When entrepreneurs or organizations start out with a product seeking a market versus the other way around, they need to think carefully about which market or markets their product (and brand) would be most wise to serve.
This involves target market identification, product category selection and unique value proposition determination.
I will use a real-life example with which one of my client companies is now wrestling. This company has created a very tasty parmesan cheese substitute that has no dairy component. It is in a ground up form that can be added to food from a shaker. The product includes many healthy ingredients and no artificial or harmful ingredients. It is a very good product. But the question is, “What are the most advantageous markets for the product?”
To determine this, we must consider the customer segments, potential product uses, market sizes, market growth rates, market profit margins, and the competition by market. Once these are used to identify the most advantageous market segments, then the appropriate product category or categories must be selected and the unique value proposition must be crafted to fit the chosen category or categories.
Going back to the parmesan cheese substitute, it could be added to pasta, used to flavor popcorn, shaken on top of grilled steaks or seafood, added to soups, stews or salads, added to quiche, added to fondue or eaten with a spoon as a snack. Which are the most likely uses for each potential market segment? Which uses provide the largest markets? For which uses are the largest quantities consumed? Which uses have less competition? Which uses would make the most intuitive sense to people? Which uses would be the most compelling?
What do the targeted markets and the intended uses imply about the product category? Is the product a healthy parmesan cheese substitute, a non-dairy parmesan substitute, a cheese-flavored seasoning, a condiment, a healthy food additive, a flavor enhancer or something else?
Each of these product category descriptions might appeal to different target markets. For instance, a non-dairy parmesan substitute would primarily appeal to vegans and people who are lactose intolerant. How big are these two markets?
One must also consider who cooks, what types of meals they prepare, how often they prepare different types of meals, how much the snack, what types of snacks they consume and what flavors their palates prefer.
In the case of this product, one must also consider whether it is to be positioned as a variation on a traditional ingredient in classical cuisine or as an ingredient associated with nouvelle cuisine.
Once the target markets, product categories and product uses are determined, one must also consider the competition in arriving at a highly compelling unique value proposition (UVP). What will make this product and brand stand out within its intended product category?
Also, one might think through whether the product or brand might best be associated with comfort, nostalgia, family, friends, experimentation, excitement or something else.
I hope this helps you to see that product uses, product category definitions, target markets and market segments and unique value propositions need to work together to create more focused, integrated and effective brand and marketing strategies. These are all components of a brand’s positioning.