The Best Meal in Town

To a large extent the booze business is in the entertainment industry with food and drink at the core. After a hard day of meetings, conflicts and difficult decisions, then and now, people in the industry go to dinner — partly for business, partly to get to know the local colleagues/adversaries and partly for the meal.

One of the senior Seagram executives was known for his love of Italian food. He was and is a real gourmet, with knowledge of pasta, sauces and the differences among regional Italian cuisines.

One day he found himself in Montgomery Alabama on a market visit. It was a long day of meetings with the trade, consumers and local Seagram people.

At the end of the day, the Seagram manager said in a southern drawl, “Mr. Smith, it’s been a long, hard day and I know how you enjoy your eye-talian food and ah’ve arranged for us to have dinnah at the best eye-talian restaurant in Montgomery.”

“Really?” said the worn-out exec. “Where are we going?”

“The best place in town…Olive Garden.”

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True Fans

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

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How small is the market?

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.

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