One of the biggest mistakes we see when up and coming natural or organic brands launch new products is a lack of Market Research.

Market research might be the most critical step in the development of new products or brands. Have you ever walked into your local grocery store and thought ‘that product is expensive’ or developed a new product only to find your price is far too high for the market?

This issue frequently comes down to the lack of market research done at the time of development. When you have a new product idea, it’s easy to get caught up in the excitement of your new product and think only about your product idea and how you believe it’s the next “RX bar”. Pause, take a moment and start your market research.

There are four main questions you should answer when doing market research.

  • Is there a market for the idea?
  • Is there a gap in the market?
  • Who is your competition?
  • What is the retail landscape?

Does the Market Exist?

Let’s start with is there a market for your idea. This could be an easy question to answer by walking into your local grocery store and asking the store manager if they have any customers asking for a product like yours. Most of the time, doing a little more in-depth research will still be needed. Start by looking at Google search data to see if this is something of interest to people and trending. Reddit is another excellent platform for this type of research. There are also more traditional approaches like asking friends and family what they think of your idea and if they would use it. It is crucial at this stage to listen when getting feedback from others. It’s easy to put on your blinders and not hear certain kinds of input while in the development process. It is comparable to the hurtful feeling you get when anything less than positive is said about your child.

The Gap

You have now looked at whether you have a market or not. Now it’s time to see if there’s a gap in this market. What I mean by the “gap” is there similar brands or products in the market. Often you will hear retailers or industry folks referring to this as METOO brands. METOO is when a specific type of product has taken off, and the market begins to see more and more of “like products” enter and crowd the space. There is no innovation, no creativity, just another of the same. It’s crucial to figure out if you are solving a new problem “being innovative” or playing “follow the leader”. There is nothing wrong with either, but if you have increased competition, it will make building or carving out your space a lot more expensive.

Who is your competition?

Are you playing against a corporate food giant or is this space predominantly local or small national food companies? It’s essential to understand this point for a few reasons, but the main one is MONEY. Larger CPG (Consumer Packaged Goods) companies will have the ability to spend more in the way of marketing and promotional activity. If these players are your main competition, it’s going to be very expensive to carve out your piece of the pie.

Consider the Landscape

Lastly, the Retail Landscape. This means a few different things, but let us focus on pricing. You may have heard the phrase “pricing yourself out of the market.” meaning you’re just too expensive.

It can happen when you start developing a product with little to no understanding of the price point you need to hit. You start with your input cost, ingredients, co-packer costs, etc. Then you stand back and say I want a 40% margin for this product, and I need to sell to my distributors for x price. Start with the retail price you need to hit to compete in your market. After deciding on the retailer price point, reverse engineer this price. Example: Most retailers like to make 35% + profit on your suggested retail price. After backing out all layers of cost, you’re left with your base cost. You now need to produce and make a profit for your company based on this base cost. If you can’t, don’t move forward. It is that simple.

Follow these market research steps when bringing a new brand or product to market, and you will increase your odds of success. Good luck!

If you would like further support and insight, please reach out to our team @ info@bnqmanagement.com; we are here to help.