A question asked all the time is “What’s the right channel for my brand?” Founders wonder if they should go to brick-and-mortar retail or focus on direct-to-consumer (DTC). My answer is as clear as mud: It depends. For some brands, it makes perfect sense to launch into retail. For instance, if it is a better-for-you analog with a low-educational threshold.
An example of this would be one of our portfolio brands, The Good Crisp Company. As a canister chip with an understandable brand promise built right into its name, putting it on the grocery shelf and offering consumers a much-needed alternative was a no-brainer.
Other brands are better suited to build traction DTC. Dr. Cowan’s Garden is another one of our brands. As producer of high-quality biodynamically grown vegetable powders it leverages the direct relationship it establishes with the consumer to educate them on how best to increase the biodiversity of their diets.
For most brands, especially those that are solving lifestyle problems or are filling unmet needs, I like a channel strategy that builds concentric circles around the targeted consumer. First, I will explain what I mean by a concentric circle strategy. Then I will offer the reason why, for most brands, I feel it is the best approach to building lasting consumer traction.
The strategy is straightforward and is narrow and deep. I recommend focusing on 1-3 core markets. It is an omnichannel approach to meeting the consumer where they live, work and shop. It starts with empathy requiring an understanding of where the problem is most acute or need most defined. A good illustration would be Native State Foods who recently pivoted their offering to ancient superfood breakfast bites. Their consumers live in yoga studios, gyms, running shops, airports and more. It recognized that having the product available at corporate campuses and micromarkets, places where its shoppers work. Finally, ensuring that it is available on the shelf at their neighborhood stores and on the e-commerce platforms they visit, completes the last of the concentric circles. Thus, the brand becomes somewhat ubiquitous within the consumers’ field of view.
As mentioned above, I do believe this is very powerful and here are a few reasons why:
Brick-and mortar-retail outlets are tough and expensive places to drive trial. You are competing for attention with 35,000+ other products and for a consumer who is very habitual in the way they shop. D2C is also tough. First of all, it’s hard to stand out among the sea of products. Plus, many first purchases made are done so on impulse, and most consumers don’t want to make too large a commitment without trying an item.
Since a concentric circle strategy is narrow and deep, it slows the burn rate. You’re not paying for a lot of slotting or promotions. You are not managing a sophisticated logistics network and don’t have national brokerage commissions or retainers. You can learn a lot about your product and its consumers in a less expensive manner.
Social media impact
Geofencing or geotargeting makes your digital efforts more effective. You become a louder voice to a smaller audience. It brings forward the opportunity to leverage microinfluencers costing you less and allows you to be bolder and more creative in your approach.
When your brand is available where people live, work and shop you help your consumers tell your story. Social proof is one of the most potent purchasing motivators. When friends see friends using a product frequently, they want to try it too.
Let’s talk about investors for a moment. Two critical variables that most investors consider are validated assumptions and proof of consumer traction. A concentric circle strategy allows you to do both faster.
In my experience, this approach is highly effective, makes good sense, but, is admittedly hard to execute. As founders, you already know that what is right is rarely easy. If I can be of any assistance or provide any greater depth of information, please don’t hesitate to reach out.
Elliot Begoun is the founder of The Intertwine Group, a practice focused on helping emerging food and beverage brands grow.