How do I convince retailers of my new product?

Companies and start-ups are always keen to place their products with major retailers , in the hope of increasing sales and awareness. However, convincing retailers of the merits of a product is a challenge. Companies have to be active on several channels and give their product a sense of purpose.

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Establishing a new product on the market is a tough challenge for companies. Especially in today's retail environment and with shopping behavior influenced by influencers, companies have to be active on various channels.

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An online presence is important for the perception of a new product, but so is positioning at the point of sale.

In the past, the focus was on placing the new product on the retailer's shelf. Today, companies have to pursue a multichannel strategy to establish a new product.

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Manufacturers, salespeople, retailers and buyers usually give the same answer: there is no magic formula. If you want to successfully place a product in a digitalized world, you need more than just qualified sales representatives and clever marketing. You also need a strong presence on social media and fans of the product. And the right momentum.

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The road to getting a new product into the supermarket is a rocky one and faces a highly competitive market. This is especially true in Switzerland, where the two retail companies Coop and Migros dominate.

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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 250,000 francs. And that's just for one of the two major retailers. So-called listing fees in Switzerland are at least twice as high as in Germany, for example. This is also because there are fewer supermarket chains and thus less competition.

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Time and again, we read that Coop or Migros are removing branded products from their shelves because retailers are not willing to accept their terms. According to the industry association Promarca, “Anyone who wants to launch a product across Switzerland will end up spending half a million francs”.

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But that's just the listing fees. 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 cost up to CHF 10 million.

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When launching a new product and listing it in supermarkets, not only is product awareness important, but so is 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 that it can be accepted by major retailers. Only then can you convince retailers to give the new product a place on the shelf or online platform.

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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 that the introduction of a new product is time-consuming 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 like in this segment?
• How can I reach my target group?

The market launch strategy can take various forms and should first consider the market itself. Therefore, the first question to ask is in which market the new product should be launched.

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And whether the demand for this product can be initially tested among the potential target group in an online test before incurring high costs to advertise the product or apply for a listing.

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Eight important points for the attractive positioning of the new product

We present eight measures for convincing retailers of a new product in a timely manner:

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1. Sell In through awareness

A company can count itself lucky if it can successfully launch a product using a so-called pull strategy: the product is so well known even before it is listed that everyone is talking about it and it is already in demand. This attracts retailers.

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This strategy is particularly suitable for start-ups that don't have a large marketing budget and mainly use influencers and pop-up events to raise their profile. Or they can launch their own online shop with a product that is already selling well, which then attracts the attention of wholesalers.

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Example: Oatly

Many people are now familiar with Oatly oat milk. That wasn't always the case. When the Swedish start-up wanted to gain a foothold in the US, oat milk was still virtually unheard of among American consumers. However, the start-up didn't have the necessary capital to promote oat milk as an alternative through traditional marketing channels.

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Instead, Oatly targeted local coffee shops when launching the product in the US. They introduced the product to urban coffee houses in cities on the east and west coasts, where they wanted to convince local consumers of the taste. The strategy worked, and a coffee house that offered dairy-free alternatives in its range had an authentic coolness factor when it poured Oatley into its café latte.

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This success, along with a tenfold increase in sales in the US, finally caught the attention of the major supermarket chains, who listed the product on their shelves. Oatley followed a similar path in Switzerland. First known in the cafes of the larger cities, Coop then added the Swedish milk alternative to its range.

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2. Unique value proposition

With Uber, you can order a taxi with a single click and at half the price, or enjoy a trendy latte from Oatly without endangering animal welfare. All these products offer a unique service to the customer that they couldn't find anywhere before.

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It is a characteristic, also known as “product-market fit”, that measures demand and hooks into it at exactly that point. It gives the consumer a feeling of not wanting to do without the product anymore. Or as Marc Andreesen, the inventor of the internet, once put it. The harmony between product and market is the only thing that matters. The burn rate should be as low as possible while iterating the product/market fit.

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3. Clear target group

To launch a new product, you need to know your target group exactly. To do this, ask yourself the following question: 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 out, it's worth defining the target market and creating a customer profile. The target group is particularly active among retailers.

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The question now is how to reach consumers who have not yet been addressed with a new product in this heterogeneous group of buyers. If we 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.

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4. What is the competition like?

Before you even go to the trouble of introducing a new product, you should know exactly what your competitors are offering and be clear about whether there is a demand for it. Otherwise, all your efforts will be in vain. The following questions can help you to determine this:

• Are there already similar products on the market?
• Which target groups in which markets already consume competing products?
• What differentiates 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?

You can also sound out customers in advance by asking them about the probability of substitution:

• How likely is it that you would choose the new product over your last purchase
  

The information about the latter products can now 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 to classify it there.

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5. What is the core message that is most convincing?

A core message is essential not only for convincing future consumers, but also for retailers. What message do I want to convey 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.

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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”, which can be used to refine salads or other dishes.

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First popular with the catering industry, the start-up managed to get its products listed in Coop stores in 2019. The microgreens are harvested just before consumption and thus contain valuable vitamins. The brand message  here is clear and also forward-looking with the approach of urban farming. Coop benefits from this “fresh image”, the startup from the retailer's large distribution network.

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6. The consumer goes on a journey

Today's customers go on a journey when they buy a new product. Content is the main tool for this. When do I offer future consumers which content on which channels and at what time? The customer is accompanied from the identification with the product to the purchase decision:

• Customers have a problem or a need and are looking for a product to solve it. Above all, the customer's attention must be gained. Today, this is done primarily 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.

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7. How do I sell the new product?

