Go to Market Series, Fall 2018. Installment #3: Production
Brand prosperity is a lot like the root system of a tree. Although hidden beneath the soil, the root system of a tree is the origin of its strength, stability and capacity to flourish. A nourished root system grows a tree that produces a bountiful yield. Conversely, a deprived root system can compromise the tree’s ability to produce at all.
In similar fashion, the root system for a brand must be strong and healthy for the brand to prosper. Each root is an integral part of a brand’s path to not just bear fruit, but flourish. A strong root system for a brand is rooted in a disciplined and methodical Go to Market strategy. This is the third in an 8-week series outlining the framework of a successful Go to Market strategy. The previous articles can be found here:
The third root in a successful Go to Market strategy is the focus of this article: Production Strategy.
Thank you for your interest in this topic. We welcome your feedback and comments, and the opportunity to help you on your journey.
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Many service providers focus on sourcing suppliers for ingredients, packaging, and manufacturing/production, as well as oversight and advisory on the operational logistics associated with the aforementioned elements. It is highly likely an early stage brand will work with one or more of these fine partners and companies, and likely stay with them as they grow. While navigating each process there are dozens of questions to help providers define the product “spec” – specifications that guide them to conduct searches and manage processes to the founder’s expectations and arrive at the desired outcome.
Defining your values and Purpose before entering these processes is critical to ensuring the end result is consistent with your original vision, or in the very least, provides a compass to guide you in the many decisions and changes you may need to adapt to along the way. For background on defining Purpose, see this article, the first in this series.
This article focuses on the decisions made surrounding a product’s Production that create or impact its positioning.
Ingredients
Ingredients are a focal point for consumers when considering a product. In broad terms, consumers consider the following characteristics about ingredients:
- Seeking or avoiding… in other words the presence or absence of growth moderator and/or animal welfare (non-GMO, grass fed, antibiotic free, etc)
- Processing level (from raw to highly refined or isolates)
- By extension:
- Farming practices and stakeholder welfare
- organic, sustainable, human and labor standards, environmental practices, business ethics, supplier diversity programs
- Transparency and traceability
You could conduct or buy consumer research to identify the importance of these in your category, but let’s save the research time and money – choose to take a leadership position on ingredient quality and standards. Don’t accept the structure and inertia of the food processing system to dictate your options – set your standards and go after it.
Not all ingredients are created equal and one of the most consequential decisions for ingredient supply is quality/integrity vs price. Often these are directly correlated (as price increases, quality increases). Different tests evaluate different factors to help determine the “quality” of an ingredient, and it’s important to conduct them or obtain certified results to verify. It’s also an implicit part of transparency.
As part of the quality vs price decision process (and many other decision points), your business model, market pricing, margin and profit objectives are almost always in a dynamic state of reconciliation with the brand’s purpose and values. Sometimes these are difficult choices that require compromise or self-promises to make temporary adaptations with the goal to adjust as the brand scales. Though well intended it may be hard to revisit when there’s so many variables to account for down the road. The more defined and committed you are to your purpose and values before you get to these forks in the road, the more obvious the answers to the decisions can be along your brand journey.
One ingredient supplier suggests the following: take the time to understand what you are spending your money on when sourcing ingredients. Why is this ingredient that certain price? What are past prices on said ingredient? Is this cost effective ingredient sustainably sourced? Is this high priced product reflecting high quality, high functionality and readily available with low risk of interruption? Are there viable alternatives? Pause and define your priorities, ingredient application and function prior to checking out your sourcing options.
Other considerations about ingredient selection:
- Seasonality and consistency of supply – Can demand be forecasted to secure sufficient supply to bridge over known periods of non-availability
- Quantity of supply - if a ‘new’ ingredient is emerging in the market, or demand creates tight supply (commodity vs specialty nature of an ingredient impacts this factor)
- Origin – is a local/regional/US source your priority or is imported acceptable?
Sustainability & renewability – this is a REALLY complicated issue. A simple example: A single almond consumes one gallon of water to produce, but growing almonds often replaces even more water intensive crops like cotton and rice. I’ll simply summarize by strongly suggesting considering an ingredient’s true cost, which refers to the environmental and social impacts to farm, transport, process and package your ingredients.
Formulation
As highlighted in the prior article about Product, taste reigns supreme. Formulation is directly correlated to taste, which can be broken down into Flavor, Texture, Aroma, and Consistency. When it comes to flavor, there are of course “5 tastes”, but I’ve added two others:
- Sweetness
- Sourness
- Saltiness
- Bitterness
- Savoriness (“umami”)
- Pungency/Spiciness
- Astringency
Are there commonly accepted expectations for flavor, texture, aroma, and consistency characteristics in your category you must formulate to achieve? If so, then the opportunity for differentiation via formulation is limited. On the other hand, if your category and consumer target permit (or desire) experimentation and discovery, use your formulation to push the envelope on one or more of these, and be “known” for it.
