Ep. 20 A Second Reading from Ramping Your Brand

APRIL 15, 2020

00:19 Welcome to Episode 20 of Startup Confidential. We’re all still muddling our way through the COVID-19 national emergency. But as a nice humorous break, I’d like to share an excerpt from my recent book, Ramping Your Brand, which is available on Amazon. If you have extra time to read books, great time to do that. And this excerpt is from my chapter on heavy users. So here we go, a super fun segmentation of premium CPG consumers.

00:59 There are four basic kinds of folks that don’t care much about price in a category: status buyers, hardcore purity buyers, category geeks, and pragmatic adopters. Status buyers are folks who need their pantry to be culturally elite, and they want others to know this. This is now common, but not universal amongst post-grad educated elites and the urban rich in general. Just go to Whole Foods in Santa Monica, River North in Chicago or downtown Dallas to see for yourself. Lots of fancy beverage buying is driven by this crowd, with or without much knowledge behind their purchases. They aren’t especially committed to or knowledgeable of natural notions of purity per se. The only impetus they need to buy is the status marking triad of premium price, coveted ingredients, and chic design. These folks are less involved in emerging niche outcomes, but they are driven by the top consumer outcomes relevant to each category that they buy. If most of their pantry is premium, it’s primarily because they can easily afford it, not because they’re savvy buyers.

02:04 Hardcore purity buyers. These folks are a group that Spins calls the true believers and claims to be 11% of the U.S. population. My research indicates that purity buyers actually overlap heavily with status buyers since purity obsession has been a status marker since agricultural civilization was invented. The Harmon group, however, has found that only 8% of U.S. adults buy half or more of their groceries in natural organic form, suggesting that Spins true believers segment may be a tad over-estimated or idealistically defined. And only 1.7% of U.S. households purchased three quarters of more of their groceries at Whole Foods despite Amazon’s acquisition in the rollout of Prime Now home delivery from these stores. Regardless of the size of this group, they tend to be driven by hardcore ideologies, often social ethical and/or environmental. Honestly, I would still find the difference between status bars and purity bars are really hard to discern in real life. Wanting to have the most pure or sustainable or healthy diet possible are all symbolic rationales for obtaining and reinforcing elite social status. It’s just that the ideology is the cover story.

03:09 This is often the case for those who buy all their groceries at Whole Foods saying, “It’s for health reasons.” The latter is simply a quest for enhanced control over one’s individual fates, something that all social elites tend to fixate on much more than others with more pressing problems. Lots of people get cancer and don’t alter their diet at all as their means to survive. Think about it. These purity ideologies are all so attractive rationales for those aspiring to elite social status in the absence of other traditional elite credentials. What I’ve learned is that the humbler the social origin of the consumer, the more likely this kind of pantry wide conversion is driven by intense service ideologies: purity, environmentalism, or health and longevity, that mask an underlying quest for a backdoor to elite social status. For those without post-grad degrees or elite professional identities, few purity ideologies are very seductive status markers in modern America.

04:04 Category geeks. In some categories, there are genuine foodie and nutrition geeks who buy multiple brands because category geeks possess a learned nuance set of demand drivers. They fashion themselves as micro-influencers, and some of them may actually be so. I’ve interviewed hundreds of these folks in my career. The majority are actually not good at influencing anyone, because they tend to come off as a bit cuckoo to the next rung out. They’re often like PhDs who can’t translate their academic theory and jargon into ordinary English. Yeah, I know, I know. Those people are the absolute worst.

04:38 Pragmatic adopters. These consumers form the largest addressable market for premium offerings inside any category or macro category. They are open to trying new products that promise high stakes outcomes of value to them. They run neutral to positive about trying the modern way of doing things in the CPG categories. They adopt health ideologies pragmatically unless there’s a quest to obtain a reinforced social status. This can be determined through rigorous interviews. Many of them are relatively normal middle-class folks, the Mike and Molly crowd. If your product can make a haloed top style argument, they’ll happily pay extra and go for it. But they are generally very selective about the categories in which they buy premium. These folks are driven by cultural trends in healthy eating, but they are not ideologues or status buyers. This group extends deep, deep, deep into the middle class where disposable income and cultural habits just don’t permit upgrading the entire grocery budget by two to four times or more, like our purity and status buyers.

05:40 Ideally, your initial heavy buyers will include a smattering of status buyers and pragmatic adopters. The more obscure the innovation though, the more likely you’ll be selling initially to category geeks and other purity buyers. If most of your initial consumers sound like my depiction of these two groups, you seriously want to pause and consider how to reposition your offering for broader appeal. It may not always be possible if the founder simply prefers to sell to consumers like yourself. Although status buyers are not driven by deep knowledge, they generally exhibit far better interpersonal communication patterns than the annoyingly fundamentalists category geeks and the often ideologically shrill purity buyers.

06:19 I would seriously recruit your brand ambassadors from the status buyers. Look for relatively uncritical support for new modern attributes coupled with a heavy dose of charming insistence. That’s how these folks influence their friends, and they’re very good at it. Ultimately, pragmatic adopters are more important to planning your longterm growth and conversion funnel than are status buyers. They’re always a bigger group. They’ll pay more when the outcome is better fulfilled by the new widget you’re selling. Make a very pragmatic outcome-based argument with these folks. Keep the missionary zeal about your purpose and about your pure and righteous supply chain to your website or back panel, or just stop talking about it.

06:57 That was my excerpt. If that material intrigues you, please go to amazon.com and check out, Ramping Your Brand, which I have permanently discounted during the COVID-19 emergency by a whopping 50% off Kindle, 30% off paperback, although paperback is slow to ship. I’ll warn you, it’s worth the wait. Thank you so much for your time today. Stay safe, stay healthy and stay home. Be safe out there.