The purpose of this article is to present the basic steps involved in launching a successful retail product. This is not a detailed step-by-step list by any means. The main purpose is to list the many tasks and questions that need to be asked and addressed when developing a product for the retail market, and to offer a few basic cautions and tips.
This discussion on how to launch a successful retail product will be presented as a series four articles and is the collaborative work of Nancy Peterson, President, Emerging Brands Marketing; Bob LaFreniere, Food Safety Lead Auditor, TUV SUD America Inc and Dale Casto, President, Wright Design Inc.
Key Step #9: Marketing Plan
The ninth key step is the preparation of a detailed marketing plan that addresses both the trade and the consumer, including your pricing strategy. You also need to address exactly how you will go to market.
Elements of the Plan
- Compare the competition
- Margin goals
- Line pricing
Think in advance about what pricing you want in each channel. Since every customer will have a different margin structure, keep your most important customer in mind when you plan your pricing. Look around at your competition and decide whether you want to be head to head with them or not. Is there a price barrier that consumers will not cross? You also need to consider YOUR margin requirements when you set your pricing, as well as those of the retailer and any distributor in between. If you are launching more than one variety you will probably want to line price your products – this will make it easier to promote them. Line pricing is when you average the costs of all products and offer an average “blended” price to the trade. And lastly be sure to build in some money for trade promotions.
Retail – Trade Promotion
- Free cases/slotting
- Price reductions/displays
- Trade shows
The trade marketing plan should first address what it will cost to put your product on shelf. Many conventional supermarket chains charge what is called slotting – either a certain number of free cases per store or an actual dollar amount. For a national launch this could cost something in the range of $1 to $1.5 MILLION dollars per SKU. Sometimes this amount can be negotiated, but it is likely to be the single most expensive element of the trade marketing plan. Now, IF you are new to the trade and IF you have a truly exceptional product, some retailers MIGHT make an exception. But don’t count on it.
If feasible you’ll also want to consider demos (in-store product demonstrations).
Depending on how well they are executed this can be a great way to get trial of your product. Your trade plan should include temporary price reductions, or TPR’s, and displays.
And finally, plan ahead for a trade show exhibit. Many companies target the major show in their industry to launch their product.
- Public Relations
- Web site
- Social media
- Traditional media
The consumer part of your plan addresses what we call the “pull” aspect of marketing. How are you going to create consumer awareness and demand for your product? How will you bring them back to buy it again?
You will want to consider PR – this can often be a very cost effective way to build awareness, particularly if your product is especially unique.
If you don’t already have a web site you will certainly need one, both for consumers and the trade. They are very different audiences so be sure to consider both when you create your site. A web site is an important marketing tool because it shows that you have a real, credible business.
Social media is another very effective tool. Small companies with small consumer marketing budgets use Facebook, Twitter, and YouTube very effectively to promote their products and brand. But it can work against you too so beware and make sure to track what people are saying about you in these forums.
You can plan sampling at locations outside of the store, like malls or farmers markets. And if you have the resources to do so you can plan traditional advertising and other promotions like Sunday paper coupons (which are known in the trade as FSIs or Free Standing Inserts).
This describes elements of a very basic marketing plan – obviously there is far more to be said on this topic.
How/Who Will Sell
- Hired sales support/direct sales force
- Broker sales force
- Brand management company
Depending on how new your products are to the marketplace, you will need to think about your sales strategy – how will you go to market? Will you hire your own sales force? Will you sell your products through a distributor – in the natural channel this is almost a given. Even if you have your own sales people you may want to consider a broker to get broad coverage across the country. The biggest advantage of hiring brokers is that you can leverage their longtime relationships with key customers in their market. They also can help at retail by actually going into stores to make sure your product is on shelf with the correct price and that any price reductions are properly reflected. They check to see if you’re getting the displays you’re paying for, and sometimes actually set them up as well.
One other option for a company new to the market is to hire a brand management company. These companies effectively serve as your sales force and handle all aspects of the Go-To-Market execution.
