Graphos Project

Laurier: Hey, product people. If you’re working to build a brand and scale your product business, buckle up: this episode is for you.

Welcome to Product: Knowledge, the podcast about creating and marketing products people truly need. I’m Laurier Mandin, founder and principal of Graphos Product.

While small brands and startups dream of being big, some of the world’s biggest conglomerates are breaking up into smaller pieces. From GE and Toshiba to Johnson and Johnson, big brands are trying to get smaller. At least a little.

Maureen Mwangi started her career in that oversized world. Launching products for the likes of L’Oreal, Dove, Lays and Chobani.

Today, Maureen’s focus in her own consultancy, Startward Consulting, is on helping product brands to design their dream business and scale profitably, with scientific precision.

I started our discussion by asking Maureen which big brand behaviors growing product businesses need to emulate, and when they should instead lean into their smallness and agility.

Maureen: We try to hire influencers. We try to do things outside of our scope, but the reason why big brands are doing what they’re doing is because they’re starting to see the power of personalizing brand. And one example I have is I was working as part of the team for Multipack under Frito-Lay and we’d created a campaign where mothers could write a letter to their children inside the variety pack. So whenever a child would open up a bag of chips, they could read the letter from their mom. What that goes to show is that big brands are trying to create touch points with their consumers in order for their brands to feel like a person.

And in order for their brands to resonate as a human being. And so as a small business owner or as an emerging entrepreneur, trying to really scale up your business, I challenge you to think about what can you do to personalize your activities? What can you do to personalize your marketing activity? In your campaigns, can you share your why? Can you show who you are, can you can connect with your audience? Can you represent your customer and be that voice? Because emotional resonance is what’s driving a purchase. Consumer behavior has changed drastically because people are becoming so discerning on where to put their dollars.

And the only way somebody would lean into your brand is if they know why you’re doing it. Because at the end of the day, branding is why people buy you. Marketing is how people find you.

Laurier: Yes.

Maureen: And when big brands are now transitioning into smaller businesses, they’re doing that because as a small company, there’s so much agility.

But funny enough, many people view the size of the business as the weakest link. But one thing I want to tell people is just because you’re small, it doesn’t mean you’re not potent. The reason why you seeing big brands becoming small brands in their own capacity is because they realized like, “Hey, I am potent when I’m small; it’s easy for me to launch a new campaign, launch a new product, test it, get feedback fast enough, and then change things up.”

But when I’m a big brand, I have to go through multiple hoops to get anything approved and do anything. And the market is changing so fast. Technology is changing so fast. Your company needs to be in a position to adapt and be agile as fast as the market is.

Laurier: Yes. And how do you think consumers make the choice when they’re deciding they have the choice to buy from a big brand or to buy from a more intimate, smaller brand? How do they decide that they trust the smaller brand compared to the big one that they’ve known all their life?

Maureen: That’s a really great question because how consumers make a purchasing decision is based on two primary factors. The first one is physical availability. Are you aware they are when they’re shopping? And the second one that really influences their buying on a subconscious level is mental availability.

Are you where they are when they’re thinking to purchase? So what that means is how consumers decide is based on memorability and how frequently you come to mind when they’re thinking about that particular product. So when it comes to a small brand purchasing decision versus a big brand purchasing decision, they do it because of credibility. Like they’ve been in market for so long, it’s trusted, quote-unquote, even if the product isn’t good enough. So for a small business, in order for you to attract that, it’s you driving credibility in your marketing effort and really honing that within your audience.

Like, how can you constantly be top of mind? How can you constantly prime your audience? How can you communicate and engage with your audience outside of constantly selling and promoting? Because the buying decision is based off three things. It’s Fame, Frequency and Fluency.

Fame Is, how well-known are you?

Frequency is how often Are you present when they’re thinking about buying.

And then Fluency is your consistency. But many of us in the small emerging space, we never do the work that will get us to Fame.

Laurier: Well, and that’s the hard part. That costs money and takes a lot of work to get to the point of being famous. We look at brands like Tesla all the time that just have great fame. They don’t have to do marketing even at this point yet, because they’re so famous that every time Elon Musk opens his mouth, he’s all over the world news. And smaller brands are large amounts per click, just to try and get some exposure much less fame.

Maureen: Exactly. But I usually tell people if you’re a small brand, you probably don’t have to think about it as being a household name. How can you be a recognizable brand within your audience? How can you create a community of raving fans, such that whenever somebody uses your product, they go and tell their friend, their grandmother, children?

