Companies and start-ups are always keen to place their products with large retailers in the hope of increasing sales and awareness. However, convincing retailers of your product is a challenge. Companies have to be active on several channels and make their product meaningful.
Establishing a new product on the market is a tough test for companies. Especially in today's retail environment and shopping behavior influenced by influencers, companies have to be active on various channels.
The online presence is important for the perception of a new product, but also for positioning at the POS.
In the past, it was all about getting the new product on the retailer's shelves. Today, companies have to pursue a multichannel strategy in order to establish a new product.
Manufacturers, sales people, retailers and buyers usually give the same answer: there is no one-size-fits-all solution. If you want to successfully place a product in a digitalized world, you no longer just need qualified sales representatives and clever marketing, but also a strong presence on social media and fans of the product. And the right momentum.
The path of a new product into the supermarket is rocky and exposed to a highly competitive market. Especially in Switzerland, where the two retail companies Coop and Migros are dominant.
Listing costs up to 500,000 francs in Switzerland
Swiss television has calculated that the introduction of a new product in all Coop stores in Switzerland can cost up to CHF 250,000. And we are only talking about one of the two major retailers. The so-called listing fees in Switzerland are at least twice as high as in Germany, for example. This is also due to the fact that there are fewer supermarket chains and therefore less competition.
Time and again, we read that Coop or Migros are removing branded products from their ranges because retailers are not meeting their conditions. "It costs half a million francs to import a product throughout Switzerland," says the industry association Promarca.
However, we are only talking about the listing fees once. Together with product development costs and marketing measures, fast-moving consumer goods (FMCG), i.e. packaged consumer goods that are sold quickly and at relatively low cost, are even more expensive. Depending on the approach and market player, they can amount to up to CHF 10 million.
For the introduction of a new product and the listing in the supermarket, the awareness of the product is important, but also how well it can be placed. Before you even start, however, you should ask yourself what kind of product you want to offer and why it is so special and unique to be included by the major retailers. Only then can you convince retailers to give the new product a place on their shelves or online platform.
How well known is the product already?
A market launch strategy can be used to decide whether the introduction of a new product or the development of new markets has priority. It should never be forgotten: The introduction of a new product is complex and costly. The following checklist can help.
- What kind of product do I want to sell and what purpose does it serve?
- Which target group do I want to address?
- Why is the product better than existing products?
- Where should the product be sold and what is the demand and supply in this segment?
- How can I reach my target group?
The market launch strategy can take various forms and should first focus on the market itself. Therefore, the first question to be asked is in which market the new product is to be launched.
And whether the demand for this product can be tested online for the first time with the potential target group before plunging into high costs to advertise the product or apply for a listing.
Eight important points for the attractive positioning of the new product
We present eight measures on how to convince retailers of a new product in a contemporary way:
- Sell in through awareness
A company can consider itself lucky if it can successfully launch a product with a so-called pull strategy: The product is already so well known before the listing that everyone is talking about it and it is already in demand. This attracts retailers.
This strategy is particularly suitable for start-ups that do not have a large marketing budget and push their brand awareness primarily through influencers and pop-up events. Or launch their own online store, where the product already has attractive sales figures and the wholesaler then becomes aware of the company.
Example Oatly
Many people are now familiar with Oatly oat milk. That wasn't always the case. When the start-up from Sweden wanted to gain a foothold in the USA, oat milk was still virtually unheard of among American consumers. However, the start-up did not have the necessary capital to promote oat milk as an alternative through traditional marketing channels.
Instead, Oatly aimed its product launch in the States directly at local coffee shops. They brought the product to urban coffee shops in cities on the east and west coasts, with the main aim of convincing local consumers of its taste. The strategy worked, and a coffee house that offered dairy-free alternatives in its range almost only had an authentic coolness factor when it poured Oatley into its cafe latte.
This success and a tenfold increase in sales in the USA eventually caught the attention of the major supermarket chains, which listed the product on their shelves. Oatley followed a similar path in Switzerland. First known in cafés in the larger cities, Coop then added the Swedish milk alternative to its range.
- Unique value proposition
With Uber, you can order a cab with one click and at half price, or enjoy a hip latte with Oatly without compromising animal welfare. All of these products offer customers a unique service that they have not been able to find anywhere else.
It is a feature, also known as "product-market fit", that measures demand and taps right into it. It gives consumers a feeling that they no longer want to do without the product. Or as Marc Andreesen, the inventor of the Internet, once put it. The harmony between product and market is the only thing that counts. The burn rate should be as low as possible while iterating the product/market fit.
