What is a go-to-market strategy? Think of it as the GPS of your natural products brand. It’s essentially your roadmap for bringing a new brand or product to market, outlining every step you will take—and perhaps more importantly, the steps you won’t take—along the way. In that sense, a solid go-to-market plan can protect you from making moves that are off-strategy and not in the best interest of your brand.
Developing a go-to-market strategy takes time, intention and careful consideration of a wide range of details. Busy entrepreneurs may think their energy would be best directed elsewhere, but this exercise is definitely worth the investment. In fact, when honed well and followed closely, this roadmap can save you a lot of time and money in the long run.
A strong go-to-market strategy involves seven essential components. Let’s dig in.
1. Know your target consumer
It is imperative to truly understand the consumers most likely to buy your brand. Demographic considerations such as sex, age, income, children and education are important, but these are only the basics.
Going deeper, does your target consumer have a set of values that your brand exemplifies? For instance, are they environmentally conscious and may therefore appreciate your use of sustainable packaging or organic ingredients? Are they interested in human rights and uplifting disadvantaged communities, which are key tenets of your mission and brand proposition?
Retail buyers typically ask new brands to describe their target consumer, so be sure you can do so in detail.
2. Identify distribution goals
Once you have a firm grasp of who your consumer is, figure out the type of retailer you want to approach for distribution. If you have a premium natural or organic product, then everyday-low-price retailers are likely not the best places to start. Instead, pursue stores that have shopper profiles that align with your target consumer.
Keep geography in mind too. It’s often best to start locally, as many retailers—and their shoppers—like to support emerging brands from their own community or region.
3. Craft a plan to create demand
You know your brand or product is great, but how can you make sure that consumers know it exists and want to buy it? Make a plan to generate demand, which involves two key pieces.
First, how are you going to create consumer awareness and trial? Second, most retailers expect brands to have a comprehensive plan for driving sales on their shelves, so how will you support them in this way? Understand the sales velocities they require you to meet to remain in distribution, and then map out how you’ll achieve—and hopefully exceed—them.
4. Dial in pricing
As a new brand or product, it is crucial to get your price correct at launch, as missing the mark and trying to adjust it later can prove challenging. For this reason, it’s vital to spend sufficient time making sure you comprehend all of the factors that dictate pricing.
First, get a thorough understanding of your costs—ingredients, packaging, labor, etc. Then incorporate a margin that allows you to both cover your promotional expenses and achieve a targeted level of profitability. Also factor in any distributor markups, as well as the margin requirements of your retailer.
Finally, understand what your price would be at the shelf—what consumers will ultimately be asked to pay for your product—and know how that compares to competitors’ prices. As a small, emerging or challenger brand, it’s usually wise to not be the most expensive choice in the set.
5. Work out specs and logistics
Retailers are never thrilled when a product doesn’t sell—but they also dislike when products aren’t easily shippable or aren’t delivered consistently in good shape.
To avoid these pitfalls, determine product and shipping specs such as shelf life, weights, dimensions and case pack configurations. Does your product have special handling requirements, such as the need for temperature-controlled storage or refrigerated trucking? Make sure those aspects are factored in as well.
Also establish lead times for both manufacturing and shipping, and enlist backup suppliers and shipping partners that you can tap in a pinch.
6. Determine trade spend
A brand’s commitment to retailers is often referred to as trade spend (or trade rate) and is generally planned as a percentage of sales. For example, if a retailer has an expected trade rate of 10%, then for every $1,000 in sales, they’ll expect you to spend $100 back with them.
Most stores offer brands a palette of trade spend programs, such as temporary price reductions, displays, digital campaigns, scan promotions or in-store events. Each program has an associated price. Some will be out of reach of smaller brands due to the cost or expected volume needed to qualify.
To determine the best course, work with the retail buyer (or your broker) to build a plan based on a proxy brand. Then once the plan is in motion, track everything so you know what does and does not work. Armed with this data, you’ll be able to speak factually about your brand’s performance when you meet with the retailer for a review.
7. Know the cost of failure
Why is cost of failure part of a go-to-market strategy? Simple: Your plan might not work out as hoped.
In fact, if your brand fails to perform, or if shipping woes result in too many out-of-stocks, there is a chance a retailer could drop you. If such issues persist across multiple retail accounts, you may decide it’s best to wind down operations—and there are costs associated with that, from admin fees to the impact of markdowns.
Hopefully, your brand won’t fail and you won’t need to worry about any of this. But it’s important to be prepared should things not work out.
Got more questions about crafting a go-to-market strategy? Reach out to us on our Road 2 Retail page on LinkedIn.
Tracey Priest is an 20+ year veteran of the consumer package goods industry with experience in both sales and marketing. Most recently, he has owned a marketing company that works with some of the largest CPG companies such as Johnson & Johnson and Del Monte. Bruce Montgomery, a managing partner at RBJ Growth Ventures, has worked closely with investment banks, private equity firms and other professional services providers on mergers and acquisition activities.
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