How do you create that? One brand that I know has done it extremely well is Pura Vida, like the jewelry company, it’s those who know Pura Vida know Pura Vida and stay with that brand. It may not be a Tesla. It may not be a Nike, but within the ecosystem of medium-sized companies, recognizable brands, they are present.

And so for me, I’m like strive towards that. And then eventually if you happen to be a Nike, fantastic. If you happened to be a Tesla, fantastic. But within your space, the audience is large enough. You can be recognizable.

Laurier: In some ways I think there’s more value to being famous with people you love, that you deeply care about than just being world famous with everybody.

Maureen: Yes, It’s that precision. I usually say, just be precise in everything you do for me, scientific precision means being surgical, understanding what is working and then really duplicating and amplifying those efforts.

Laurier: Yes, and I love how everything you talk about in your content is about knowing your numbers, doing the math, understanding business strategy with scientific precision. In the B2B world and definitely the agency world, there’s a lot of talk about value-based pricing and that’s not something we hear constantly in the product world.

You have a great philosophy on that. Can you tell me what is the difference between branding and pricing a commodity versus value-based pricing when it comes to a physical product?

Maureen: Value-based pricing is pricing that is based on the perceived value by your target audience. And what my equation looks like is every product-based business has a cost. It’s fantastic to know your costs. But also, you have to realize that your cost is just your springboard to profitability. There is a certain added profit margin that every one of us desires to achieve in order for us to be sustainable.

And that profit only comes from the brand development work. Understanding what is the value of your product outside of the functional benefit it has? So if you’re selling a candle, because I am literally looking at a candle as we record this, what represents your candle?

Think about three adjectives that drive people to buy your candle. That is the value that people are paying for. Think about Louis Vuitton. Louis V sells bags. And you would argue that the bags of Louis V primarily could be the same as Chanel, Dior, or any of those well-known brands.

But Louis V has done a fantastic job of segmenting their market, claiming their position and articulating who they are for and what they stand for. People can know. Well, I’m an audience for Louis V and I’m not an audience. So what is that value that you’re bringing out to the market and that’s your profit margin?

And that’s what adds up to the value-based pricing. So the reason I share this is, in the product space or in the commodity space, once we know our costs, we probably just do a mock-up of that times two and then you sell it. And sometimes that doesn’t even represent what you’re trying to sell. So think about what is the transformation that your product is seeking to provide and actually sell that because at the end of the day, people are buying based on value. Like price is only expensive, as long as it’s being compared to something else.

Laurier: Yes, value is entirely a perception in the customer’s mind, unlike price and your costs. And commodity-based products are priced, as you said, based on the cost-plus profit margin equals what they sell for. But if I’m buying a Louis Vuitton bag, that’s not even a factor. It’s entirely based on the value delivered and perceived by the buyer, what that buyer will pay for it compared to other similar bags.

It’s not a mathematical equation based on manufacturing and distribution costs at all. It’s entirely based on perceived value by the customer for what has been built up by the brand.

Maureen: Absolutely. And that’s the work we need to do. It’s good to know your manufacturing costs. It’s good to focus on distribution. I personally think that the work that we’re talking about in this session needs to be done for us before anything else is done.

Laurier: Absolutely. Because that’s another important thing you do in your work, is recognizing that a business needs to make a profit, not just break even. Success is not about selling and making the same amount of money come into your bank account as what went out. We have to learn to embrace profitability and give the right amount of value to our customers, that they want to pay, that they perceive the value of the product enough that they make us profitable in buying it.

Maureen: Absolutely. That’s the end of the day, that’s why we’re doing this. I usually say journey is stressful enough and I don’t think we need to add more stress if we’re not making money. So yeah.

Laurier: I think entrepreneurs are often a little embarrassed about that. They don’t want to admit in many cases that they deserve to make money, that they’ve given up so much and taken so much risk that the upside should be profitability in the life they’ve chosen.

Maureen: Yes.

Laurier: Welcome back to Product: Knowledge, the podcast about creating and marketing products people truly need. Today I’m talking with Maureen Mwangi, founder and CEO of Startward Consulting.

Maureen, a lot of your customers, as we discussed, are in DTC businesses selling direct-to-consumer. And a lot of DTC businesses that have grown on digital ads are looking for better ways to scale. Getting into wholesale is one of them, but that is scary because of the risk and the fact that you don’t get paid for a long time.

And there are a lot of hazards to scaling through wholesaling. Scaling in that pay-per-click environment though has become harder and harder. And sometimes it’s impossible, especially now, for products that don’t have enough margin or are expensive to ship. So how do you recommend DTC product makers plan to take the leap into other distribution channels If they’ve been in digital to this point?

