Customer Focus

There's a commonly held misconception that a new product should be targeted at as large a group as possible. I used to think this - until my friend made me realise how dumb I was.

I'll take Malcolm Gladwell's example of coffee. I could create a new blend of coffee which I think everyone will like, but when I ask people's opinions the approval rating is only around 50-60%. How could this be?

The answer is pretty damned obvious - not everyone likes the same stuff. We are human beings, with individual tastes and biases. Even Coke isn't liked by everyone. But Coca-Cola are smart, and they realised this a long time ago. You don't like classic Coke? No problem, have Diet. You don't like Diet? Have Coke Zero. In this way Coca-Cola manages to capture more of the market than it could possibly hope for with a single product.

Since an entrepreneur only has limited resources they're unlikely to launch with more than one product, so they have to carefully pick their target consumers. There's no point in targeting everyone, because a product with a 50% approval rating isn't going to set the world alight. But if you can create a product which 10% of people think is fantastic, then you're on to a winner.

This is because the world is full of mediocre, generic crap. If somebody feels like a product has been designed especially for them then they're going to buy it. And they'll tell their buddies who might also buy it.

The challenge is selecting which group to target. It's usually a good idea to target lead users, who're respected for their exceptional taste, or high level of technical understanding. Here are some examples:

Apple Macs are strongly associated with the design community. Everyone expects a designer to have a Mac. This in itself is incredibly powerful, but when you consider that designers are the trend setters of the future, it has a halo effect to other users.

The same is also true of fashion, where designers produce garments for the top end of the market, and then produce diffusion ranges once the desirability of the product has been established.

Another example is Etsy who carved out a profitable niche by providing an alternative to eBay for producers of craft items. They now dominate that area of the market, and could conceivably expand in to new areas. If they'd gone head to head with eBay from day one then they would've been annihilated. Even if they'd reached widespread acceptability, they would've struggled to build a strong, long term business. It takes time to hire good people.

My final example is Facebook, who started out by targeting college kids. They're now the biggest social network in the world. Pick your target market carefully, build a strong team, and then go mainstream. Anything else could spell disaster.