With an average of 30,000 new grocery items launched each year, it can be challenging to capture the attention of potential customers and generate excitement. Trade promotions can be an effective tool for boosting awareness and driving sales. Let’s take a look at how CPG companies can leverage trade promotions for successful product launches.
1. Understand your target audience
Before launching a new product, it's important to understand your target audience. Ideally, you have done market research to understand who your likely consumers are as well as their preferences, behaviors, and habits. By understanding their pain points and how your product solves them, you can tailor your trade promotions to resonate with your target audience and increase the likelihood of success.
Of course, you must have the same information about any alternatives a consumer might consider along their path to purchase. Make sure your research covers the attributes that are important and how each product performs against them. This will also be helpful information to exploit when convincing your retail partners to give you shelf space and promote your new product - especially in competitive categories.
2. Set clear objectives, measure, and optimize
The next step should be to give your objectives some thought. Defining clear objectives is essential for measuring the success of your trade promotions. Are you looking to increase awareness, drive trial, or boost sales? For new items, you are likely trying to achieve all of these.
Setting clear and measurable goals and objectives will help you focus your efforts and allocate your resources effectively. Make sure you understand all the KPIs around new launches and have the mechanisms in place to track them and quantify their impact on sales. How much is a point of household penetration worth? What distribution build is needed to meet objectives, and are these communicated to the sales team? What is the value of a distribution point? What sales velocity do you need in the category to justify shelf space? What items in your portfolio may be cannibalized by the launch? What is the category growth projection for the retailer stocking the item?
Finally, measuring the success of your trade promotions is essential for optimizing your strategy and improving future launches. Use data analytics tools to track your promotions' performance and identify areas for improvement. You can then use these insights to optimize your promotions for better results in the future. Consider specialized revenue growth management and trade optimization solutions that capitalize on machine learning models to quantify impacts.
3. Choose the right promotion type
There are many types of trade promotions, including discounts, retailer ads, both traditional and electronic, coupons, rebates, and free gifts. Choosing the right promotion type depends on your objectives, target audience, budget, and timeline. For example, a free trial or a money-back guarantee can be an effective way to encourage customers to try your product for the first time.
In today’s omnichannel world, there is rarely one promotion that captures a consumer, but rather an entire journey with many touches. The length of the journey and number of touches depend on many factors but are typically longer with higher investment items. An air fryer would have more involvement than, say, a jar of pickles.
In-store promotions are an effective way to support new product launches, here are some examples:
- Product displays: Creating eye-catching product displays can help draw attention and increase visibility. For example, a special display at the end of an aisle or at the front of the store can help showcase the new product. Displays are particularly important for impulse items and brand new brands.
- Sampling: Offering free samples of the new product in-store is a great way to encourage shoppers to try the product and increase the chances of them making a purchase. This can be done through product demonstrations or by offering small samples at a sampling station.
- Bundling: Bundling the new product with other complementary products can help increase sales and drive awareness. For example, offering a discount when customers purchase a new product along with another related product can encourage them to try both items.
- Price promotions: Offering a discount or special price for the new product can be an effective way to encourage trial and drive sales. This can be done through temporary price reductions or by offering a discount when customers purchase a certain quantity of the new product.
- In-store signage: Placing signage throughout the store that highlights the new product and its key features can help to increase awareness and generate interest. For example, shelf talkers or banners can be used to draw attention to the new product and provide information about its benefits.
Of course, all of these in-store promotions are more effective if consumers are pre-exposed to the product through an omnichannel journey approach, as described above.
4. Create a sense of urgency
Creating a sense of urgency and a fear of missing out can be powerful motivators for customers. Limited-time offers, flash sales, and countdown timers all encourage customers to take action quickly. Likewise, anticipation is a great motivator - teasing important launches across many channels so that when the product is finally available, interested consumers don’t hesitate!
This is a strategy often used successfully in the video game market. For example, for the launch of "Assassin's Creed Valhalla", Ubisoft offered exclusive in-game content to customers who pre-ordered the game, such as a bonus mission and a cosmetic item for the main character. This incentivized customers to pre-order the game in order to receive the exclusive content.
5. Leverage social media
Social media can be a powerful tool for promoting your new product and trade promotions, with the ability to reach millions of potential buyers in your target audience and pre-dispose them to purchasing by generating buzz around your product.
To get the most out of this tactic, it’s important to identify the social media platforms that your target audience is using, and then use those platforms to share product images, videos, and reviews. You can also leverage social media influencers to help spread the word about your product launch and trade promotions. Apple did this during the launch of the iPhone X. They partnered with popular influencers who shared images and videos of the iPhone X, showcasing its features and benefits to their followers. This helped Apple reach a wider audience and generate more interest in the iPhone X launch.
So there you have it, a successful product launch in the CPG industry always requires careful planning and execution. In this highly competitive industry, leveraging trade promotions is crucial to gaining market share and maximizing your return on investment (ROI). By following the steps that we have put together in this blog, you can increase your likelihood of success and achieve the results that you are looking for from your product launch.
Utilize trade promotion intelligence
Historically, CPG companies have managed their promotions through multiple spreadsheets with limited integration between systems. This approach can be difficult to manage, particularly when the data is not automatically updated.
However, more and more companies are shifting away from manual, labor-intensive processes to automated, precise account planning utilizing a trade promotion management (TPM) solution. This solution allows you to efficiently manage your complex promotions.
CPGvision provides a state-of-the-art, fully connected, and integrated trade promotion solution suite for consumer packaged goods. With industry-leading functionality, CPGvision offers real-world solutions for your trade promotion challenges.
At CPGvision, we are here to support you at every stage of your trade promotion journey. Whether you are just starting out or looking to optimize your revenue growth, CPGvision has the tools and resources to help you achieve your goals. Contact us today to discover how we can transform your business.