Saturating a market: The benefits of a regional go-to-market strategy

This CPG expert explains why emerging brands should focus on one sales territory at a time to achieve manageable growth. Learn more about this strategy.

Jennifer Barney, Principal

January 29, 2024

5 Min Read
ennifer Barney is a CPG industry expert with deep startup roots from founding and building her own almond butter brand.

The best way to build distribution is through market saturation. Market saturation means you are available in multiple store locations within one territory before moving on to another.

A regional strategy, as opposed to a national strategy where your products go out all over the place, is going to help you achieve market saturation. Going out nationally is a mistake I see all the time by brands starting out in brick-and-mortar retail. I know it’s hard to say no when a retailer wants your products, but if you are too spread out, it becomes very hard to control your success, hard to get that second purchase order because velocities were not as expected, and hard to know why. Did your placement/promos even execute?

There is a better way.

What saturating a market does for you:

  • Concentrates your in-store execution efforts for better results

  • Creates cost efficiencies in logistics

  • Consistently delivers data on where your products are being shelved

  • Builds ACV through consumer cross-shopping

How to saturate a market

The playbook here is to get into an anchor retailer, then sign on as many independent and smaller chain stores that also pull from the same warehouses as the anchor. You’ve saturated that market when you have reached your all commodity volume target consistently over a trended period.

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For example, let’s say you get into Raley’s. That will turn on a distributor like UNFI. Once you are in the UNFI warehouse, you’ll want to get into stores like Mollie Stone’s, Andronico’s, Gus’s and others that pull from that warehouse. When you do that, your merchandizing teams—which charge you a retainer per region no matter how many stores—can get around to all your locations. They will ensure your products are on shelf and properly tagged.

The additional benefit of having someone come around regularly is that store staff will start paying attention to your items, and then eventually your merchandizers can come around less frequently. How many times have you popped into a store you rarely or never visit, can’t find your items, and then approach the store assistant who shrugs, “I dunno, never heard of it.” Products easily lose placement when stores aren’t visited consistently.

Once you’ve saturated a market, your marketing activities will drive velocities everywhere you are sold, which is key. You benefit from efficiencies and higher ROI when doing demos, pop-ups, launch events, etc., because your products are available in multiple locations around town. More consumer touch points where your products have physical availability + more impressions per customer = more sales. It’s the quickest way to reach velocity goals.

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I cannot over-emphasize the importance of consumer cross-shopping. The myth that there is a natural consumer that only shops natural stores gets debunked when you talk to real people. Real people, including your target consumer, shop different kinds of stores. On average, people shop at 5.2 different retailers per month, according to Coupons in the News, so if you are in multiple stores in one region, your customers can find it no matter where they are shopping. You want your products available to them in multiple places.

Using ACV as a key performance indicator

The way to know you have saturated a market is through measuring your ACV percentage. You don’t need to buy data to approximate this percentage. ACV, a measurement of distribution, is stated as a percentage because it is the ratio of actual stores selling your product to total stores. (There is store weighting involved in the calculation, which we won’t get into here). Investors and retailers use ACV percentage as an indicator of brand breadth. You will use it as a measure of market saturation.  

ACV is time bound. When you state an ACV percentage, you are telling what percentage of stores have sold at least one unit in a period of time. I suggest using four weeks because you want to match up with velocity tracking—units per point of distribution—per week.

ACV can be measured by retailer or by region. You want to do both.

Simply, if you are authorized to sell in all the stores of a certain retailer, you will filter for that retailer, and if at least one unit sold in all of those stores in the last four weeks, then theoretically your ACV percentage will be between 95% and 99%, as it never actually shows 100%.

Then, if you are authorized to sell in 100 stores in the entire region, and the region has 1,000 stores (again, simplifying), then your maximum ACV percentage could only be 10%.

What is a good ACV percentage?

Ideally you want to be available and turning in all the stores you are authorized in. Barring an exception, like some stores that are part of a chain are very hard to get to and for efficiencies sake you’ve strategically allowed your merchandizers to skip them, I like to see that you are performing at greater than 90%.

For market saturation, I like to see that you are at 10% ACV in a region before moving on to conquer a new region.

Remember, just because you have a high ACV doesn’t mean you are a top seller, it just means you are selling, which means your product is available.

Now, what do you do if you don’t purchase this data?

You can approximate ACV by running distributor reports per retailer, at the store level, to see if your products are being ordered consistently. A couple caveats here: This is not a perfect method. Cases can be piling up in the back of a store skewing the numbers—but if you are doing store checks and you visibly see placement, you can be more confident that the store is ordering because product is moving through the register. My recommendation here is to use trended data over several periods to smooth out the ordering spikes and lulls that happen due to promotional buying. I would look at three consecutive four-week periods of data at a minimum.

Control your success through a regional go-to-market strategy. Achieving market saturation through regional rollouts will ensure you are building a sustainable, high velocity business.

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About the Author(s)

Jennifer Barney

Principal, 3rd and Broadway

Jennifer Barney is a CPG industry expert with deep startup roots from founding and building her own almond butter brand, Barney Butter. Jennifer melds classical brand marketing training with practical tools for startups so that small brands can get off the ground and be investor-ready.

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