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Product Development - Route to Market
1. Expert Formulation Strategic Business Advisory Marketing Brand Essence and Design Manufacturing Operations
Product Development
Route to Market and Channel
Strategies
Debbie Wildrick
May 16, 2018
2. Expert Formulation Strategic Business Advisory Marketing Brand Essence and Design Manufacturing Operations
Debbie
Wildrick
chief strategy officer
3. Expert Formulation Strategic Business Advisory Marketing Brand Essence and Design Manufacturing Operations
Agenda
• Product Development Dependencies
• Consumer
• Trends
• Shopping Behavior
• Channel Mix
• Commercialization
• Beverage Case Study
• Channel Strategies - Defined
• Differences Between Channels
• Channel Distribution
• Channel Growth – Beverages – A Niche
• Evolution of Strategy
• Category/Shelf Positioning
• Store Tours
4. Expert Formulation Strategic Business Advisory Marketing Brand Essence and Design Manufacturing Operations
Source: Ingredion Global Nutrition Trends Webinar
Global Nutrition Trends by
Ingredion
5. Expert Formulation Strategic Business Advisory Marketing Brand Essence and Design Manufacturing Operations
Today’s Health and Wellness Trends Shaping the
World
6. Expert Formulation Strategic Business Advisory Marketing Brand Essence and Design Manufacturing Operations
When Consumers are Looking for Health and
Wellness
7. Expert Formulation Strategic Business Advisory Marketing Brand Essence and Design Manufacturing Operations
When Consumers are Looking for Health and
Wellness
8. Expert Formulation Strategic Business Advisory Marketing Brand Essence and Design Manufacturing Operations
Study cites barriers to online grocery shopping
• 45% of consumers have ever shopped for groceries online: 60% of those say they
have rarely done so.
• Biggest barrier to shopping online is that 53.7% of shoppers don’t trust others to
pick the best or freshest items; 44.3% said they don’t want to pay for delivery.
• Greater convenience was the No. 1 reason respondents gave for shopping online,
at nearly 68%, followed by time savings, at more than 62%.
• Online shopping allows them to stick to a list and make fewer impulse buys, cited
by 39.3% of respondents.
• 24.3% said they can save money and find better deals online, and 22.8% said it
was easier for them to find items that meet their dietary needs, such as gluten-
free or vegan.
* Source: RichRelevance, News provided by Supermarket News, March 19, 2018
Shopping Behavior
9. Expert Formulation Strategic Business Advisory Marketing Brand Essence and Design Manufacturing Operations
Give up brick-and-mortar? Shoppers say “not yet”
• More Americans are going online for groceries nowadays, yet stores remain
central to the shopping equation.
• About 10% of U.S. consumers regularly buy groceries online. Still, grocery
purchases have been slower to migrate online than other consumer categories.
• Research finds that 99% of online grocery customers still go to brick-and-mortar
stores to shop for groceries.
• 46% of consumers who are “lapsed online grocery shoppers” or have never
shopped online said walking through a store helps remind them about items they
need.
• The same percentage of non-online grocery shopping enthusiasts reported that
they think it’s faster to just go to the store and get what they want.
* Source: The NPD Group, News provided by Supermarket News, April 25, 2018
Shopping Behavior
10. Expert Formulation Strategic Business Advisory Marketing Brand Essence and Design Manufacturing Operations
University study shows most households shop an average of six
different grocery stores
• The vast majority of shoppers – 83% – regularly visited between four and nine
chain stores over the course of a year to purchase groceries.
• Of the 1,321 households studied, only 12 stayed loyal to just one store.
• More than half – 51.1% – went to an average of five to seven different stores, and
88 households, or six of every 100, went to 10 or more.
• But there are also a substantial number of shoppers who are “cherry pickers”
clipping coupons and shopping from store to store for bargains, as well as certain
brands or products.
* Source: “Polygamous Store Loyalties: An Empirical Investigation” study by team of business school researchers led by Washington University in
St. Louis, News provided by Supermarket News, February 1, 2018
Shopping Behavior
11. Expert Formulation Strategic Business Advisory Marketing Brand Essence and Design Manufacturing Operations
Digitally savvy consumer group expected to drive retail trends
• “Spendsetters” embraces digital technology and tends to be early adopters of
new tech-driven solutions.
• Over the last 12 months, 86% of the more than 1,000 U.S. adult consumers polled
said they’ve left a store because of long lines.
• That resulted in purchases at another retailer or no purchase at all, representing
about $37.7 billion lost in potential sales.
• Also, $1.1 billion in potential sales have been lost when retailers don't support
customers' preferred payment methods.
• 75% of Spendsetters acknowledged they would shop more in physical stores that
offer a "just walk out" payment experience.
* Source: U.S. consumer study from global payments platform Adyen, News provided by Supermarket News, April 27, 2018
Shopping Behavior
12. Expert Formulation Strategic Business Advisory Marketing Brand Essence and Design Manufacturing Operations
Millennial Motivators
• Millennials are leading the escape from mass produced, over-processed
and over-packaged foods and beverages with a demand for real, less
processed ingredients.
• They want the preservatives and artificial ingredients out, and natural,
nutrient-dense ingredients in.
• 69% of Millennials have changed what they buy in order to avoid artificial
ingredients in foods and beverages.
• 73% say they try to buy products in packaging that is recyclable.
• 59% say they look for beverages in packaging that is made with renewable
materials.
