In 2001, Apple launched the iPod. They soon faced serious competition: the Creative Zen had more storage, and the iRiver — not the name of an early Apple product, but a South Korean electronics company — had a longer battery life. Nevertheless, Apple sold 450 million iPods in the next decade, because they reimagined the identity of their customers. Zen buyers may pride themselves in being able to download a thousand songs, but Apple buyers had taste.
This idea of using identity-market fit to invent a customer base in an existing market goes against the philosophy of many founders looking to create a disruptive market. Today, I wanted to focus on three companies: Nutribullet, Peloton, and Gymshark, on how to reimagine innovation.
Nutribullet: Name your identity
By the time Nutribullet launched itself in 2012 via an infomercial, Vitamix had just finished celebrating its 90th anniversary. The former did not invent a new way to blend fruits or extract nutrients, and, in fact, Vitamix was the better product in most aspects: a sharper blade, stronger motor, and longer lifespan.
First, Nutribullet didn’t position itself like Vitamix. Whereas Vitamix costs $400 - $600, Nutribullet was able to target a different consumer base by pricing it at $99 (nowadays, one could find a Nutribullet ‘Nutrition Extractor’ for $50 - $80). In the first year,
Nutribullet crossed $100 M in revenue, and by the first 5 years, it reached almost $500 M.
The wisdom of Nutribullet lies in its product names. While Vitamix has arguably the best blender on the market, what they didn’t have is the “nutritional extractor,” something that customers could use as proof that they’re taking their health seriously (to others, but also to themselves).
Business Psychology research consistently demonstrates that people are willing to pay a premium to reinforce a self-concept over a superior function or feature. Every marketing Nutribullet launched takes the job of closing the cognitive dissonance of their customers very seriously: even the infomercials showed active individuals making green drinks as part of their morning routine. Buyers were convinced of a better version of themselves achieved through a single purchase.
Peloton: Your community is your product
How do you sell a $1,995 dollar bike with a $39/month subscription when a quality bike costs $300, and free workout videos are abundant?
Simple. You build a community.
The leaderboard was a real-time ranking among thousands of people taking the same class at the same time. Working out was transformed from a private session that required lots of discipline to a social performance and competition. Working out became a way to earn social status, especially with the introduction of celebrity instructors like Robin Arzón and Cody Rigsby, who had a following inside the platform. A sense of belonging is architected through the ability to join these celebrities and compete for an even higher score than them with friends and strangers met on the platform.
The bike was just the hardware, and the community, the implication that being a part of meant you were an elite group of individuals who took fitness seriously, even during the pandemic, was the product.
Gymshark: Find the space no one else has claimed
If you’re starting a business from your parents’ garage and have no money for celebrity collaborations or commercial branding, you’ll have to get creative. Gymshark, for example, invented its own way of marketing.
Ben Francis found himself in a predicament at 19, building in his parents’ garage in Birmingham. The problem: Under Armour brought in $1.8 Billion in annual revenue, Lululemon dominated premium activewear, and Nike exists. Simply put, it did not seem like there was space in the market for a gym clothing brand like his to succeed.
Francis saw an opening through YouTube. He spent months studying fitness channels, because their audience was the same as his target consumers. The people who identified as part of the fanbase were active gym-goers who cared about training and the discipline of showing up every day. Whereas Nike and Under Armour were for athletes and Lululemon was created for yoga-goers, no one specifically claimed the gym-goers. Or the content creators who were influential in this specific world.
He soon began to send free products to these creators without asking for anything in return. He watched their content for weeks before reaching out, making sure that the audience of the influencer matched the customer he had in mind.
Within its first decade, Gymshark was in over 130 countries, making Francis a billionaire.
His invention of the influencer strategy wasn’t planned. He just found people who already had a tie with the people he wanted to sell to. More importantly, he found people his customers wanted to be: much like Nutribullet and Peloton, Gymshark sold its customers on becoming the dream version of themselves through the product.
Conclusion
The exercise is to write down what your product does, and what it says about the person who buys it. If the two sentences resemble each other, you’re competing on features. If the latter is more interesting than the first, your real product is the identity you sell to customers. This isn’t to say that product-market fit is inferior to identity-market fit, only that the latter produces another type of innovation that avoids direct competition in a different way.
Keen Insights:
- Strength of identity: An identity-product model works best if the identity is stable. While it avoids competition, the consumer base falls apart if the identity does. Peloton, whose identity was reliant on the pandemic, saw a market cap of $50B go to under $3B in just two years.
- Descriptive Vs. Aspirational: Strong identity products are built on the types of people that the customer wants to become, rather than who they already are. An identity-product brand could only work if it convinces the customer that their dream identity is achievable through their product.
- Values over Aesthetics: Some companies have found success by indirectly tying a value that does not have to do with the product itself. Patagonia, for example, attributes a large part of its success to its dedication to the environment. These values become part of the company’s identity, as well. When customers buy the Patagonia vest, they feel as if they’re indirectly helping the environment.