Now comes the crucial phase for introducing the new product to retailers. How do I get it to buyers and which channel is best suited for this? What is my sales strategy? Does it really have to be a physical store or is it perhaps even better and cheaper to sell the product online? There are three key elements to consider.

• Nowadays, a purchase on one's own initiative usually only happens in online retailing. The customer discovers a product on the internet, then through an online shop, SEO or social media, as well as banner advertising. This means that a company does not have to operate any sales channels to make the product known, but it does have to invest in marketing.
• If a company still relies more on the classic method of sales, it needs a team for this. They get in touch with potential customers and present the product to them. However, social media far outweighs the possible contacts, especially when it comes to consumer goods. Field sales would also be possible for this, 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 the co-determination, on the other hand, the target group can be increased. However, part of the revenue also remains with the partners. For example, Zalando offers brands and retailers three different partnership models: Wholesale, Connected Retail and the Zalando Partner Program. However, depending on the retail value and category, Zalando charges a commission of between 5 and 25 percent.

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8. Measure and determine targets

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 yourself. That's why KPIs, i.e. concrete and quantitative figures, can be set, but also overarching ones such as: We want to sell 10,000 units within six months.

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These goals can then also be included in a possible pitch with the wholesaler. At Coop, there is something called an “innovation score”. The retailer measures weekly how well the new product is doing. If it doesn't go down well with customers, it is quickly banished from the shelves again.

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How do you successfully launch a new product in a timely manner?

We would like to go into more detail about how to make a new product so well known in advance that retailers automatically include it in their range.

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We would like to shed light on strategies of brands, also with regard to startups that don't have a large budget for promotion. We want to show a contemporary marketing for young, emerging brands and present the latest trends and tricks. Especially in the context of social media and a younger target group.

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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 at all. The product must stand out from the crowd. Essentially, today's consumers are always wanting new products that, above all, tell a story and are transparent and accessible. And in doing so, they place a high value on community building and also acquire real fans.

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The trick is to do this without an exorbitant marketing budget. The crowning glory is to make the press and attract attention despite only being around for a few years. This is the entry point for a product listing in stores.

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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 promote it as ambassadors. This should be possible without an Instagram marketing budget, but with visually strong elements and images.

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Above all, a high level of interaction is needed to position a product in the digitalized world of the 21st century. Today's consumers are more loyal to brands that pursue a greater purpose than just selling their product. This is particularly noticeable in the case of brands with a young target group.

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Example Billie

Georgina Gooley and Jason Bravman founded Billie in 2017 to shake up the female razor market. The male market had already been shaken up. Now it was the ladies' turn. In addition to the typical look of a young brand going 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 view of the female beauty ideal.

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The first campaign showed videos and photos of women who had hair under their arms. The ads stood out in a market where ads for female shaving products typically show models grooming their already hairless legs. Press coverage snowballed for weeks, with the story picked up in 23 countries. Billie's video has been viewed 24 million times, and the company's entire product range sold out multiple times throughout the summer.

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A strategy like this relies on two main pillars: the meaning of the product and the presentation:

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Retailers are knocking on their own doors

If this strategy is successful, it may even happen that retailers approach the brand with a new product instead of the other way around, as was usually the case in the past. This often happens because young brands are more adept and authentic in their use of “new” advertising channels such as Instagram or the metaverse.

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That's 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 opportunity for their broad customer base to discover new products. It 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 then lies in remaining authentic with their followers, even when they are discovered by Mr and Mrs Smith on the wholesalers' shelves.

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Visual is king

Particularly for new products in the fashion and beauty industry, images are now more important than words. New products need a visual signature and a steady stream of fresh images on social media platforms.

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Only then does the product stand out and become embedded in the customer's perception. And thus also on the radar of retailers who become aware of the product. Instagram and Facebook have become shopping channels, and large retailers such as Rewe in Germany now send their catalogs via Whatsapp.

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But social media is not the deciding 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 aware of the harmful effects of constant consumption on social media and are longing for real experiences again.

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What's more, launching a new product on social media also comes at a cost. To get a product out there on a wide scale, you need money for the placement on social media and to pay the influencers. Unless, that is, you pull off a coup by launching a brand campaign that goes viral all by itself and is shared by users.

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That is why pop-ups and interaction at the point of sale are still important for retailers. However, all these strategies are meaningless if a brand has no right to exist in the market and offers a product with no real value proposition. New companies need a stronger point of view than just design, price or distribution.

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They need a differentiated perspective that customers can understand, as they are otherwise inundated with options. New products must reflect true values; anything else will be immediately seen through by today's highly informed and critical consumers.

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A people business with a lot of persuading

Despite all the data and sales figures, a successful listing ultimately only comes about if you can convince the buyers of a large retailer of the product. While the positioning of the product is crucial, it also takes contacts to get you in front of the right decision-makers, who will then include a product in the listing.

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Regardless of whether a wholesaler comes up with the product themselves or you make it through a network to be contacted by them, you ultimately have to do some convincing. Such a conversation requires the appropriate preparation. The following questions should be answered in advance:

• Why was the product developed at all?
• How large is the target group and does it interact with the retailer?
  
• What media work, but also advertising measures at the POS, can be undertaken by both sides?
• How can the new product be given special placement, should it be mentioned in catalogs or, for example, in the retailer's newspaper?
• Is it possible to launch joint advertising campaigns?
• The packaging is crucial for the retailer – how can the packaging be made eye-catching and placed correctly on the shelf?
  
• What are the price expectations? Are they too high or too low?
• What is the order quantity, are there discounts, what are the delivery conditions?