Why You Need a Strategic Review, Not a Re-Brand
When early-stage businesses struggle in the premium end of consumer-packaged goods, a shocking number of founders and operators leap to the conclusion that they need a “brand refresh” or a “re-brand.” Look, branding agencies are numerous, and they network heavily at Expo West. They sponsor events routinely, from Bevnet to Nutritional Capital Network investor huddles. In this context, in which founders who have little to no professional experience with what a branding agency does later often pass themselves off as business strategists to the naive. Very few of these agencies can command the data necessary to play that role with a business owner. Many don’t use the correct data or any data. Read Mark Ritson’s hilarious take-down of sh*t branding consultants if you think I’m exaggerating.
Branding outfits are not experts at competitive analytics, let alone experts on the data driving your market performance. They are communication tacticians. When they say “strategy,” think “communications strategy” to use symbolism systematically to influence the trial.
The underlying mistake new founders frequently make is gravitating to tactical service providers to solve ALL their business problems, real or imagined. I get it. These folks provide you something tangible you can immediately deploy. A new pack design. A better sales deck. Funding. A marketing campaign. The problem with this tendency is that it relies on a significant assumption, a massive elephant-in-the-room of your company: the assumption that your strategy is well-thought-out.
Strategy-less tactical fiddling is a pervasive problem among early-stage founders.
Let me give you a blinded example of how this goes wrong to make my abstract point super concrete. An otherwise highly disciplined founder I know entered Walmart exceptionally early on in the life of the business. When sales wildly underperformed vs. the mainline supermarkets he was also selling, he immediately hired a marketing consultant whose objective was to increase Walmart sales. And this consultant dutifully set out to execute a campaign that did generate a brief boost in the trial through simple awareness building. But the founder’s error was not in hiring the consultant. That was a symptom of a more significant problem. The problem was being unable to back out far enough to put into question one straightforward thing: Why the hell are you selling your thing in Walmart? How was that decision made? Why aren’t you just doubling down on your high-velocity supermarket sales with world-class out-of-store marketing?
So many questions arise when I see founders jump uncritically to this or that executional P as the ‘solution’ to their problem du jour.
By refusing to accept that he didn’t have a real competitive business strategy guiding ALL his execution decisions, this founder hired a tactical consultant to execute his self-diagnosed solution to a B2B problem. And because it worked to solve his immediate problem for a while, his eye was taken off the real problem: Walmart continues to underperform his other accounts on a velocity basis wildly. I can assure you from years of experience in CPG that mainline brands do not underperform at Walmart. Lays. Oreos. Pepsi. They see their highest store velocities at Walmart. Oh, but wait, you’re not selling cr*p like that, you say?
Yes, you’re right, which is why you need a competitive strategy for a premium CPG business. It optimally moves through society to create rabid fans who make high-efficiency sales at maximal unit pricing.
What needed to happen with this founder was something few inexperienced founders even know is an option: back way out and conduct a total, empirical review of the business and the strategy guiding it (implied or written down). When you enter a retailer and faceplant, it almost always means you had no well-thought-out strategic plan showing your selection of retailers. Instead, as is typical, you were focused on strategy-less account accretion. You were running a B2B business.
In premium CPG, your price point alone alienates ~90% of potential category buyers. So, you have to fight very hard to gain attention, generate memorability, and secure repeat purchases. This competitive situation more or less makes modern strategic planning essential.
In Part 2 of this series, I’ll explore what a strategic review involves and the tangible benefits it has for founders.
If you’re a founder who’d like to learn more about creating your competitive strategy and strategic plan for exponential growth just like the pros, please register HERE to join the next cohort taking my Riding the Ramp training webinar on July 9th. I look forward to meeting you there. Only 19 slots left.