Launch of products in the FMCG industry

Even in its name, the FMCG industry is characterized by the speed, by dynamic movement of products, categories, and processes. The dynamism can also be seen in the daily development and marketing of thousands of new products. The path that the product takes from the producer to the consumer is quite complex for every product, especially for the one placed on the market for the first time. As trade marketing (TM) plays an important role in the supply chain in general, it also plays a role in the launch of new products on the market, and with its tools, it contributes to their further development.

The development and launch of new products on the market is a regular activity within the supply chain, all aiming at satisfying the needs and wishes of end consumers for new or improved products, which certainly brings new opportunities for growth development and differentiation from the competition on the market. Although all links in the chain significantly contribute to the new product launching process, TM plays an increasingly important role regarding innovation and creativity within this process, which uses its tools to highlight and bring products closer to consumers at the point of purchase. Consequently, it can be said that trade marketing participates in every phase of a product’s life cycle.

Every new product has its lifespan and goes through different stages of development, which are strategically planned from the inception of the idea about the product. The goals are clear from the beginning, just like the need for the product, but the development phases can vary, that is, their duration and specifics concerning the product itself. Given that trade marketing is considered a marketing discipline, it is indispensable in the process because the positioning of a new product requires, first and foremost, the development of the marketing mix (4P – product, price, place, promotion). To be able to define a strategy for the launch of a new product, it is necessary to look at all the components of the marketing mix, carefully plan the stages of development, i.e., the expected life of the product, and conclude whether such a product can satisfy consumers and, in the end, encourage the realization of a profit.

We recognize four main phases within a product’s life cycle, with the first two phases being the main indicators of the product launch strategy success: the market introduction phase, the market growth phase, the maturity phase, and the decline phase.

However, before the product reaches the market introduction stage, various sectors need to carry out a series of preparatory operations. Before the introduction phase, trade marketing, together with the manufacturer, coordinates the strategies of the introduction phase, performs preparatory operational tasks, such as the preparation of logistics data and product prices, active participation in the conceptual solution of advertising material, and takes a significant part in market research and making proposals for the launch of the new product in certain sales channels.

When the goals and strategy are clearly defined and when the product is ready to begin its journey from the item to the consumer, the first phase begins, i.e. the phase of introduction to the market. In the introduction phase, the primary goal is to develop the market and attract a certain number of customers. At that stage, it is necessary to provide budgets for promotional activities to convince and motivate consumers to buy the product, while brand development is not the main priority. In the phase of introducing the product to the market, it is difficult to expect significant profits, considering that the development, marketing, and accompanying promotions will prevail as costs within the process. The new product finds its way into specific sales channels, recognizes its target customers and consumers, and through introductory TM activities, it communicates its clear benefits, that is, the reasons why the product “saw the light of day” in the first place.

  If a picture is worth a thousand words, then promotion is worth a thousand pictures

During the introductory phase, which aims at getting the consumer to see and buy the product, the role of trade marketing is crucial. Primary TM activities in this phase refer to:

• Defining distribution channels and levels and monitoring and analysis of implementation;
• Researching the market and categories and, based on the gathered information, creating a product positioning plan, choosing the best position in the store;
• Creation of presentation standards, i.e. planograms of the new product in the principal and secondary positions;
• When the product reaches the desired place on the shelf, “merchandising activities” follow in the sense of highlighting the product and its advantages with advertising material. Many tools and types of advertising material serve to attract the consumer, such as shelf liners, wobblers, price tags, shelf dividers, posters… What connects them all is the unique communication of the product, i.e. its key features and benefits;
• Also, an additional increase in product visibility through massive placements of branded secondary positions in the best locations in facilities and complementary categories is one of the indispensable activities in this, but also in the following phases of the life cycle;
• Considering that the main goal in this phase is for the consumer to try the product, the primary focus in the framework of TM activities is in-store – sampling promotions, which refer to the distribution of product samples to consumers, and then tasting, which entails allowing consumers to taste/use the product on-site;
• The analysis of consumer comments is an indispensable part of collecting information through promotions, which are further summarized and processed in the following stages, all to further improve the product itself and its further development strategy.

In the second phase, the product continues to search for the best positions on the market, with significantly higher expectations to achieve a certain market share. The product is gradually becoming recognizable among buyers and consumers, and TM activities are even more intense. At this stage, it is already possible to recognize the differentiation from the competition within a certain category and the “fight” for a place on the shelf.

In the growth phase, TM activities are directed towards emphasizing the image and brand of the product itself. Examples of TM activities in this phase are organizing and participating in prize games, devising activations with freebies with a certain purchase threshold, such as VAP items (value-added packaging) where the consumer receives a gift that is already packaged together with the product/s or “gift with purchase” activities that imply the distribution of gifts directly in the facility with the condition of purchasing a defined assortment. In addition to participation and active proposals in the conceptual sense, trade marketing is precisely the one that further develops ideas in detail, and follows all steps up to the very implementation. This is followed by an analysis of the effects of all implemented activations in the form of detailed reports to other competent sectors in the company, which are key to understanding the effects of the product, comparing it with the original goals, and harmonizing the next steps for the development of the launched product on the market.

When it comes to price promotion activities, which are the most intensive in this phase, trade marketing has a significant role in terms of giving promotion guidelines and price performance on the market, which is a direct result of market research, opportunities, and competition.

In the third and fourth, i.e. the stages of maturity and decline of the product on the market and the moment when the product will enter them, the success of the first two stages is visible and it is possible to conclude whether the initial strategy of product launch on the market was long-term. The maturity stage is often the longest stage in the product’s life and the TM task is, among other things, to maintain the acquired market share with its regular activities and prevent loyal consumers from becoming interested in competing products within the same category. In addition to a slightly more aggressive performance in promotional activities primarily organized by trade marketing, manufacturers, on the other hand, based on sales analyses and brand positioning on the market, decide to create product extensions in the form of new flavors or new packaging, depending on the product category. In this way, we try to avoid saturation of end consumers and provide them with new opportunities.

The last phase, the phase of decline, is certainly not the goal of any producer or other links in the supply chain. The decline, i.e., the product extinction, depending on the category, characteristics, and trends on the market, can be a natural phenomenon, where the product is no longer attractive for use or consumption, but it can also be a consequence of the greater success of the competition, which has won over our consumers. In the decline phase, profits can no longer be expected since the costs of maintaining an already launched product are increasing, so the goal is to withdraw the product from the market in the most effective way possible or to keep it in minimum quantities and the minimum number of sales facilities.

The rapid development of the market includes, among other things, consumers who constantly expect innovations and improved quality of the products they consume. To satisfy the consumer needs and wishes, and for sales to have constant growth, companies must often work on the development and launch of new products. The correct launch strategy is the first and most important step that precedes the product’s life, and the TM sector plays an important role in the initial stages and continues with activities and monitors the product’s life, to spark interest and retain loyal consumers in the long term.