- Clear target group
To launch a new product, you need to know your target group precisely. The main question is: What "problem" can I solve with my product? What deficiency can the product compensate for? And how much is a customer willing to pay for it? To find this out, it is worth defining the target market and creating a customer profile. The target group is particularly active among retailers.
The main question now is how a new product can reach consumers in this heterogeneous consumer group who have not yet been addressed. Let's take the example of Oatly again: With the listing of oat milk by Coop, the retailer was able to address a target group that previously had to buy their product in specialty stores.
- How is the competition organized?
Before you even go to the trouble of introducing a new product, you should know your competitors and their offerings in detail and be clear about whether there is a demand for it. Otherwise, all the effort will be in vain. The following questions can be helpful here:
- Are there already similar products on the market?
- Which target groups already consume competitor products in which market?
- What distinguishes my product from the competition? Does it have a unique selling point?
- Is there any demand at all or is it just a me-too product?
Customers can also be scanned beforehand by asking them about the probability of substitution:
- How likely is it that you would prefer the new product to your last purchase
Now the information on the latter products can be compared and combined with the new product that you want to launch. This allows you to show which category the new product fits into at the retailer and classify it there.
- What is the core message that is convincing?
A core message is essential not only for convincing future consumers, but also for retailers. What message do I want to make about the product and how does it fit the respective target group? The focus should be on explaining the added value of the product and how it can solve the customer's problems.
Example umami
The urban farming start-up Umami from Zurich is another example of how a young company with a unique idea was listed at Coop: Umami offers so-called "microgreens" that can be used to refine salads or other dishes.
First popular with the food service industry, the start-up made it into Coop stores in 2019. The microgreens are harvested shortly before consumption and therefore contain valuable vitamins. The brand message here is clear and also forward-looking with the urban farming approach. Coop benefits from this "fresh image", while the startup benefits from the retailer's large distribution network.
- The consumer embarks on a journey
Today's customer goes on a journey when buying a new product. Content is the main tool for this. When do I offer the future consumer which content on which channels and at what time? They are accompanied from the identification of the product through to the purchase decision:
- Customers have a problem or a need and are looking for a product to solve it. The most important thing is to attract the customer's attention. Today, this is mainly done via social media, SEO, Google Ads, but also product reviews.
- The customer discovers the product and compares it with others. The core message and the sexiness of the brand are crucial here.
- The customer decides on the product but has not yet purchased it. At this point, you can offer discounts or other added value.
- How do I sell the new product?
Now comes the crucial phase of introducing the new product to retailers. How do I get it to the buyers and which channel is suitable? What is my sales strategy? Does it really have to be a physical store or is it perhaps even better and more cost-effective to sell the product online? There are three key elements to look out for.
- Nowadays, purchases are usually only made on one's own initiative in online retail. The customer discovers a product online via an online store, SEO or social media and banner advertising. This means that a company does not have to operate any sales channels, but must invest in marketing to make the product known.
- If a company still relies more on the classic sales method, it needs a team. It gets in touch with potential customers and presents the product to them. However, social media far outweighs the potential contacts, especially when it comes to consumer goods. Field sales would also be possible, especially if the product is intended for wholesale.
- Another option, in addition to online marketplaces such as Amazon or Zalando, is distribution through external channels. Although this reduces co-determination, the target group can be increased. However, part of the income remains with the partners. For example, Zalando offers brands and retailers three different partnership models: Wholesale, Connected Retail and the Zalando Partner Program. Depending on the retail value and category, Zalando charges a commission of between 5 and 25 percent.
- Measure and determine goals
When a new product is launched, it is not only the retail partner who is interested in it selling well, but first and foremost you. This is why KPIs, i.e. concrete and quantitative figures, can be defined, but also overarching ones such as: We want to sell 10,000 units within six months.
These goals can then also be included in a possible pitch with the wholesaler. Coop has a so-called "Innovation Score". The retailer measures how well the new product works on a weekly basis. If it is not well received by customers, it is quickly removed from the shelves.
How do you successfully launch a new product on the market in a contemporary way?
We would like to go into more detail about how a new product can be publicized in advance so that retailers add it to their product range themselves.
We would like to shed light on brand strategies, also with regard to start-ups that do not have a large budget for publicity. We want to highlight contemporary marketing for young, up-and-coming brands and present the latest trends and tricks. Especially in connection with social media and a younger target group.
Brands must first have a clear idea of their product and it should have a unique selling point in order to be considered by retailers. The product must stand out from the crowd. Essentially, consumers today want new products that tell a story and are transparent and accessible. At the same time, they attach great importance to community building and also want to acquire real fans.
