Speaking at Drinkpreneur Live in London, Anne Wong-Erven, senior consultant, Zenith International, told beverage entrepreneurs to clearly establish the value their product will offer consumers.
Then it’s important to understand what the brand’s ‘hero consumer’ wants – and use this knowledge as a drive to constantly improve the business.
75% of start-ups fail
Beverage entrepreneurs are often immersed in product development – and fail to look at the market around them, said Wong-Erven.
“The first question is: Why do you want to create this product? What made you decide this is the product the market needs?” she said.
“We know that 75% of all start-ups fail, and they fail because they jump right into the product idea, they spend all the time creating the product, and never talk to the customer. You need to understand if there is an unfulfilled need in the market.
“It’s not about can you create the product, but should you be creating the product.”
While intuition does play a part, it’s necessary to find out if there is a sustainable market for your product, said Wong-Erven. Ask yourself if you’re the only person who needs your product; or if there are thousands of others who also want it, she said.
Define your value proposition
A value proposition is a clear description of the benefits your product or service offers your customer.
Wong-Erven uses examples of companies that have taken a common product but created a value proposition.
AB InBev produces beer, but also focuses on bringing people and friends together. Nestle has taken its food and drink, and concentrated on its nutritional positioning. Starbucks produces coffee, with an emphasis on offering a comfortable environment in which to consume it.
“They’ve defined a value proposition. It’s not about the product, it’s about the target customer and what they’re interested in,” said Wong-Erven.
And it’s important to understand how much worth people will place on your value proposition - how much will they pay for it. Is it possible there is a mismatch between value, and cost? “There could be a reason why there’s a gap in the market,” Wong-Erven warns.
Having investigated the broader market and the challenges and opportunities for your product, it’s crucial to focus on the people who will really appreciate your product and the value it offers.
Wong-Erven defines hero consumers as “people who are completely and utterly passionate about your product, the people who are never going to be able to live without your product.”
These consumers will drive improvements in your business into the future, she said.
“What you want to do is understand everything about them. It goes back to understanding their attitude, value, what they like, what they don’t like. These are going to be the customers who are going to constantly challenge you to do better at your business and ensure you’re satisfying their needs.”