For any new consumer product launch, achieving broad distribution through Retailers is vital to success.
Retailers are incredibly judicious and fact-based when making their decision about which products get on shelf. This intense scrutiny is necessary to their business model and drives their financial success.
Understanding how Retailers evaluate New Products and knowing their 3 most important decision criteria are essential. Here are the 3 most important Retailer New Product requirements and what you must do to prepare and present them.
You must get these 3 things right, the first time!
Feautre 1: Product Innovation That Delivers a Meaningful Perceptible Difference to the Consumer
Retailers are very financially driven and make decisions on what products get on the shelf by the sales and profitability they deliver for the whole category. Retailers want products with innovation that will be of interest and be purchased by their shoppers.
Further, New Products with innovative features or benefits are usually more premium priced, thus driving higher sales revenue per item and stronger profit margins. To be seen as innovative, the product must deliver a Meaningful Perceivable Difference (MPD) to the Consumer.
The new product must inherently have a benefit or feature that is different than other products on shelf, and that difference is perceivable by the consumer. Most important, this difference must be sufficiently
“meaningful” to the consumer to generate consumer purchase intent, leading to an actual consumer purchase.
Therefore, when presenting a New Product to a Retailer, not only must the product have an MPD, it must be clearly communicated. Further, the Retailer must be convinced of this. Knowing how to accomplish this, is key to distribution success.
Feature 2: Getting The Pricing Strategy and Retail Shelf Price Point Right!
Setting the right price point on the shelf is another very important decision point for the Retailer.
Not only does the shelf price drive revenue and profit margins for the Retailer, but the price also has a great impact on whether the consumer will purchase the item, in the first place.
Consumers make value judgments when they compare the product’s offering to the price, determines its value vs. other choices, and then make their purchase decision. Establishing the right pricing strategy requires a quantitative analysis as well as consideration of qualitative factors.
There is a known pricing analysis that all New Products should go through. Further, the Retailer must be convinced that the shelf price point is right for the brand among their Shoppers, and will deliver positive incremental P&L results when placed on the shelf.
Feature 3: Delivering New Product Marketing Support for The Retailer
Assuming that your New Product has demonstrated to be Innovative with an MPD, and is priced right, now the task becomes having the consumer become aware of and want to try the product.
Sitting on the shelf without building awareness and trial will not deliver the Sales and Profits Retailers are looking for. Without building sales velocity, the product will not stay on the shelf, as Retailers will delist.
The new product must have Marketing support that delivers consumer awareness and trial so that sales velocity begins and grows over time. Remember that a newly placed item on a shelf usually replaces an existing product with sales history. The new item must more than recover those lost sales.
Presenting your Consumer Marketing support to the Retailer is an important metric that Retailers look for, and greatly helps secure their acceptance to place your product on their shelf.