The mass market is dead. Welcome to the era of the "sub-sub-submarket."
It's no secret that America's melting pot is thickening faster than demographers can identify each new ethnic, geographic, and psychographic strand. But the trend for marketers is clear: if you want to reach the masses, you've got to appeal to lots of subcultures. Witness Nike marketers a few years ago hanging out with skateboarders in an effort to increase the company's "cool quotient" and crack a new market for its shoes. The very submarkets once seen as outcasts or splinter groups are now often the most coveted consumers. The advertising world calls the renewed focus on customers' eclectic needs "brand planning." In the 1970s the idea blossomed into a full-fledged movement that's still not widely known beyond Madison Avenue.
"You start off by saying, 'There is no mass market. Everyone isn't coming to me for the same reason," says Ted Nelson, managing partner and director of brand planning at Mullen, a communications firm in Wenham, Mass. By that yardstick, today the measure of a good brand is that it resists a fixed definition. "Each submarket reacts to something different," Nelson says. "Your national appeal is the sum of all the fringes."
A perfect example of the trend? The unlikely success of Silk Soymilk, a once obscure product that last year was purchased by 8 million households nationwide and counting. Steve Demos, founder and president of White Wave, the producer of Silk, doesn't know much about "brand planning." Based in Boulder, Colo., he's about as un-Madison Avenue as they come. Yet his product has gained national traction for one reason, he says. "We look at our market as mainstream but very niche specific."
Just study Silk's carton for clues. Demos designed every element to speak to customer groups that on their own once appeared too small -- or too extreme -- for most advertisers to bother with. Yet they've added up to a robust national market. Take lactose-intolerant consumers. Seven years ago the idea of appealing to people who were so unable to digest cow's milk that they couldn't eat their Wheaties didn't seem like a great way to generate buzz or business. But after striking out in the mainstream marketplace with dozens of other soy-based products, Demos was ready to gamble on Silk. His first crazy marketing idea: use the carton to depict the soymilk flowing into a cereal bowl. Marketing experts told him he was mad to position Silk as "the milk for cereal." But Demos didn't listen. "They said, 'You're limiting your marketing opportunity.' I said, 'Don't worry. I trust their intelligence -- they'll find the glass." And consumers did.
Last year 8% of U.S. households purchased Silk at mainstream supermarkets across the country. Silk sells briskly in border towns and college towns, in liberal outposts, and in the bayous. "I'm not sure we're smoking out the doors in the backwaters of Mississippi," says Demos, "but someone there is buying it, and last I checked, Mississippi is not a hotbed of liberalism." From Wal-Mart to Wegmans to Piggly Wiggly you can find Silk in the refrigerator case. Demos says about 95% of supermarkets now carry it. And how's this for a breakthrough: at certain Starbucks you'll find Silk creamer sitting on the counter next to the whole and 2% milk.
Since Silk's debut in 1996, White Wave has gone from a little-known $8-million company to a $136-million brand powerhouse that dominates the soymilk market. Demos estimates 2002 sales at $200 million, with 90% from Silk. Pretax profit margins are in the midteens, attracting investors like giant Dean Foods, which last year acquired White Wave for $295 million.
Silk's success with a range of demographic groups has led Demos to some equally offbeat marketing choices. He advertises in publications as diverse as Rolling Stone and Ebony. Nelson, the branding expert, applauds that approach. "Typically, you don't do ethnic-focused marketing until you've maximized the mass market. This flips the equation. It's a more sustainable way to think about building a brand," he says.
Reaching the Masses
Silk's carton is Demos's biggest billboard. The front appeals to no fewer than five niches or subgroups. Taken together they account for an estimated $320-million wholesale market for soymilk that's expanding by 30% or more a year. White Wave's sales, meanwhile, grew 47% in 2002, to $200 million.
The I-can't-do-milk set
Silk appeals to minority groups from Detroit to Los Angeles to the border towns of Mexico. "It's a real rainbow coalition," says Demos. "What they have in common is lactose intolerance." As it turns out, lactose intolerance is a major issue for millions of Americans, or just about every ethnic group but Caucasians. Add in consumers who are allergic to milk and those who seek an alternative calcium source, and the crowd increases to one-third of the market for soymilk.
Sold on soy
Ironically, Demos decided not to even include the word soymilk on the carton when he first launched Silk in 1996. "You don't rub it in their face when they think it's going to taste bad," he says. Back then 80% of Americans thumbed their nose at the sight of soy. Today at least 40% of consumers are willing to at least try it. And soymilk has cachet.
Natural organic consumers
These folks shop at regular supermarkets yet are keenly sensitive to environmental issues. Once narrowly defined as a bunch of recycling "green" leftists, they are everywhere today. Demos estimates that this group drives about one-third of the market for soymilk. The U.S. Department of Agriculture's new organic-standards law should provide another boost for sales.
"Conscious commerce" crowd
These consumers actively seek out products and services that help the environment and better their lifestyle. As many as 50 million people fit the definition, according to Natural Business Communications, a communications and information services company. Admittedly, the group is a bit amorphous, but you know 'em when you see 'em, says Demos. "They buy electric cars, and they're eating lower on the food chain. You can find them at Run For the Cure and at health-food stores." He's happy to appeal to even a small portion of them. "We're still trying to meet the 15 million we advertise to every day on NPR," he says.
Demos didn't originally see this group as a big target market but changed his mind after the Food and Drug Administration certified in 1999 that soy protein can help fight coronary heart disease. "About one-third of the market opportunity for growth came from that announcement," he says.
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