The importance of stereotyping in e-commerce

Stereotyping: An often unfair and untrue belief that many people have about all people or things with a particular characteristic.

I completely agree that in most areas of life, stereotyping is harmful, and with the advance of technology, social media, and the power of virality, it can be corruptive. However, the power of stereotyping can also be the most valuable intangible asset for your business. While today’s newsletter will be more tailored to first-time founders, this is because I believe branding is often overlooked and undervalued by new business owners. I’ll also highlight three companies I believe are building a stereotype in their space. But what are some key factors limiting founders from building brands rather than just products?

1. Harder to execute: It’s definitely a longer process of research, audience analysis, user experience and especially design (often expensive) to brand your business powerfully.
2. Low barriers of entry: It’s never been easier to build a business yet it’s never been harder to build a profitable one. Founders are easily swayed by building a brand because there’s an “opportunity” in the space, or an easy barrier for entry, leading them to bump branding down the priority list.
3. Impatience: This ties into point two, but it’s true that building a brand organically, without acquiring users through paid channels takes a lot of time, energy and if even if your product retention is exceptional, it’s exhausting. Raising money for a quick exit, in a world of inflated valuations seems the default method for most in today’s e-commerce world.

Fantastic Five

The Need the Belong, by Baumeister, R. F., & Leary, M. R. (1995).

“A great deal of human behavior, emotion, and thought is influenced by a pervasive drive to form and maintain lasting, positive, and significant interpersonal relationships.”

Below are some of my favorite examples of brands that have built powerful stereotypes, tapping into the biological nature of select audiences to self-categorize within their chosen “in-groups.”

1. Harley-Davidson (Motorcycles):

Stereotype: The Harley-Davidson rider is often seen as a rebellious, freedom-loving individual. Typically male, with a big beard, sunglasses, rock n’ roll blasting and leather attire.

1. Red Bull (Energy Drink):

Stereotype: A personal favorite and incredible case study for the ages. Red Bull consumers are often seen as adventurous, energetic, and thrill-seeking. The brand has cultivated an image around extreme sports, high-energy activities, and pushing physical limits. The fact that founder Dietrich Mateschitz has built a billion dollar empire, around a product that’s terrible for your body is truly exceptional.

1. Tesla (Automotive):

Stereotype: Typically viewed as forward-thinking, environmentally conscious, and tech-savvy, the stereotype of “Tesla people” are not only concerned with luxury and performance but also with sustainability and innovation.

1. Patagonia (Outdoor Apparel):

Stereotype: Patagonia customers are often seen as eco-conscious, socially responsible, and adventurous. However, Patagonia’s stereotype has also changed, and some folks associate the brand with higher earning “tech” or “finance” focused individuals. The change in stereotyping is also a very important factor we’ll discuss.

1. Starbucks (Coffee)

Stereotype: Starbucks customers are often viewed as urban, trendy, and busy professionals or students. Or the more colloquial version: “basic white girl” coffee. Former CEO Howard Schultz, pushed for a change, and a new corporate branding initiative that totally changed the company.

Stereotyping vs price sensitivity

The most powerful brands in the world not only draw users in through exceptional design but also demonstrate remarkable resilience to price changes.

Warren Buffett once said, “The single most important decision in evaluating a business is pricing power. If you've got the power to raise prices without losing business to a competitor, you've got a very good business. And if you have to have a prayer session before raising the price by 10 percent, then you've got a terrible business.”

Pioneering examples include Apple, Tiffany, Hermès, Microsoft, and Coca-Cola (a few of which are Berkshire Hathaway holdings). While pricing is just one factor in a brand’s long-term success, it plays a crucial role in defining target markets by segmenting audiences into distinct personas. Stereotypes evolve, and pricing is one method to test a brand’s resilience.

There are also brands and sectors where the strength lies in the intangible value of affordability, with Walmart being a prime example. Action Supermarkets, a 3i Group holding, is an affordable supermarket chain experiencing astronomical growth. Similar to its American counterpart, these brands thrive on price being their primary USP rather than quality.

My Company Watchlist. Who’s doing it best?

Three companies that are building a powerful persona

1. On Running

What has On Running actually invented? The answer is: nothing. Just like Apple didn’t invent the computer or Tiffany the ring, On has built a “bougie” persona that appeals to high-end, affluent individuals with an interest in high performance. Essentially, it’s an upmarket Reebok (although Reebok is also making a comeback).

Swiss-built, On Running is now a $14 billion business, with a 66% increase in its share price this year alone. Backed by Roger Federer, the brand boasts ambassadors including the newest hot shots in sports, as well as Hollywood A-listers like Zendaya. On is not only growing at an immense rate but is also profitable (shock!). Meanwhile, Nike and Lululemon shares have tumbled YTD as there’s increasing investor sentiment that they’re losing market share.

Visit On Running

1. Brompton Bikes

Founded in 1976 by Andrew Ritchie in the UK, these foldable bikes have pioneered the concept of biking to work, with their iconic branding and color options making them highly recognizable on the streets of London.

Brompton has developed such a strong user persona in the commuter space that people now ask friends who cycle to work, “Do you have a Brompton?” Similar to how people say “Why don’t you Google it?” when searching for something, Brompton bikes are the quintessential commuter stereotype. Brompton also hosts the Brompton Bike Race through central London every year, where thousands of commuter cyclists (predominantly male) race around St. James’s Park in their suits and ties.

Visit Brompton

1. JUNG+ Longevity

JUNG+ is a science-backed longevity supplement brand that challenges the concept of aging by claiming it offers “Longevity for the billions, not the billionaires.” Founded by scientist and academic Simon Sakhai at Oxford University (now based in New York), JUNG+ has built a strong millennial consumer base and an immensely sleek, upmarket image. Simon envisions a world where longevity products could replace your morning coffee, anticipating a shift in user psychology as the field of longevity advances both in the lab and in consumer markets.

While JUNG+ products are priced on the premium side, they have organically acquired a robust and loyal customer base, with a strong consumer retention rate. JUNG+ emphasizes lifetime value (LTV) in its messaging and education, focusing on maintaining key vitals like glucose levels, skin health, and sleep to lead a longer, higher-quality life. JUNG+ has also recently announced a partnership with Equinox.

Visit JUNG+

The design inspiration behind Apple products: Dieter Rams

Throughout my tenure at Igloo Media, I’ve spoken to hundreds of founders from all walks of life who have built brands across a wide spectrum of success. Since starting DC, some of my followers have reached out and asked, “What businesses are you seeing are the most successful?” The truth is, this is almost irrelevant when it comes to building a brand for the future. If you spend enough time and conduct robust research to identify a gap in customer experience within a sector or niche, I suggest focusing on how you can change that experience rather than reinventing the product—especially as a first-time founder.

You've got to start with the customer experience and work backwards to the technology. You can't start with the technology and try to figure out where you are going to sell it - Steve Jobs.