I got a lot of comment (mostly positive so far) about my last posting on “How Small is the Market.”
Like many businesses, the market for alcohol follows the old 20/80 rule. Twenty percent of your customers account for 80% of your business.
I came across a posting on a marketing blog that goes the next step.
I follow Seth Godin, a marketing guru, a prolific writer and someone well worth following and reading. Lots of insights.
A recent post of his is called “The circles (no more strangers)” and deals with the value of a “true fan” vs. “strangers.”
He concludes his posting with:
Let’s say a marketer has $10,000 to spend. Is it better to acquire new customers at $2,000 each (advertising is expensive) or spend $10 a customer to absolutely delight and overwhelm 1,000 true fans?
Check out his blog…there’s good stuff there. Here’s a link to this posting — Seth’s Blog
I’m always struck by the size of the spirits category and small number of dedicated drinkers of a particular brand. (Based on US Census and Gallup’s annual survey.)
Let’s do some math (or trust me and skip ahead to the fact that there are ‘only’ 24 million core spirits drinkers)…
- US population over 21 is around 200 million.
- 60% of those over 21 drink alcohol at least occasionally, 120 million people.
- People who drink spirits most often (as opposed to wine or beer) are about 20% of those who drink alcohol. So now we’re down to 24 million spirits drinkers.
(Actually the overall number who drinks spirits is much higher; perhaps 80% of alcohol drinkers or close to 100 million. But I’m focusing on most often, the core of the market.)
The size of the core market at 24 million people can be seen as huge or small depending on your perspective.
If half these drinkers consume Vodka, that’s 12 million people. But, if a brand has a 25% share, the size of the ‘franchise’ is only 3 million consumers. (The numbers get smaller as you get into different categories.)
What this has always meant to me is, in addition to or perhaps in place of mass media, marketers need to think in terms of ‘a rifle not a shotgun’. Maybe even with a telescopic lens.
Whether aiming at increasing brand loyalty or converting users of competitive brands, it’s all about the return on investment. Efforts such as relationship building programs, digital marketing, database marketing and point of sale programs, to name a few.
Just like the old expression – fish where the fish are… but with a rod and reel not a net.
I bet you knew that.
There is an interesting article in this week’s Ad Age on Belvedere and their new advertising campaign.
Not much more for me to add other than what I said in the article.
However, what I didn’t say and was thinking at the time of the interview was why go in this direction in the first place? Most brands I know that are called for by nickname have traction and a following e.g., Crown, Jack, Captain, Stoli, etc.
Wouldn’t it make more sense to further develop the brand on-premise rather than through ATL spending? Even if the message was strong.