How to develop a promotional and pricing strategy when launching a retail brand

You've spent years perfecting your formulation and packaging, have sweated blood, tears and every ounce of your creative juices reaching the point where you're finally happy with your brand.

Now comes some more hard work; finalising the commercial element!

This might be something that's out of your comfort zone as a creative, brand-led business owner. But in this blog, we demystify some of the decisions you need to make next to ensure you deliver a fully rounded presentation to the retailer of your choice.

Commercial strategy

The first question to ask yourself is what is your strategy when it comes to commercially launching your brand. There are several options here.

• Do you want to gain as much product reach as possible, and penetration of your brand into as many household as you can?

• Do you want to drive average weight of purchase (AWP) to make sure your customers are spending as much as they can on your brand?

• Are you targeting frequency of purchase (FOP) and getting customers to buy your product more often?

Penetration, AWP and FOP are the key levers that will generate sustainable brand growth.

You can use a selection of these levers during the product lifecycle to drive different customer behaviour at different times.

Target customers

At this point in your product development, you should have made a final decision about who is your target customer. You should have a good understanding of their spending power and their sensitivity to price.

This should formulate a huge part of the recommended retail price (RRP) decision. Don't price your target customer out of your brand. Ensure you make the RRP and any promotional activity achievable for them.

Also, your promotional activity must support your strategy as above. To drive penetration, a price point promotion would be most sensible. But if you're focused on AWP, a multibuy would be preferable.

Market and competitors

You must carry out a full assessment of the market in which you'll be launching.

You'll need to make sure that you're pricing and promoting your brand in such a way that it either fills a gap in the pricing hierarchy in the market or is accessible to new customers so that they can trial it with limited risk.

Also be aware of the pricing ceiling in the marketplace. Very few new brands can launch at a higher price than the brand leader.

Retailers

Visit the stores or online shops of the retailer/s in which you're looking to launch to assess whether your RRP and promotional activity are viable.

Is your RRP in line with the competitors listed in that retailer? Does it give you a clear position in the range of that retailer?

Look at what type of promotion the retailer is running in your category. Do they often run cross-category promotions, for example, three for two across all skincare or are there more single price point promotions?

This will give you a clear idea of what activities are successful in the retailer of your choice so that you can create a promotional plan to fit.

Purchasing pattern

When working through your promotional plan, also think about the purchasing pattern of your brand.

Think about how often a customer will return to buy your product, and create promotional timings that work within the repurchasing pattern.

If your brand is highly seasonal, be sure to make the most of the season with some promotions that will generate you a high level of market share.

Profitability

Obviously, throughout this entire process, you need to hold your future profitability at the forefront of your mind.

Ideally, your RRP and promotional strategy would be decided prior to finalising your formulation, packaging and branding. That way, you know you have a rounded commercial proposal that will be profitable for you in the future.

However, at the very least, you must have a clear pricing and promotional strategy before you present your brand to any retailer.

Not only are you confident that you can financially deliver what you promise, but they'll also have belief in your brand's commerciality.

This may seem like a time-consuming process. But get it right first time and you'll stand a much better chance of being profitable, gaining a loyal customer base, having a strong position against your competitors and being able to invest in the future of your brand. Good luck!

Relevant resources

• How to price your products and services

• Lunch and Learn: Pricing for confidence and profit

• Lunch and Learn: How to charge correctly as you scale