Opportunity Gaps: Why Brands Should Identify And Close Them
Bedrock’s Key Takeaways
- Opportunity gaps are voids in your existing lineup that can be closed by introducing a product or expanding retail distribution.
- Understanding the relationships between your markets, velocities, and distribution can help you find valuable opportunity gaps.
- Focusing on opportunity gaps increases efficiency when chasing after shelf space.
Today’s CPG industry is undergoing rapid changes, and with change comes new opportunities. Unfortunately, these opportunities are not without risk for manufacturers, especially those with limited resources. How can sales teams know which untapped market or region is the most valuable? This is why it’s so important to identify opportunity gaps that help you grow most effectively.
What is an Opportunity Gap?
Opportunity gaps are voids in brand lineups that can be filled by introducing a new product or expanding coverage within retail categories. Identifying these gaps requires an in-depth understanding of your market, product velocities, and distribution. With this knowledge, you can answer questions like:
- How does a single product perform across multiple markets?
- How do multiple products perform within a single market?
- Is it possible to improve your ACV within target markets or regions?
You can also measure opportunity gaps in relation to competitors. For example, if a competing brand is losing distribution within a critical market, but overall product/category demand remains high, that might be a space your brand can access.
How Do You Identify an Opportunity Gap?
A good CPG professional will find opportunities using data instead of gut instinct. They analyze the relationships between metrics like ACV, prices, and velocity, among others, to identify the most valuable gaps in their offerings. The good news is this data is readily available in syndicated data reports. The challenge is that these reports require detailed analysis to make sense of emerging trends.
Bedrock Analytics makes this process more straightforward with our opportunity gap report. Using this visualization, you can better understand whether your product would benefit from a price increase or if your distribution is lacking within a specific category. Opportunity gap reports analyze your line-up with two options:
- Single product/brand in multiple markets
- Multiple products within a single market
Bedrock also offers customizable brand heatmaps that highlight products and markets above or below critical thresholds. Heatmaps are an effective way to visualize ACV, velocity, and other metrics relating to your products — granting you insights to increase your standing with target markets, as well as showing areas of growth and decline.
What Makes for an Excellent Opportunity?
Let’s say you manage an emerging natural food brand, and you’ve decided to expand your distribution within a market, but you only have enough budget or production for one expansion. How do you choose between two promising options?
In most cases, the deciding factor is the sales velocity. If you have a low ACV with a particular market, but your product is flying off the shelves, that’s a sure sign that increasing distribution will net a profit. It’s important to understand that closing similar ACV gaps don’t always return the same sort of $ opportunity, as you can see in the example below, with CVS and Kroger — similar distribution opportunity, but very different outcomes if that gap is closed.
The Danger of Ignoring Your Opportunity Gaps
The benefits of closing opportunity gaps are clear, but the risks of neglecting them are just as real. It’s not about competitors identifying and claiming your opportunity first — an opportunity gap for one brand is not equal across the category. The danger is that your brand will assign resources to opportunities that don’t generate returns.
Between shelving fees, shipping expenses, and other manufacturing costs, modern CPG brands need to maximize the impact of every investment.
This detail is especially true right now, when time and resources across the industry are under strain. If your brand must pivot to capitalize on an opportunity, it’s crucial to know that you’re as efficient as possible. The good news is that identifying and closing opportunity gaps tends to generate high returns — and sometimes more cost-effective than investing in new retail accounts all together.
To learn more about how Bedrock analyzes and visualizes opportunity gaps, check out our May 202 Webinar. Click here to watch now.