Maureen: great. We talk about this because when it comes to physical products or product-based businesses, we always should be striving to be focusing on Omni channels. Right. So if you’ve had success in e-commerce and you are sort of apprehensive when it comes to wholesale or external retail agencies, I do challenge people to think about what if you created your own retail storefront, but if you had your own.

You know, so if you were focusing on getting an audience online, that is global. What if we focused on getting your audience in your local zone area and continue expanding? To answer your question, it depends on what kind of level of stress are you willing to tolerate? What is your ability when it comes to your business? Do you have the capacity to either add a new channel, like wholesale, and deal with the repercussions of wholesale and retail? Or do you also have the ability to create your very own retail storefront and manage that? But that’s, the omni channel presence that pretty much works in the e-commerce space.

If you think about a Venn diagram, it’s an e-commerce it’s retail, external retail, or your own retail storefront.

Laurier: Yes. I love that idea. And there are so many opportunities for people on a local basis for business owners to have a pop-up store, to test the waters, to get out there and sell direct on a level that is not high risk to them. Even, before selling direct online was a thing, Chip Wilson started Lululemon with the premise that he was going to sell direct.

And essentially as he put it, get both ends of the profit, the retail and the wholesale end altogether. And he built a global business by doing that. So I love that you recommend thinking like that whether your aspirations are Lululemon or just being able to own the entire business and not let someone else make as much money from your product as you will, just by being that connection between you and the consumer.

Maureen: Yeah. And so glad we’re talking about this because I personally feel like just because we have access to the online space, people have forgotten the fundamentals of business. Like, how were businesses being created before social media? It was door to door.

Think about Sarah Blakely. That’s how she started. Door to door, had her own store, and then exploded on social. So I challenge people to always go back to the basics. Think about the online space as the icing on the cake, but how else can you get exposure outside?

Laurier: When I got into product marketing decades ago, a smart mentor told me, the money is not in creating a product. It’s all in distribution. And that was before most product makers had the ability to take that part on, on their own and still that’s where there’s so much loss, when it comes to fulfillment to receiving the product from a manufacturer and then shipping it to customers, having the product shipped back and just doing all of that management. Taking your product and creating ways to sell it yourself is something that’s, not only a beautiful opportunity as far as being able to own all the profits, all the margin, but also to be able to connect with and to get to know your customer because we’re so distanced. What you learn in speaking to somebody face-to-face is so different from what you learn in comments that you have posted to your social media, from these people that you don’t even know.

There’s, so much of a disconnect that we have now.

Maureen: Yes. And that face-to-face communication. That introduction is real-time data that you can use to refine anything you do. So if you’re collecting data in real time, which, I’m a sucker for that, that’s something that,

Laurier: Absolutely. And because it’s so impossible to replicate, we can kind of simulate it to some extent. And often we have to, the only way to connect to consumers who are buying our product from the other side of the country or another part of the world is through social media and it’s immediate.

And there’s a lot of gain that we have from that, that we’ve never had before. But because it’s so easy, it’s often possible to not know our customer truly, and to not even have a human connection with… you can sell a product and not know a single person who buys your product from you.

And to me, that’s a great shame. That’s a source of pain and it’s a loss to product makers. So I think any way that you can come up with to truly know customers and to see your product benefit them because we create products to help people. It’s nice to actually get to know the people we’re helping and to see examples of it in real life.

Maureen: Now that we’re talking about this, I personally felt like with the changes that happened this year with digital marketing, with iOS and Facebook, the growth strategy for 2022 moving forward has to look very different. And my recommendation is we are going to have to think about referral marketing or micro influencers within our brand.

So that we can push the word of mouth and continue to grow our businesses without relying heavily on ad spend or Facebook platform. So the digital marketing space is changing. It’s getting a lot more complex, but I think the benefit of this looking forward is that it’s teaching us to go back to the organic way of building our businesses.

Laurier: Yes. A lot of brands, a lot of product makers are looking to affiliate marketing, to influencers of different levels. And some of those things work for brands better than others. You can really get lost in the weeds with some of those methods. It’s important to look at your values and look at how you really want to connect, to understand what those next steps are going to be, because are experiencing a great shift.

We are seeing that digital advertising platforms are no longer able to give us the data that they were before. Privacy has changed. People’s expectation of privacy online is changing. So that means that we have to respect our consumers more and we have to connect with them in new ways.

Maureen: Yes, absolutely. It goes back to community building, relationship marketing.

Laurier: Another thing I wanted to ask you about is supply chain issues. And that’s such a big thing for all of my clients right now. There hasn’t been a worst time probably since World War II for supply chain management. And it’s really made life stressful for the majority of product makers.

