Starting From Scratch … Without Investors (Article #5 – Target Marketing … a consultant’s panacea)
(This is the story of Embrazio, a leather accessories company in Boulder, Colorado complete with lessons learned and a few tools and exercises all brought together for your entertainment and hopefully a bit of learning to boot. The story is told in the form of a series of articles by Embrazio founders Scott Schaefer and Stephanie Boyles who also happen to be married.)
Article #5 – Target Marketing … a consultant’s panacea
In article #4 we described jumping into selling and how we wandered around potential market segments looking for a common group of buyers. We went from selling to friends and family, at street fairs, horse tack shops and motorcycle stores and shows, to buying space at expensive industry shows and then finally settled on selling directly to fashion boutiques. We didn’t have an initial “target market” defined beyond the rather general term “horse people” as we’d designed our first product to solve the problem of how to carry your smartphone with you while on horseback.
Figure 1: Our solution for "horse people"
Our belief was, and still is, that the fastest way to learn and grow in an early start-up is to go sell to all you think have a need for your product/service. This is in contrast to most marketing books and courses and it goes against most of the advice you’ll get from start-up mentoring programs and venture capitalists. That is not to say we don’t believe in the theory of target marketing…we do. It’s just that we also believe in the need to have some real-world market knowledge when selling something new before you can hone-in on a specific initial target market.
Lesson #5 – Get some knowledge and then get a target!
Do an online search on the term “target marketing” and you’ll get 850,000,000 results (at least that’s what we just got). It may be the most overused marketing term ever created and is the subject of countless books, articles, and pitch decks.
We think you can boil it down to this:
You want to target a subset of the market that is homogeneous within (similar demographics and psychographics) and heterogeneous without (different from the next group over) so that you can focus your scarce resources and generate buzz and word of mouth referrals amongst people likely to communicate with each other.
At Embrazio, we tested and considered multiple target markets before deciding to focus on higher end fashion boutiques at the wholesale level and a persona called Dakota at the retail level (more about personas in a moment). Staying at the wholesale level for now, let’s take a look at how we sharpened our definition of in-target boutiques. This ensured we were zeroed in on those shops most likely to buy our products.
Figure 2: Upscale casual boutique Co-op California
Competitive Products Are Like A Rifle Scope
As we began cold calling on retail boutiques we thought were in our target market we started noticing clear similarities among those that eventually wrote an order with us. For example, those that bought were almost always already selling items of genuine leather versus not real leather. More specifically, they were usually carrying existing brands that were similar in style like Frye boots and BedStu bags. These shops were clearly catering to people who love leather goods and like an upscale casual style.
Figure 3: Embrazio's small leather backpack in RED!
It is just as important, of course, to define what is not in your target market. In our case, we know if a store carries what we call “polished” or “plastic” looking items, even if real leather, they are not in our wheelhouse. Brands fitting this category include Louis Vitton, Michael Kors, and Kate Spade. These brands fit a more formal look and can carry a much higher price tag.
In-Target Stores Look And Feel Alike
We also started noticing stores that were likely to buy from us have a similar look and feel to each other. Our in-target boutiques usually have hardwood floors, a fairly well stocked display area, warm and inviting lighting, and, believe it or not, a nice fragrance due to the presence of candles and perfumes. Contrast this to boutiques that have a modern edge, sparsely stocked displays, and lots of low voltage lighting.
Our targets are usually located in quaint areas where you’ll also find great coffee shops and cute little restaurants. In fact, we wish we had kept a list of all the great coffee shops we hung out in during our mornings waiting for an in-target store to open as it would have made a great travel guide or book! We still tell friends when they’re visiting a new town to look at our online store locator to find the coolest areas and best restaurants in town.
Figure 4: Portsmouth, NJ, is enhanced by great boutique Puttin on the Glitz
The stores we don’t sell to, at least not with our current line, are located in malls or have many locations around town. They’re in strip centers, high end chain hotels, or downtown in a business district. Store owners and managers in these type stores have been great teachers for us. They’ll look at our line and then tell us something like, “you have great high quality products and my sister/daughter/good friend would love them, but they just don’t fit with what the people who shop here are looking for.” Fair enough and thank you for that guidance!
With A Target Defined, Here’s How We Find ‘Em
With a good sense of what a solid in-target boutique looks like, how do we go about finding them? Well, once again, we turn to the internet and, in this case, specifically to Yelp.com. We researched a group of early existing stores and discovered they are almost all rated 3 stars on price when doing a search on YELP for women’s boutiques.
