Where’s Your Startup In The Supermarket Aisle?
Living in a gigantic city like New York where shelf safe is small was a real blessing for me during my college years — going supermarket shopping for myself for the first time felt fun and manageable.
I thought my brain was going to shut down from decision fatigue the first time I stepped into a Safeway. I could not believe the number of options I had to choose from in order to buy a bag of coffee beans.
I struggle with the same issues I faced in my first Safeway many years ago anytime I’m on the market to purchase anything that’s non-perishable — a website developer, new course, sweater, a new notebook…
We are no longer bound to our location when buying something new and have access to a supermarket aisle that stretches around the globe thanks to the Internet. Talk about decision fatigue!
Here’s the thing though, within every supermarket aisle, there are always 3 clear categories that speed up the decision-making process for any product.
These categories are store brand, middle-of-the-road, and premium.
Depending on what the shopper is looking for, they make a decision first on which of these categories they want to shop within.
The same logic is used when shoppers are deciding to buy from your startup vs. another startup in the same aisle. They have a lot of options to choose from, but they are going to start first from whether they want to buy the store brand, something middle of the road, or from a premium brand —
Store Brand — Poor ingredients, questionable taste. Affordable.
Every major supermarket chain now has a store brand alternative for major shopping staples such as pasta, cookies, and canned goods. These store brand products exist to appeal to shoppers who are looking for a cheaper alternative to brand-name options.
These store brands either have pretty crappy ingredients in them or even copycat the ingredients of the most popular brand within that category (yikes).
Buying a store brand product is usually a toss-up — it’s usually as good as the brand-name option, or really bad. Either way, customers who shop for these products are looking more for utility rather than premium taste.
For businesses, this may translate as products such as staplers, pens, and notebooks — if you’re just looking for the product to just do one thing, you may not care how it looks or whether it’s made out of great materials.
There’s a big market — in addition to the market of shoppers that already buy store brand products, everyone buys a store brand item sometimes. There are plenty of shoppers out there that love getting a bargain, even if they only do it now and then.
You receive a high quantity of customers.
Just because there’s a big market, it doesn’t mean that your business will have it easy. You will constantly be fighting:
A lot of competition.
Shoppers will haggle you on price (because you’ve already established that you compete based on having the lowest prices).
No brand loyalty (shoppers will buy from someone else as soon as they find a cheaper competitor).
You’re forgettable (do you remember where you last bought a store brand item? I certainly don’t).
Trader Joe’s has completely turned the reputation of store brands on its head.
Trader Joe’s is a great example of how a brand can innovate within their shopping aisle by being highly aware of how the market perceives its competitors. By using this information and then mixing it with some premium brand-esque moves, you can completely make the industry’s weaknesses obsolete for your brand.
Middle-Of-The-Road — Passable ingredients, ordinary taste. Mix of value and affordability.
Middle-of-the-road brands sell comfort, safety, and the ordinary. Some brands that embody this category for me are Heinz Ketchup, Tabasco sauce, and Lay’s potato chips — none of these products are the best I’ve ever had, but they’re not terrible either.
Middle-of-the-road brands present a mix of value and affordability, but they don’t knock it out of the park.
I see middle-of-the-road practiced a lot when hiring labor — a bootstrapping startup may hire a graphic designer that’s affordable and can complete the current work needed, but as soon as the business grows, they won’t see their graphic designer as reliable or premium enough to take the brand in a more sophisticated design direction, and will hire a more established agency instead.
There’s a market for ordinary and affordable — there are plenty of shoppers that love the safety of ordinary, especially when taking the financial risk on the premium route is too scary.
You receive a high quantity of customers, less so than store brands but more than premium brands.
Not for growth — products from middle-of-the-road brands are usually bought when you need someone to complete a to-do list item. They’re not bought when a business is looking for true upleveling or innovation.
Compete with store brands — a lot of store brands are copycatting the ingredients of products from middle-of-the-road brands. So as a middle-of-the-road item, you’re not only competing within your category but with the store brand category as well.
Lock yourself under a price and quality ceiling — when you’re middle-of-the-road, customers remember you for your affordability and value mix. As a result, you’ve basically locked yourself under a price and quality ceiling, where you cannot raise your prices or lower your quality without compromising the interest of your customer base.
Your best customers eventually graduate — If your customer truly loves something, like Bluetooth earphones, cameras, email marketing, etc. they will eventually graduate out of buying your products because they want more — better quality, more features, and higher-quality knowledge.
Premium Brand — Good ingredients, premium taste. Crème de la crème, the best.
Premium brands aren’t for everyone. They appeal to a small segment of shoppers, but where premium brands lack in quantity, they make up for in quality, which enables them to charge higher prices.
Premium brands either have a recipe that’s hard to replicate, a secret sauce that no one else has, or an impressive presentation. Premium brands are the ones that entice you to drop $5 on coconut water (anyone else love Harmless Harvest?) and an unspeakable amount on bean to bar dark chocolate (guilty).
For businesses, premium brands are the Apples, Seth Godins, and high-performance coaches that charge thousands for a few hours with them.
You go to these brands because you want the best and you don’t want to waste your time on anything that would give you mediocre performance, knowledge, or customer service.
You only compete within your category — shoppers who are on the market for a premium product are not also looking at store brand and middle-of-the-road products. They are only shopping within the premium category.
Customer loyalty — when you deliver premium results, customers build trust in your brand and develop loyalty. They fall in love with your efficiency and the results they get from using your product — going back to anything less is extremely difficult.
Brand growth potential — When customers are loyal to your brand and in love with your delivery, they will follow you anywhere. They will buy whatever you release because they want that same efficiency and results in every other area of their lives.
No price ceiling — this is a no-brainer, but premium products = premium prices. There isn’t a price ceiling when the quality of your products are in a category of their own.
The investment — whether it’s by putting in the 10,000 hours, only studying and learning from the best, hiring expensive team members — the investment to go premium is high because the payoff is limitless.
Where is your startup in the supermarket aisle? And are you currently in the wrong aisle based on your business’ long-term goals?
Do you desire to have the customer loyalty and profitability of a premium brand, but you’re marketing as if you’re middle-of-the-road?
Do you think you’re branding yourself as middle-of-the-road, but you keep getting customers that treat you like a store brand?
Use this perspective to gain some clues on how you can properly position yourself in your aisle so that when customers find you, they properly assign you in the category you want to be in.
With so many options to choose from, customers do not have the time or mental capacity to try every single brand out with the hopes of finding a diamond that got accidentally filed away into the store brand category. Make it easy for your customers to find you.