Product Launch and Evaluation
7.4 EXTERNAL LAUNCH TO THE RETAILER & OTHER DISTRIBUTORS
The launch to the retailer is of course crucial. Supermarkets today have strong control over the introduction of new products with their decisions affecting how much shelf space will be allocated, the costs of the introduction, the length of time allowed for sales to grow and the potential introduction of their own-brand products. Supermarket buyers rarely use formal analysis to make their new product decisions because of the low risk in giving shelf space to new products - a failure can soon be dropped from their shelves, and if a rejected product is a success in other supermarkets, it can then be purchased with confidence.
Some of the questions supermarkets ask when reviewing a new product are:
Does the product look as if it will sell?
Is the manufacturer going to promote the product strongly enough
to produce the sales?
Are the 'deals' offered in line with the product type and past
experience with the manufacturer?
Will the product increase profit because it is a superior replacement
to an existing product on the shelves?
For some products, there are advantages in launching the products only to strategic retailers, especially if the product is particularly new in some way and requires special cooperation from them to sell to the consumers. The product may be launched in a 'party' atmosphere with free food and drink, promotional gifts, samples presented in attractive ways, and information presented in easy-to-read form. These parties can be great publicity if they are covered by the media, and thus can give the company a chance to reach the public before the actual consumer launch.
Industrial products are often launched in a similar manner at trade fairs, where they can be presented to a large number of manufacturers at the same time. But often industrial products are launched to a few manufacturers, or even one manufacturer with a long association with the company so that there is the opportunity to solve that manufacturer’s problems and gain knowledge of the effects of the product in their processing.
Contract Launch is where the new product is contracted to a retailer under their own-label brand or where a new ingredient is contracted to only one or two manufacturers.
A significant proportion of food manufacturers, particularly small manufacturers, are approached by the retailers and asked to produce products to the retailers' specifications or to agreed specifications developed by the manufacturers. These are mainly me-too products or product improvements or line extensions. This means that the prices and quantities are known and there are no promotional expenses, but of course there are no guarantees for the future when the contract is finished.
A few large retailers, usually national or international supermarket chains, will undertake the product development themselves and then contract out the production of the new products. Other retailers look out for small innovative manufacturers and will absorb the company or just the products into their organisation. An industrial marketer may plant an idea for a consumer product with a manufacturer or a large retailer and provide some “know-how”, hoping that they will sell their ingredient(s) for the new product if it is developed.
There may be a need to launch to other people in the food system, such as primary producers, agents and other facilitators in the market channel.
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