The trick is to achieve this without an exorbitant marketing budget. The crowning glory is to make it into the press and attract attention despite having only been around for a few years. This is the gateway to listing the product in the retail trade.
To be successful, brands must above all represent clear values and messages. Today, this is even more important than the design of the product. A second important component is the careful and consistent development of a community and supporters who interact with the product both online and offline and carry it forward as ambassadors. This should also be possible without marketing budgets for Instagram, but with visually strong elements and images.
In order to position a product in the digitalized world of the 21st century, a high level of interaction is required above all. Today's consumers are more loyal to brands that have a greater purpose than just getting rid of their product. This is particularly noticeable among brands with a young target group.
Example Billie
Georgina Gooley and Jason Bravman founded Billie in 2017 to shake up the women's razor market. This had already happened in the men's market. Now it was the women's world's turn. In addition to the typical look of a young brand that goes direct-to-consumer - i.e. internet-friendly graphics with natural models, an eye-catching product design and a low price - there was another component: The founders took a philosophical stance on the ideal of female beauty.
The first campaign featured videos and photos of women with hair under their armpits. The ads caught the eye in a market where advertising for female shaving products usually features models grooming their already hairless legs, and press coverage picked up for weeks, with the story being picked up in 23 countries. Billie's video was viewed 24 million times and the company's entire product range sold out several times throughout the summer.
Such a strategy is primarily based on two pillars: The purpose of the product and the presentation:
Source: "Business of Fashion", 2022
Retailers come knocking by themselves
If this strategy is successful, it can even happen that retailers approach the brand with a new product instead of the other way around in the past. This often happens because young brands are more skillful and authentic in their use of "new" advertising channels such as Instagram or the metaverse.
This is why retailers are now acting as partners for up-and-coming brands with innovative products. They offer them a large audience and at the same time want to benefit from their expertise with target groups such as Generation Y.
They use them as an impetus for their broad consumer base to discover new products. This was not only the case with women's razors, but the vegan wave was also driven by new brands, as was the meat substitute market. The difficulty for new products is then to remain authentic with their followers, even if they are then discovered by Mr. and Mrs. Swiss on the wholesalers' shelves.
Visual is king
Images are now more important than words, especially for new products in the fashion and beauty industry. New products need a visual signature and a constant stream of fresh images on social media platforms.
Only then does the product stand out and become part of the customer's perception. And thus also on the radar of retailers who become aware of the product. Instagram and Facebook have become channels for shopping, and large retailers such as Rewe in Germany now send their catalogs via WhatsApp.
However, social media is not the decisive factor. It has become the central point of contact for a new product, especially if it comes from a young brand. But people are also realizing the harmful effects of constant consumption on social media and are longing for real experiences again.
In addition, launching a new product on social media is also associated with costs. In order to distribute a product widely, money is needed for placement on social media and to pay the influencers. Unless you land a coup by launching a brand campaign that goes viral on its own and is shared by users.
This is why pop-ups and interaction at the POS are still important for retailers. However, all these strategies are meaningless if a brand has no raison d'être in the market and offers a product with a real value proposition. New companies need a stronger point of view than just design, price or distribution.
They need a differentiated view that is understandable to customers, who are otherwise overwhelmed with options. New products must reflect true values; anything else is immediately seen through by today's highly informed and critical consumers.
People business with long persuasion
Despite data and sales figures, a successful listing is ultimately only possible if you can convince the buyers of a large retailer of the product. Although the positioning of the product is crucial, it takes contacts to reach the right decision-makers who will then include a product in the listing.
Regardless of whether a wholesaler comes across the product himself or you manage to be contacted by him through a network, you ultimately have to do some convincing. The right preparation is needed for such a conversation. The following questions should be answered in advance:
- Why was the product developed in the first place?
- How large is the target group and does it frequent the retailer?
- What media work and advertising measures at the POS can be undertaken by both sides?
- How can the new product be placed in a special way, is it mentioned in catalogs or, for example, in the retailer's newspaper?
- Is it possible to launch joint advertising campaigns?
- Packaging is crucial for the retailer - how can the packaging be eye-catching and correctly positioned on the shelf?
- What are the asking prices? Are they too high or too low?
- What is the quantity of the order, are there discounts, what are the delivery conditions?
Do you have any questions, comments or would you just like to chat?
I would love to hear from you. Contact me directly via Linkedin or email.
.png)
.png)
.png)
.png)