This piece first appeared with Young Foodies, a community for the UK’s up-and-coming food and drink brands.
Common mistakes in CPG strategy
Generally speaking, there are two ways for a young CPG brand to impress a retailer.
The numbers game is simple. If you’ve got fantastic figures from elsewhere you can flash them in front of a buyer, and regardless of the merits of your product there’s a good chance they’ll want a piece of the action.
Easy. Or at least it would be if you had them.
It goes without saying that you can’t get good numbers without good distribution. It’s a chicken and egg game, and therefore this approach is a luxury only available to brands that have already reached a certain scale.
So that leaves us with argument.
How, in the absence of dazzling sales figures, can you convince a retailer that such rewards are on the way? Why must they stock you? Why wouldn’t their offering be complete without you?
That’s what I want to cover in this piece, and I want to start by looking at the way not to do it – an approach that is sadly the primary strategy of almost all food and drink startups.
The worst possible argument you can make to a retailer is this: “my product is better”.
“Better” is the most useless, insidious word in all business strategy. Being “better” than other companies promises so much, and feels like such an obvious win, that its ineffectiveness always comes as a huge surprise to bankrupt entrepreneurs.
Do you see your brand as being “better” than x establishment alternative? If the answer is yes, stop right there. You’re looking at things the wrong way.
Don’t get me wrong, your belief may well be true. You might well be tastier, longer lasting, healthier, or get whiter whites than the other brands in the market. That’s great. But it doesn’t translate to traction – with retailers, or consumers. The world is littered with the husks of “better” businesses, all of whom tried the same approach, and failed in the same way.
There are two primary reasons why “better” won’t impress retailers:
- It’s not salient. Shoppers don’t notice “better”. Offering marginal gains on a concept that already exists might impress a handful of hyper-aware consumers, the type who shop in Planet Organic, but it will fail to register with mass market. They don’t value things that are “better”; they value things that are easy to buy. Things that do the job “well enough”, and which they’ve heard of. Never forget how little the average person cares about your brand and your category.
- It’s a bad commercial proposition. Let’s say your product is truly, noticeably, better than the establishment brands, and the buyers decide to stock it. How do they profit meaningfully from consumers switching from the old brand to your brand? Why is it better for them to have £100 of sales split across 4 brands rather than the same amount split across 3? In this age of range rationalisation, and a drive from retailers for less choice, not more, such dilution of the field is pointless. They seek growth in sales, not growth in options.
Ultimately the word “better” is simply a synonym for “the same”. It’s a way of saying, “hey, here’s a product that you already stock, but subtly tweaked”. Not exactly compelling.
So what’s the alternative?
It’s simple. Rather than offering something that is “better” than existing alternatives, you need to offer something for which there is no alternative.
You need to be able to show that your product represents sales that would happen if you were stocked, but wouldn’t happen if you weren’t.
“Better” products don’t do this, because they represent the shuffling around of sales that would have happened regardless.
Perhaps this means bringing a group of people into a category who weren’t shopping it before. Or perhaps it means bringing sales that were being made away from the retailer, into the retailer. At the extreme end, it might even mean creating a whole new category, and conjuring new sales and growth out of thin air. Or it might just mean offering something so unique in the category that the current shoppers are happy to pay substantially more – thus giving the retailer additional profit.
The commonality between all these cases is refusing to be judged on the same metrics as other brands in the category, and creating a mini-monopoly all of your own. This is what creates growth, brings value to retailers, and of course will bring value to you as well.
It is not just a refusal to be “better” than other brands. It’s a refusal to compete with them at all.
If you’d like to know more about creating companies without competitors, please visit the downloads section of this site, and check out the ebook on the subject.