Even a lot of product makers who produce and sell locally. For example, even your neighborhood microbrewery or kombucha maker is struggling to get bottles and cans for their product. And when they do it might be at four times the cost. Overseas freight is multiples the normal cost, and ships wait weeks just to get into port.

Customers are often not sure who they believe and buying is hard on the customer side, but what advice do you have for managing customer expectations and supporting continuity for businesses that rely on imported products or imported components to their products?

Maureen: One of my core philosophies is leading with integrity. And one of my biggest recommendations would be to communicate that to your audience, right away.

If you’re noticing some gaps, if you’re noticing some delays, communicate that with your audience. Also communicate that with buyers. And I say that because I have some clients in retail and they still have to share that with their buyers because there’s a risk of the shelves not being stocked.

And once you communicate that, think about your assortment, what is it that you currently have that you could continue marketing and selling it to them. So they, feel like they’re still being taken care of. And I think about the supply chain issues, when I think about the flip side, think it’s given entrepreneurs in the physical space, a chance to really audit their product assortment.

And really look at what’s selling. What’s not selling, what is it that they can manage? What is it that they cannot manage from a capacity standpoint and really refine that process? Because at the end of the day, you want to have a business with products that, A, your customers love and want, and, B, that actually sell.

So if you’re finding yourself like your hero products are selling, or your non hero products are not selling, I think this is a time to market and sell those products, do that, but also for you to evaluate and notice that, hey, moving forward, I potentially don’t need this.

Laurier: You talk a lot about that, about not letting your non hero products, your baggage products, I guess, just cannibalize the work that you’re doing with the hero products, and yet product makers are told, you’ve got to increase your average sale value.

Because of that, I believe that these business owners are feeling, well, I’ve got to bring on more product. There’s that constant pressure to keep on expanding your product line, in order to be able to sell more. I think a lot of that is driven by these high ad costs for digital.

Maureen: Absolutely. A lot of that is driven by the ad costs and potentially the product combination. When you’re using ads to sell. What do I mean? So many of us would probably run ads to one single product. We really haven’t accounted for the pricing of that product, the cost acquiring that product.

And we don’t have a strategy to baking on the back end, where you can have a cash multiplier system that allows you to make up like three X or four X more than what it costed you.

Laurier: Tell me a little bit about that. What is a cash multiplier system?

Maureen: So a cash multiplier system? It’s what people call the lifetime value of a customer. Basically, it’s thinking beyond the first purchase that your customer makes. So if you run a paid ad, you sell them a product that costs $20. You want to make sure that you at least get like 5X of your return within the first 90 to 120 days.

Don’t forget your audience. So if they bought this, what can you sell them up as a complimentary product? What can you sell them up as a second complimentary product in 60 days? Like it’s really making sure that that mathematics on the back end is working so that you get more ROI eventually?

Laurier: Yes from that customer. And another thing that people often overlook when, when they’re selling online is a great value can come from making those customers absolutely delighted and turning those customers into evangelists. So they don’t just buy ones for themselves. That they’re driving revenue to you from sharing and telling like-minded people in their community about the product, about the brand. I can’t tell you how many times I’ve bought something, not because I saw a digital ad and clicked on it, but because somebody in my circle told me it’s a great thing to have. Most of the apps on my phone are there for that reason.

Maureen: Same thing. And I think when we’re recording this: The Remarkable. Literally one friend told me about The Remarkable digital notebook and I’m craving over it. Right. I’m like, I’m just about to bite just because somebody told me; I didn’t know anything about them.

Laurier: Yeah, and less effort and investment into just buying more ads and spending more on being in people’s face, and more on delighting customers that we already have that we’ve paid to acquire that we’ve delivered the product to a great cost.

What more can we do in those relationships with our customers so they can’t help, but talk about us as soon as they step away. They’re not just showing off the product, but they’re saying, this is the best company. Because if the product is good, that’s one thing.

But if I hear the brand is great and they support you. And they’re a hundred times better than any competitor at supporting you as a customer, why would I buy from any competitor?

Maureen: Yup. You said it and it goes back to referrals and taking care of your audience and being the voice of your customer. This is the work that we all have to do That’s it for this episode of Product: Knowledge and my conversation with Maureen Mwangi, founder of Startward Consulting. Find out more about Maureen and her Product Profit Lab and Big Brand Academy at startwardconsulting.com. You’ll find a link in the show notes. Be sure to also visit graphosproduct.com where you’ll find all the podcast episodes with transcripts and get insights from our blog. Reach out to us on Twitter @GraphosProduct or email us through the form at graphosproduct.com.

Laurier: Thanks for listening. I’m Laurier Mandin.