Before heading off on a new sales trip we’ll gather all the Yelp 3 starred women’s boutiques in the area we’re visiting and then further qualify them by looking at what they sell and at pictures of the store itself. If we can’t get enough information online, we’ll put a call into the store and ask if they carry real leather bags and, if so, what brands they carry. Doing this sort of detective work has saved us a ton of time over the years.
Figure 5: Real leather offers something extra
Finally, once we visit a store, we always ask the owner/manager, “who else in town might be interested in our line.” We extend an exclusive relationship with stores that carry our line that prohibits us from selling to another store nearby, but owners/managers are usually very forthcoming about other stores across town that might like our products. After all, it is in their best interest to help us become a successful and well recognized brand.
A Few Words About Personas
Using the aforementioned targeting and qualifying methods has allowed us to build a group of over 200 retail boutiques carrying our line on the wholesale side. It has been a much more difficult task to build market share on the retail side (i.e., selling directly to consumers via our online store). We would say our efforts in this area are still a work in progress.
We used an approach called “personas” to describe our target market for our direct to consumer channel. A persona is a detailed description of a fictional person, in our case Dakota, who is the embodiment of your target market. In other words, by describing them, you are describing your target market.
We wrote an entire article about Dakota’s life including where she works, travels, and what she does for entertainment. We described the clothes she wears, the car she drives, and the movies, magazines, and web sites she likes. We even talked about her family and dreams for the future. In the end, this exercise has helped us channel our small amount of advertising dollars to online ads where we could fine people like Dakota.
Figure 6: Embrazio’s persona imagines a person who relishes the natural world with its intendant beauty, fragrance, touch (model Hannah Waldner)
You should be aware that selling direct online is an expensive proposition that takes lots of time and lots of money and the less you have of one, the more it takes of the other! We have an excellent web site, and are engaged in active backlink building, facebook posting, twitter tweeting, pinterest pinning, and Instagram posting. We also send our products out to fashion bloggers to do online reviews and endorsements. Still, building a brand with consumers takes more time, money, and effort than we thought would ever be needed.
Figure 7: Fashion blogger @kenzywho sporting Embrazio's Media bag
Coincidentally, we’ve just engaged our 5th consultant in an effort to get our online business growing faster. Thank goodness we didn’t hire a full-time employee in this area as they would no doubt have over promised and under delivered given how difficult this assignment seems to be. In fact, the question of engaging consultants versus hiring employees is where we’ll conclude this series of articles with article #6; Employees Or Peace Of Mind … you choose. Hope you’ll stay tuned…
Summary of Article #5
- SELL FIRST, THEN TARGET. We agree that zeroing in on a specific homogeneous market sub-segment as fast as you can is the way to go. However, to get to that point with something new you’ve got to first “kiss a lot of frogs.” Selling broadly gives you the feedback and knowledge you need to confidently decide on the right initial target market.
- DEFINE YOUR INITIAL TARGET MARKET IN MANY DIMENSIONS. By this we mean, describing as many points of contrast with adjacent markets as you can. If you’re describing an end user instead of a business, what restaurants to they frequent, what cars do they drive, what do they do for entertainment and vacations for example.
- ONCE DEFINED, THINK ABOUT THE MOST EFFICIENT WAY TO FIND YOUR TARGETS. We use YELP to locate target stores online but there may be an easier way for you to locate your targets. Do they congregate somewhere, subscribe to the same publications or web sites, or appear on some kind of industry or consumer list?
- TARGETING AND SELLING ONLINE DIRECT TO CONSUMERS IS HARD. There’s just no two ways about it. It has gotten significantly more expensive and time consuming to get noticed and make a sale on the internet. As “ecommerce” has grown, online platforms like Facebook, Google, Amazon and the like have figured out how to charge you, the seller, a pretty penny for the eyeballs they deliver. Go into this arena with your own eyes open and be skeptical of consultants that promise a fast path to success.
Exercise – The Bowling Pin Analogy (often accredited to Geoffrey Moore)
Think of your entire potential market as a triangle of bowling pins. Each pin represents a “sub-segment” of the market where those within that segment share a great deal of commonality. People within pin #1 are largely the same and they are just a little bit different from adjacent pin #2. People within pin #1 are very different from a faraway pin #8. Now, see if you can tightly define Pin #1 and then Pin #2 and how your product/service would need to change to expand from Pin #1 to Pin #2. By continuing this process, you’re describing an orderly and efficient way to attack your full potential market over time.
Figure 8: Bowling pins represent market subsegments