Getting it Right the First Time

June 10, 2020

What investors and retailers look for as you take your product to market

When launching a brand, start-ups can make a few common mistakes that are tough–and costly–to recover from. Former executive for major consumer packaged goods (CPG) companies like Colgate Palmolive, Dan Schmitt, says there’s a lot you can do to minimize risks.

NPC talked with Dan about what investors and retailers are looking for, and key things you need to consider before launching your product in Canada.

There’s a culture in the start-up world around moving fast and breaking things, or “failing forward”. In the work you do around getting consumer packaged goods (CPGs) to market, you focus on “getting it right the first time”. How does this all come together?

Dan Schmitt, CEO, Jigsaw Consulting

The essence of brand strategy is getting it right the first time. I believe that when a company is doing a lot of their internal work, testing things, this “skunkworks” approach has a lot of value. But once you go external to a retailer or a bank or a funder, you have to make sure you’re buttoned up and ready to go. Entrepreneurs are natural risk-takers, but now you’re working with people much more powerful than you and they can have a massive impact on your success. Even the consumer is incredibly powerful – if they buy your product once and then reject you, you’re done.

What can happen if you don’t take the time to get it right?

There is, of course, a range of answers to that question, but pricing and packaging are especially important. If your pricing is wrong and you’ve launched at Sobeys or Loblaws, it’s a monumental problem that could take a year to fix. If you launch with the wrong copy on your packaging, and the consumer doesn’t know what your product is about, that could take another year to fix and your launch will be sub-optimal.

What are investors and retailers looking for in a CPG brand?

Investors and retailers have one key thing in common: just like you, they both want to make money from your product. They’ll want answers to these key questions to determine if you’re a good bet:

  • Does the product or service have a meaningful, perceptible difference from its competitors? You can have a point of difference, but if the consumer doesn’t care it doesn’t matter. It also has to be perceptible. You could have a different formula or a different way of delivering the product, but if it’s not easily seen or noticed by the consumer it doesn’t mean anything. And your opinion about this difference is not enough. You need to validate it with market research. If the idea is good and the information you’ve supplied is good, you might even ask funders for money to do the market research.
  • Is your pricing strategy solid? Getting to the right pricing strategy is fundamental because it drives both revenue and profit margins for the retailer and purchase interest by the consumer. Most small companies don’t have the experience and knowledge to do that properly, but it’s essential to securing both funder and retailer interest. Following a formal process is key to getting your pricing strategy right.
  • Do you have a strong marketing support plan? Investors and retailers want to see a well-developed and evidence-based marketing plan, especially for a small company. How are you going to market to ensure consumers buy and try the product the first time? Are you instilling confidence that your new product will more than replace the revenue from any older product you might be pushing off the shelf? If you don’t have the budget for a fully-developed marketing strategy, consider presenting a plan for how your smaller company would do it – and tie it together with your product differentiation and pricing strategy.

Is there anything else investors or retailers are keen on?

Do you have a distribution model, logistics, and distribution partner to take your product across Canada? If you’ve built a foundation of good networks, it can really bolster your product’s appeal. You also need to have a selling infrastructure in place, and it doesn’t have to be in-house. You can establish a partnership with a broker or selling agent.

About Dan Schmitt

Dan Schmitt helps consumer products businesses succeed through proven strategies and practical execution plans. An experienced senior sales and marketing executive in the CPG industry, Dan spent 25+ years with Colgate Palmolive and his experience spans more than 35 countries. Today, as founder and CEO at Jigsaw Business Consulting, he works with small Canadian food and beverage companies to launch and establish new products. Dan has launched over 200 successful new products for brands including Clorox-Javex, Janes Family Foods, Solo Energy Bars, Mennen, and Fleecy, and received numerous awards for innovation. Dan is an active member of Canada’s Natural Product Innovation Cluster.