Going From Small to Big Business: What You Need to Know as a Manufacturer

So you have a product that you sell locally, for now.  Whether it is a local cupcake business, bread producer, toy manufacturer, etc. this will apply to you because your goal is success and the more success, the better…right?

Growing your business requires incremental dollar sales month over month, year over year.  Holding everything constant (product, price, distribution, placement, etc.) there is no reason to believe that the customers that you currently sell to or the shop that you currently sell at  will produce more sales one year over the next.  Therefore, the only way to grow when holding everything constant is to increase the number of stores that you are selling to.

There are two ways to go about this: continue to sell locally or expand into national or regional accounts such as Costco, Target, Toys R Us, etc.  In either scenario from the above and similar to what you require for growth,what retail is looking for when deciding to take on new products in their finite space is also incremental dollar sales.  What I mean by this is the following:

If you sell locally your famous mustard recipe, why would a retailer want to replace an item on their shelf that is already profitable for an item that has yet to be proven?  The answer is this: you need to demonstrate to the retailers why your product will drive incrementality to their mustard category.

Incrementality within manufacturing is typically achieved through innovation or differentiation/unique characteristics of your product vs. the competitor.  Perhaps for mustard, it could be that your mustard is Kosher Certified and USDA Organic whereas Grey Poupon or Boar’s Head is not.  Also, maybe your mustard is incremental due to the unique packaging that doesn’t leave crustiness on the rim after closing the cap and storing in the refrigerator (I hate this!).  Whatever the differentiation is, you must prove that it is valuable differentiation and therefore, incremental in dollar sales because existing mustard consumers will switch to your product for whatever that added value is.

Now there are two ways to get in on shelf at bigger accounts:

  1. Analyze the competitors within the space that you want to compete in and recommend to the retailer a competitor that you would like to “pick-off” because it is slow moving, but nutritional label, etc.
  2. Present to the retailer via research (surveys, customer testimonials, consumer needs, etc.) why your product deserves a slot on shelf

Developing these stories is the tricky part.  Adam and myself have the experience of selling-in to national retailers over various industries and would love to hear your story and how we can help, if needed.

10 Ways to Analyze Your Business Performance to Increase Sales

If you are looking to increase business sales, you first need to analyze your business performance to determine the right marketing tactics that will help you to achieve your goals.  Below are 10 ideas to help you get started to analyze business performance:

  1. Optimizing the Path to Purchase. If a consumer is standing in front of a shelf that houses your product or is scrolling through an online store to find a product to purchase, what matters most to the consumer?  Build a survey for your consumers to fill out so that you can determine what matters most to them.  As an example, if you are in the ice cream section at a grocery store – what is the first thing that you look for – Flavor? Brand? Price? Size?  Assuming it is size, what is the next point in the consumer’s decision tree: Brand? Flavor? Price?  Keep narrowing down so that you can find out what is most important to a consumer by building a decision tree analysis similar to the above.
  2. Advertising Channels.  Do you know where your competition is advertising and how often they are advertising?  Try to find out what your competition is doing this way you can preempt your competition and reach the same consumers that they are trying to reach.
  3. Product Mix.  Is your product or service line segmented to target a variety of consumers?  For example, Verizon Wireless offers a broad mix of phones, each targeting different consumers – Blackberrys for businesses, iPhones for the tech saavy/innovators, pre-paid for those that don’t need many minutes, phones with great cameras, phones that are waterproof, etc.  By offering a wide product mix, Verizon Wireless is maximizing their revenue by expanding the pool of target consumers.  Secondary, check out what your competition is offering to see if there is opportunity to improve your product mix.
  4. Optimize Price Mix. Similar to number 3 above, determine if there is opportunity to segment your products not by product type, but by price bracket.  Not all consumers are willing to pay $120/month for cable TV, however, cable providers maximize their pool of consumers by offering pricing structures that segments their consumers based on what the consumer is willing to pay.  This is similar to pricing discrimination.
  5. Leverage Surveys.  Different from number one on this list, use surveys to determine the attitudes and usages of your consumers toward your product/service, industry, category, etc.  This might give you some valuable insight that will help you to get an edge on your competition.
  6. Analyze the Competition.  Is your competition launching new product or offering discounted pricing for a similar service?  If so, this might give you valuable insight on new suppliers (which could be helping your competition to drive down their price), industry trends (leverage research that the competitor might have that you don’t), or new product renovations (packaging concepts, product features, additional services, etc.)
  7. Monitor the Price Gaps.  If you haven’t already learned by now, we have taught many times that there is a relationship between product benefits and propensity to purchase which can be quantified through a metric called elasticity.  If the difference in price between you and your competition is not being carefully monitored, you can be losing sales based on the elasticity impact.  Read this article on price gaps for more information.
  8. Distribution Channels.  Is your product distributed in all channels that sell that product type (locally or nationally)?  To give yourself an easy start on where you should at the least be distributed, do some research to determine where your competition is distributed and you are not.  Fill those gaps to increase your sales.
  9. Increase Awareness.  Leverage effective advertising strategies such as coupon marketing to drive trial of your product.  Design the coupon to entice repeat purchases so that your consumers continue to come back.  If you are a service company, design a clever advertising campaign that targets your niche of consumers.
  10. Keep the Consumer Top of Mind.  Who doesn’t love free products or trials – offer these to bring new consumers into your pool.  Reach out to your target consumers via social media to engage with them, drive loyalty, and make them feel special.