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In my last post I wrote about some characteristics I thought CPG natural food start-ups must have to succeed in that category. As context for that article and this article, I visited with about 20 start-up companies in the natural food category that showcased their products at a recent event. I want to continue from my last post where I left off, which was highlighting the common challenge of marketing and distribution for a CPG food start-up. In this post, I will try to provide solutions to this challenge.
At this event, I asked every company I visited what they are doing for marketing and distribution. The majority offered a similar overall strategy that goes likes this:
1. They are attending farmers markets and other local events to sell and promote;
2. They are in a few retail locations, the vast majority naming the same retailers (one which is a big name natural products retailer) who are testing sales of their products;
When I asked about another local prominent natural product retailer, they said they were trying to reach the buyer to see about getting shelf space, but the majority had not gotten in, yet;
3. They had a social strategy through Facebook and were trying to accumulate likes;
4. Some had a few additional twists, such as selling in alternative locations like coffee shops or restaurants, and of course, online e-commerce.
The above is not necessarily a bad strategy. But, given that there are a large number of small natural food CPG companies, especially in Colorado, it becomes a challenge to find distribution when everyone is plowing the same road to get their product out there. And, retail shelf space is not growing commensurate with the products being created by small companies.
Most small CPG brands don’t have a lot of money for marketing, and probably very little. Spending on marketing is one of the first things that interest buyers at retailers and helps move product off the shelf. None of the companies I spoke with had any kind of marketing, beyond the online social through Facebook and their presence at local events.
Here are some other ways in which I might approach marketing and distribution:
1. A major retailer is testing billboard advertising in major pedestrian areas in Korean cities, which displays pictures of product and a QR code next to each for consumers to scan with their phone to place an order, from which it will be delivered to their home. Why not try the same here? Display a product in public locations such as bus stop billboards and include an enticing picture of the product with a call to action (CTA) statement allowing consumers to scan the code on their mobiles, pay and get the product shipped to their home. Or, tag a retailer in the ad so the consumer knows where to get the product.
2. Identify local home delivery companies – there are 2 in the metro-area of Denver – that deliver produce to consumers. These companies may be looking for packaged products to add to their catalog. Additionally, see if you can partner with these home delivery companies to do some co-marketing, such as paying for emails they send to their subscriber base to promote your product, or including flyers in home delivery orders about your product. In fact, major retailers are testing grocery home delivery and its only a matter of time when they figure out the economics, logistics and process to make this service viable.
3. Identify local gift companies that provide gift boxes with local products. See if you can sell to them. Here is one for Colorado and they might be doing the same in other areas of the U.S.
4. Radio and TV spots can be dirt cheap, so don’t assume they are too expensive for a small company. It is probably too cost prohibitive to get on prime time slots or channels (unless you have a good media buyer that can get you some remnant buys). But you can find air-time with a small budget.
5. Most start-ups seem to want to get to the bigger well known retailers as fast as possible. Don’t do that. If a large retailer tests you in one location and you bomb, do you think they will give you other stores? Probably not. Test your product in small single-location retailers first. You will want to test your product in different locations in the store with various kinds of in-store advertising (shelf tags, endcap promotions, sampling, etc). You have a better shot at doing this kind of testing with a small single-location retailer rather than a chain.
6. Create an booklet and e-book with health articles. For example, if your product is gluten free, it might have health benefits for people that may not be perceived to be having issues with gluten, but with some education, they might gravitate to gluten-free, including buying your product. Use this material to give to people through your website or through the above names distributors and locations.
There are many other ideas I might explore, like targeting small format retail stores such as convenience stores. C-stores? You ask. I know, the stereotype is that C-stores don’t sell healthy food products. But, that is changing. I have also wondered about those automated retailing machines which brands like Best Buy are using. Maybe these is a place for your product in one of those somewhere.
There way are many ways to market and distribute. Just cast aside your stereotypes and do some research and you might be surprised at what you can do.