If specific ingredients are a consumer focal point , in broad terms, consumers also consider the following characteristics about formulations:
- Ingredient list length
- Approachable/recognizable
- Macronutrient features (high/low fat, carb, protein, fiber, antioxidants)
- Absence/presence of artificial/nutrient dense ingredients
As described in this series’ article on Product, look across the category and identify the common and emphasized features. Then look at adjacent and complimentary categories, and even disparate categories. What do they have in common? Where do they differ? How is your product distinct and alike? Can you combine sought-after attributes from multiple categories? Does your product elevate some aspect of the target category? Most importantly, what is important to your target consumer? Why does the consumer buy product ‘A’? Why don’t they buy that same product? Why does your consumer need your product?
If consumer considerations noted above for ingredients is more inclined to educated, higher income individuals (though thankfully that’s changing to be more inclusive), I would argue that formulation is where a brand can also take a leadership position. About 20% of the population is not engaged with their food for awareness or financial reasons. For them, the food system exists simply to feed them, and their ability to live well based on their state of health can only be as good as the inputs into their lives. Choosing to formulate for short & clean Ingredient lists, optimizing macronutrient features, excluding artificial and highly refined crap, and including nutrient dense ingredients, also serves to help those who are simply in need of something to eat and who benefit unknowingly.
Lastly, the orchestration of formulation includes optimizing for profitability, also known as the buzz kill of culinary artistry. It doesn’t have to be of course, but having fun with formulating and designing new products does have a practical side… Enough said.
Preservation
The implication of preservation method on merchandising was treated in the Product article of this series. The implication of preservation method on product & brand positioning can be an afterthought, if any thought at all, or it can be the basis for your innovation and differentiation. My favorite current example of this is Once Upon a Farm baby food. The HPP (“cold pressed”) process extends shelf life of fresh foods with minimal effect on nutrients, enzymes, and flavor, resulting (in this case) the freshest baby food possible short of making it yourself. This is a major disruption to the baby food category whose majority of sales are from pasteurized shelf stable products. Where else can we freshen up traditional shelf stable foods?
Food preservation prevents the growth of microorganisms & bacteria, slows the oxidation of fats that cause rancidity, and inhibits visual deterioration. Some examples of preservation include:
Canning Heating/Boiling
Curing High-pressure preservation
Fermentation Pasteurization
Freeze drying Pickling
Freezing Vacuum packing
What if you stopped to think how preservation method might be an opportunity to differentiate for your product. Just for fun, pick one of the above methods and force yourself to reconfigure a product based on that method instead of its traditional method. Is something there worth pursuing? Think outside the box.
Packaging
Packaging is as much about branding as is messaging and artwork. For good reason, there are entire agencies and processes built around packaging design. I’ll simply offer a few ideas in the theme of this article:
Will packaging be a point of differentiation? Will you use the standard category package, or can you employ unique (or subtle) differences in size, shape, form, and material composition?
Take a fresh look at the use occasions for your product. How can a package be designed for being use occasion friendly?
Consider the material composition of the package – are the materials environmentally friendly? Does the package production process use caustic chemicals? After use, is the package and its materials waste-stream friendly?
Certifications
Certifications are third party validations that translate to trust for the buyer (you and your business, if on the supply side) and the consumer (when on the finished product at shelf). Certifications implicitly assign a higher value to the certified product, and consumers tend to put more trust in certifications over brand-made claims. For some attributes like Kosher, there are numerous certifying agencies, each with different standards to earn their seal. When in doubt on any certification choice, choose the one with stricter criteria when possible.
Certifications also cost money to obtain, which cascades to the retail shelf price. Some questions to ask when considering which certifications to invest in:
- What are the risks, threats, and hot buttons for your ingredients or processing plant for which a certification can diffuse or eliminate consumer concern or aversion?
- What are the common certifications in your category?
- What matters to your casual consumer?
- What matters to your target & engaged consumer?
I’m an advocate for obtaining certifications because of the linkage and values message it conveys about your brand & product, not to mention it is simply good business practice to work with outside resources who exist solely to ensure the integrity of the inputs and practices you and your consumers desire.
As a result of the industrialized food system as the norm, companies with practices and inputs better than this norm need to invest in certifications, and consumers end up paying a bit more for those assurances. Wouldn’t it be nice one day to see the reverse – high integrity ingredients, practices and processes as the norm such that companies outside of this norm are the one who need to make the claims that they don’t follow best practices? This is kind of the case with GMO labeling “requirement”. Hopefully we’ll soon see this revised to being more transparent and consumer friendly, and then translated to more practices and ingredients.
In summary, considerations for production encompass ingredient selection, formulation, preservation method, packaging, and certification selection. Aligning to current trends gets you to the starting line, while thinking outside the box could mean breaking away from the crowd....
Next week: The other side of product strategy: People (consumer) strategy