* Source: Seventh Annual EcoFocus Worldwide Study; News provided by Evergreen Packaging Jan 02, 2017
Shopping Behavior
13. Expert Formulation Strategic Business Advisory Marketing Brand Essence and Design Manufacturing Operations
What is a Route To Market Strategy?
By clearly defining the target market (consumer), you will determine:
Where to Sell
• Channel mix/strategy
• Category Positioning/Shelf
Positioning
• Geographic plan
• Distribution plan
• Sales team strategy
How to Sell
• Differentiation
• Value Proposition
• Pricing Strategy
• Marketing Tactics
14. Expert Formulation Strategic Business Advisory Marketing Brand Essence and Design Manufacturing Operations
Channel Strategies
A marketing channel is the people, organizations, and activities
necessary to transfer the ownership of goods from the point of
production to the point of consumption. It is the way products and
services get to the end-user, the consumer; and is also known as a
distribution channel.
A distribution channel strategy enables you to sell to customers in
geographical areas or market sectors that your direct sales team cannot
reach. You can choose from a number of distribution channels,
including wholesalers, retailers, distributors and the Internet.
15. Expert Formulation Strategic Business Advisory Marketing Brand Essence and Design Manufacturing Operations
PRODUCT
TYPE/FORMULATION
PROCESSING PACKAGING SHELF LIFE SHELF
STABLE/REFRIGERATION
Bottled Water
CSDs
With Preservatives
Cold Fill PET, Glass, Cans 12 to 24 months Shelf Stable
Juice, Tea, Sports
Drinks, Functional
Preservative Free-Lo
PH; Non Carbonated
Hot Fill
Contents of bottle
heated to 195
degrees
Glass, PET (must be
Hot Fill Grade), Cans
12 to 24 months Shelf Stable
Protein Drinks, Milk,
Nut Milks, NFC Juices
Aseptic
Flash Pasterization
Flash heating; 195 to
295 degrees
Tetra Pak, specific
plastic, sometimes
cans
6 to 12 months, PH
dependent
Can be less shelf life
Shelf Stable or
Refrigerated – PH
and Package
Dependent
Milk
Chilled Dairy
Products
Extended Shelf Life
Minimal Processing
or Pre-Cooking
Most plastic
Tetra Pak
Extended but still
limited.
Refrigeration
Required
Fresh Products – Cold
Pressed Juices,
Blended Fresh
Smoothies; Lo PH
High Pressure
Processing
Cold-isotactic
pressure w/water
Primary plastic
bottles in similar
shapes sizes-must be
tested
Extended but still
limited
Refrigeration
Required
16. Expert Formulation Strategic Business Advisory Marketing Brand Essence and Design Manufacturing Operations
RTD 14 oz Functional Hot Fill
COGS Component
COGS 0.74$ Ingredients 0.16$
Shipping 0.10$ RO Water 0.01$
Fullfillment -$ Bottle 0.22$
Allowances 0.14$ Bottle Freight 0.01$
Total COGS 0.98$ Closures 0.03$
Label 0.10$
Unit Revenue* 1.65$ Tray/Shrink/Outside Cs 0.02$
Tolling Fee 0.18$
Gross Margin 40.6% Pallet 0.01$
Delivery Margin % 25%
Unit Cost to Retailer 2.20$ 0.74$
SRP 3.69$
Margin to Retailer 40%
Price / Ounce to Consumer 0.264$
Pack Size 12
Ounces Per Bottle 14
* what you sell the product for
Route to Market – Pricing Strategy_COGS
17. Expert Formulation Strategic Business Advisory Marketing Brand Essence and Design Manufacturing Operations
Channel Mix / Channel Strategy
Retailers Selling Food
and Beverage
Take Home
Supermarkets
Natural Specialty
Grocery
Corner Markets
Club Stores Mass Drug
Immediate
Consumption
Convenience/Corner
Shops
Hotels, Bars,
Restaurants
Institutional /
Vending
Health & Fitness
Take Home Packages
Higher Volumes Per Outlet
Single Serve
Lower Volumes Per Outlet
Can Depend on Category
On – Line Retailers
E-Commerce Sales
18. Expert Formulation Strategic Business Advisory Marketing Brand Essence and Design Manufacturing Operations
Differences Between Channels
• Category Sales
• Volume Per Outlet
• Consumer
• Purchase Patterns
• Demographics
• Retail Pricing / Margins
• Marketing
• Promotional Strategies
• Types of Marketing
• Cost of Entry / Decision Timing
• Managing SKU’s / Space Location
• Distribution to their Stores
19. Expert Formulation Strategic Business Advisory Marketing Brand Essence and Design Manufacturing Operations
Evolution of Strategic Plan
• Lack of understanding of your volume potential can cause big
mistakes in planning
• Matching your product to a retailer strategy is critical
• An overlay of all these areas with a market potential strategy will help
focus your distribution to your highest potential markets
• Making strategic decisions regarding your marketing plans both with
retailers and ‘in market’ adds to your success
• Lastly, lay out your plan, apply it to a financial forecast, and begin
executing
20. Expert Formulation Strategic Business Advisory Marketing Brand Essence and Design Manufacturing Operations
Category Positioning / Shelf
• Positioned where consumers go to look when they are making a
decision to purchase a beverage.
• Refrigerated/Fresh
• Cold – Single Serve
• Shelf Stable
• By Category
• Change the paradigm.
• Retailer strategies versus brand strategies
• We define the position for our brand
• Drive the position with the retailer
21. Expert Formulation Strategic Business Advisory Marketing Brand Essence and Design Manufacturing Operations
Store Tour