When Strategic Opinions Conflict, Let Data Be Your Guide
Bedrock’s Key Takeaways
- Data resolves more strategic business conflicts than intuition alone.
- Trend-chasing will only develop your brand if the data suggests you’ll make a return on the investment.
- Targeting specific market segments is the most effective way to put a unique spin on a trending opportunity.
Achieve Your CPG Business Goals Using Data, Not Intuition
Any business organization, large or small, will have internal disagreements at times. Two departments will have different perspectives on a strategic issue, putting them at odds until a leader makes a decision.
In CPG, these disagreements can often arise when companies are looking to launch new products or expand into new markets. The brand team, for example, having researched consumer habits and emerging trends, recommends one course of action. While sales, forever in service of hitting their goals, and often knowing what their retail buyers want, recommend another approach.
So how does a leader make the correct decision in these circumstances?
In our experience, the last thing you should do is rely on anyone’s intuition. As human beings, we are often blind to critical details. This is especially true when it comes to assessing risk — something that must be considered frequently in the CPG industry. The better approach is to use data as a compass to guide your organization to a solution.
Take, for example, an emerging chocolate brand looking to expand at retail. The brand team pitches a new raspberry dark chocolate product — the market research says it’s all the rage this season, and is convinced that adding a SKU there will increase brand visibility in win additional shelf space. The sales team, on the other hand, are deeply skeptical. They note that the raspberry dark chocolate trend has been capitalized on by competitors, is now oversaturated at retail, and buyers don’t see it contributing to their category at this point. Chasing this trend now might not have the return on investment the company is looking for.
Both facts are likely true: Raspberry dark chocolate is trending, but it’s also nothing new, and already widely available. So what’s the right strategy? That depends entirely on what the category data reveals.
Data Scenario #1: The Raspberry Dark Chocolate Category Is Oversaturated
Reviewing chocolate sales data from each retail partner confirms the sales team’s fears: Raspberry dark chocolate has flooded the market. Competitors jumped on the trend when it first emerged, which means chocolate customers already have plenty of options to choose from. Chasing raspberry dark chocolate at this point will not help the brand stand out, and go-to-market investment will likely be wasted.
Even worse, the data suggests that the raspberry chocolate trend is a fad — one that peaked months ago. By the time a new product is available on retail shelves, the market will have moved on. The overall velocity of the product’s sales will decrease without a substantial promotional discount, which will ultimately cut into revenue.
The alternative strategy is to get ahead of an emerging trend that the brand can target. Sure enough, peanut butter dark chocolate is making a comeback with a trend line that’s far more reliable over time. Perhaps that’s the place to focus efforts.
Data Scenario #2: Niche Opportunities Exist Within The Raspberry Chocolate Category
Reviewing chocolate sales data from each retail partner suggests that raspberry dark chocolate saturates the market, but not uniformly. Yes, the competition already has products on store shelves, but they are all near-identical variations that target a mainstream audience. This suggests there is room for a unique raspberry chocolate product that would interest otherwise underserved consumers.
A closer analysis suggests that a distribution void exists for organic raspberry dark chocolate among two retail partners. Such an item could appeal to consumers of natural products who are highly conscious of all ingredients in their food items. This sub-category has a low sales velocity but does attract customers who are willing to spend more for organic products.
At a minimum, that should convince these particular partners that your product will increase chocolate sales within the category. What’s more, if sales manage to exceed expectations, you might be able to convince other retail partners to stock a limited supply of your raspberry dark chocolate.
Let the Data be Your Guide
Each of these scenarios is entirely plausible, but CPG sales data can only support one of them. That’s why it’s so important to take additional steps to find actionable insights that inform your strategies. For an emerging brand, adopting the wrong approach could be devastating for your prospects since you may not have the resources to bounce back.
In our raspberry dark chocolate example, each of these data-driven scenarios must then be weighed against other factors — manufacturing and logistical costs, time to market, etc. But the insights contained in the sales data are the best place to start formulating a launch or expansion strategy. Using Bedrock’s “Weekly Share product Share Trends” visualization, for example, CPGs can easily get a grasp on how new items are affecting existing business (Cannibalization) and the interaction between brands for the category as a whole.
Need help finding these insights? Bedrock Analytics makes actionable insights more accessible than ever, thanks to our comprehensive data visualization platform. Not only can we render syndicated sales data in a readable format, but Bedrock can also create easy-to-understand sales stories that update with each data refresh. When your team must choose between two opposing strategies, that perspective can make the difference between a successful product and a well-intentioned misstep.
Contact our CPG data experts today for more information on how the Bedrock platform can help guide your most important business decisions.