Harsh Pamnani is a marketer and author. He obtained his B.E. (Computer Engineering) from IET-DAVV, Indore and MBA from XLRI, Jamshedpur.
In Mahabharata, once during archery training, Guru Dronacharya pointed to a toy bird on a tree branch and instructed his students to aim for its eye. He asked them to describe what they saw. Many of his students answered that they could see the bird, tree, branches, leaves, fruits and other things. They were all sent back without being allowed to shoot. Then came Arjuna, the third Pandava brother. He said, “I see only the eye of the bird, nothing else.” Dronacharya allowed him to shoot, and Arjuna's arrow struck the bird's eye.
Arjuna could hit the target not just because he was a better archer than others. Along with skills, he had razor-sharp focus too.
The way focus is necessary for archery; it is also essential in marketing. With focus, a marketer can segment the total customer population into separate groups, which have similar customers within. But outside, these groups are quite different from each other. If a brand can fulfil the needs of a customer group better than its competitors, it has a growth opportunity. However, the segmentation process is not as easy as it sounds. According to late Harvard Business School professor Clayton Christensen, about 95 percent of new products fail because of ineffective segmentation.
In segmentation, customer groups are created by slicing and dicing data. The more data available, the more variables and data groups can be created. But when marketers apply too many variables, and a group becomes too small, they feel the pressure of justifying the return on investment (ROI). Therefore, they are tempted to combine multiple groups and increase the segment size. This aggregation of groups could reverse the whole segmentation strategy.
I have found that if marketers answer these four questions, and accordingly design 4 Ps of marketing (product, place, price, and promotion), they can improve their focus and, in turn, ROI:
Q1. Who are the potential customers?
Answer to this question gives a rough sketch of the audience covering their age, gender, income, life stage, education, location, etc. Let me take an example. Snacks have been part of our daily lives. Powered by higher disposable income, India's growing urban middle-class population is getting interested in trying new snack items. A few years ago, Greek yoghurt was almost unheard of as a snack in India. It is much more expensive than regular dahi.
A rough sketch of potential customers for Greek yoghurt would be older millennials (aged 28 to 35 years), earning a decent disposable income and living in a metro city. However, people in this group also eat unhealthy packaged snacks. Thinking plays a critical role in defining consumers' preferences. Hence, to narrow down the focus on people who prefer healthier snacks, marketers have to ask another question.
Q2. How do potential customers think?
People may look similar externally, but they differ in internal traits such as interests, nature, attitude, opinions and personality. People who are health conscious and nutrition seekers would prefer a healthy snacking product over an unhealthy snacking product. Hence, a marketer would like to add one more variable in the segmentation process. The new group may look like older millennials (age of 28 to 35 years), earning a decent disposable income, living in a metro city, and are health conscious.
Interestingly, there are various healthy snacks, such as organic, vegan, sugar-free, gluten-free, etc. Some of them are tasty, some are not. Some could make people feel fuller for extended periods, some could not. Some could be eaten on-the-go, some could not. Even if a group has potential customers who think alike, their needs will vary. Hence, to narrow down the focus on people with similar needs, marketers have to ask another question.
Q. Why would potential customers need your product?
To attract and retain a brand’s most important customers, a marketer must understand what customers’ needs are and which benefits will appeal to them. People have rational as well as emotional needs. Rational needs can be satisfied with the functions and features of a product. As a case in point, Greek yogurt is a nutrient-rich food. In comparison to regular dahi, it can provide an equivalent amount of protein in half of the quantity. Greek yoghurt's functional benefits would be small hunger satisfaction, natural taste, unique flavours, etc.
Emotional needs are based on feelings. Here, people would look for benefits such as improved self-image. In the case of Greek yoghurt, emotional benefits could be satisfaction, relaxation, and confidence as a person has eaten something healthy without compromising taste. Further, the reputation and personality of the brand selling the product will provide more emotional benefits such as trust and prestige.
A day has three meal occasions: Breakfast, lunch and dinner, and several snacking occasions. Even if a group has potential customers with similar needs, their choices will vary based on the context. Hence, to narrow down the focus on people with similar context, marketers have to ask another question.
Q. What is the context of potential customers’ need?
People’s expectations from a product and brand are based on the context. Context varies according to factors such as time of day (morning, evening, night), mood (happy or sad), event (joyful or joyless), location (home or office), occasion (Valentine's Day, Diwali, World Health Day), and company (no one, friends, family, colleagues), and so on.
If a customer eats one snack item more, he or she will eat another snack item less. So, Greek yoghurt has to find on which occasion it has the top right to win. Usually, small hunger strikes between 4 to 6 pm. A snacking option that can provide some energy and make people feel fuller for extended periods has a probability of winning here. If that product is both healthier and delicious, then for health-conscious people, it has considerable potential during this occasion. Greek yogurt is tasty and can meet much of the daily protein needs. It can also promote weight loss because it can make people feel fuller. If it comes in a friendly and elegant package, then people can eat it in different companies at different locations.
To imagine the opportunity for Greek yoghurt, let's take a hypothetical situation and do some mental calculation. India has a population of over 130 crores. Even if a brand selling Greek yoghurt could reach a 0.5 percent population, i.e., around 65 lakh people, and make all of them eat one cup worth Rs 40 between 4 to 6 pm, even once in a year, revenue could reach Rs 26 crore. There are 365 days in a year. In the best possible scenario, if eating Greek yoghurt becomes a habit for these 65 lakh people, then the brand’s annual revenue could reach Rs 9,490 crore. That's the magic of focus.
The writer is the author of the book 'Booming Brands'. Views expressed are personal and don't necessarily represent any company's opinions.