Setting goals for that growth will differ from company to company. But many CPG manufacturers have difficulty getting started with this process, or setting the right goals for their company’s position in the growth cycle. Common difficulties include being reactive instead of proactive, becoming fixated on one aspect of growth, and lacking the data necessary to set realistic, appropriate goals.
Goal-setting doesn’t need to be that complex for CPG manufacturers, whether they’re bringing their products to market for the first time, entering a new category, or trying to break into a different geography. Here are the three things to keep in mind when setting growth goals.
1. Be Proactive, Not Reactive
A lot of small and mid-sized CPG manufacturers, especially when they’re just starting out, will look at their initial sales and base their overall growth goals on that. Often this manifests as a goal to increase accounts or placements, or to increase overall distribution. Projected or forecast metrics might be attached to that goal, but ultimately it’s a goal that is limited by its basis in internal data; in other words, it’s reactive. It fails to recognize the size and opportunity of the market, the nuanced differences between accounts and buyers, and where the market might be going next.
Some CPG manufacturers set goals this way simply because they lack access to the data they need to gain visibility into the broader market. To have goals that are more specific and more accurate than “get into as many accounts as possible,” manufacturers need a more proactive approach.
This means seeking out the relevant data on market size, category potential and competition in addition to product performance. Having that information on hand may not drastically alter the fundamental goal—after all, netting more accounts is a worthwhile aim—but it allows the manufacturer to more effectively prioritize and execute its strategy. For instance, if a manufacturer of vegan, GMO-free healthy snacks can assess the sales potential of those snacks at Retailer A vs. Retailer B, it can target the account that will yield the most return. This might be a common-sense decision if one retailer serves a higher-end, health-conscious clientele and the other is a discount/dollar retailer, but what if Retailer A and Retailer B share similar customer bases? What if they both emphasize healthy food options? Access to data helps the manufacturer make decisions like these, while better defining their existing goals.
This proactive approach boils down to one big idea: Don’t be inward-focused; look at the market in addition to your own performance.
2. Think Beyond Distribution
A focus on new accounts and increasing distribution is important. But those aren’t the only ingredients to growth, even if those are the two metrics small and mid-sized CPG manufacturers often fixate upon. Manufacturers can also consider understanding and targeting consumers themselves, and increasing their sales in this way. They can set goals based on which kinds of households they can sell into, or increase their sales within. A move away from volumetric, velocity-oriented goals toward a consumer approach may be the right solution for manufacturers that have previously focused exclusively on getting distribution wherever they can.
On the other hand, maybe our vegan healthy snack manufacturer already has a high distribution rate in one market—the metro Sea-Tac area of Washington, perhaps—and might consider branching out to new markets, like the broader Pacific Northwest or Portland, Ore.. Or a manufacturer with strong nationwide distribution relative to its category might set a goal of increasing its assortment in existing stores, while another might set a goal of taking market share from the leader in its category.
None of these goal types are exclusive to any one kind of CPG manufacturer; rather, a single manufacturer can layer these on top of one another to create more specificity and detail for their growth roadmaps.
3. Have Relevant Data…And Know How to Leverage It
To set any of these non-distribution-related goals – and even to set accurate distribution goals—CPG manufacturers need data. They need to understand the categories their products are in, the retailers that buy and stock their products, and the end consumers that purchase and use their products. Having this information not only allows manufacturers to more accurately project their future growth trajectory, but it can help them achieve that growth in a variety of ways.
Take, for example, our manufacturer of vegan, GMO-free snacks, which is looking to break into a new market. The right account- and market-level data can tell that manufacturer that their products will be more successful in California and Oregon, and that they should target distribution in Retailers A and B rather than Discount Store C or D.
Or that same manufacturer can go into a buyer meeting in its current market armed not just with its current sales data, but also data reflecting the performance of the category as a whole in the market, and in the specific retailer they’re meeting with. This would help the manufacturer tell a compelling story about why their product deserves to be on that buyer’s shelf.
These are just a couple of examples of how data can facilitate growth as well as forecast it. Data allows manufacturers to shift the conversation from “grow as fast as possible and get distribution wherever possible” to “grow by X% ACV (percent all-commodity volume) this year and gain Y number of dollars over last year’s sales by targeting specific accounts A, B and C.” This is powerful information, and something all CPG manufacturers should have access to if they want to set their growth goals more effectively.
The good news is, access to this data is easy for any CPG manufacturer to get. Nielsen helps small and midsized CPG manufacturers set their growth goals and make informed business decisions, through affordable, easy-to-use, retailer-preferred measurement data. Contact us today to get started.