- Sales targets
- Sales materials & meetings
- Start ship
- Distribution build
It is important to plan your roll-out. Will this be a regional or a national launch? Next, set targets for what you expect to sell. Then prepare the materials you will use for your customers. Set up sales meetings with your sales force to introduce the products to them so they will be well informed in front of the customer. Samples are a very important part of any sales presentation and typically you will plan ahead for these when you are doing your production testing. Set dates not only for start sell but also for start ship. And finally plan out what you anticipate the distribution build will be – in other words, a timetable for when your products will be on shelf.
4 Step Sales Process
- Buyer meetings
- On shelf
Keep in mind that there are 4 distinct steps in the sales process that need to happen before your products can be sold in the store.
First you make the sales calls and meet with your buyers. Second the buyer actually accepts your product and authorizes its purchase. Third the customer ORDERS the product. And fourth – your product actually gets on shelf. Don’t assume that any of these steps will automatically happen. Each requires follow-up from your sales department or broker.
Key Step #10 Assessment
- Sales calls
- On shelf distribution
- Correct placement
- Correct retail price
- Market performance
The tenth and final step in the process is to measure the results of the marketing effort. Many companies skip this step and they are really missing a key piece of the launch.
It is very important to set targets and measure against whatever the KPI (key performance indicators) are for your business. Typically this would be things like sales calls, customer authorizations, % distribution, shelf placement, and retail pricing. And then of course there’s market performance such as dollars or units sold, turns per point of distribution and share of category.
Post Launch Assessment
Review the entire process. And don’t forget to assess the product development process itself. Assess what worked and what didn’t.
Here is a quick review of the 10 key steps to launching
a successful retail product.
Step #1 Consumer Strategy
Determine what makes your product unique and clearly articulate your Unique Selling Proposition.
Step #2 Target Consumer
Identify the demographics and psychographics of your target consumer.
Step #3 Trade Channel Considerations
Think about your trade buyers – which channels you develop and your most effective approach to sell those buyers.
Step #4 Organizational Priorities
Make sure that your project is in line with company priorities and assemble the right team.
Step #5 Product Development
Develop a great product that makes a distinctive impact in its category.
Step #6 Consumer/Operational Testing
Test and evaluate both operationally and with the consumer.
Step #7 Regulatory/Labeling
Ensure that you understand and comply with all regulatory and food safety issues relevant to your products.
Step #8 Packaging Design
Allow ample time for packaging design and, to do it right, hire a professional.
Step #9 Marketing Plan
Prepare a marketing plan that includes a consumer and trade plan, a pricing plan and a Go-To-Market strategy.
Step #10 Assessment
Develop and measure your results and assess the process.
Nancy Peterson is President of Emerging Brands Marketing, a marketing services firm that helps food manufacturers and particularly seafood companies, grow revenue and market share through highly successful product launches. She draws upon 21 years of experience at Gorton’s Seafoods where she launched the Grilled Fillets product line which grew to 20% of Gorton’s revenue and took them to the #1 national brand share. She also developed warehouse club products for Gorton’s, managed the Canadian market, and started a new mail order business selling gourmet fresh seafood via the web and catalog.
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Nutrition Labeling http://www.fda.gov/food/labelingnutrition/labelclaims/ucm111447.htm
Food Allergen Labeling Consumer Protection Act (FALCPA) http://www.fda.gov/food/labelingnutrition/FoodAllergensLabeling/GuidanceComplianceRegulatoryInformation/ucm106187.htm
Net Weight Requirements – Maximum Allowable Variance (MAV) http://ts.nist.gov/weightsandmeasures/h1334-05.cfm
US Department of Agriculture (USDA) Country of Origin Labeling (COOL) http://www.ams.usda.gov/AMSv1.0/cool
Good Manufacturing Practices (GMP’s) http://www.accessdata.fda.gov/scripts/cdrh/cfdocs/cfcfr/CFRSearch.cfm?CFRPart=110&showFR=1
Seafood Hazard Analysis and Critical Control Points http://www.fda.gov/food/foodsafety/hazardanalysiscriticalcontrolpointshaccp/seafoodhaccp/default.htm
Bioterrorism Act of 2002 http://www.fda.gov/Food/FoodDefense/Bioterrorism/ucm083064.htm#slide