Generating predictable and sustainable free cash flow is an important part of a growing and successful CPG enterprise. Many entrepreneurs immediately want to get their products onto the shelves of major retailers, such as Walgreens or Walmart. However, major retailers have new vendor terms that mitigate risk for the retailer until a product and/or company has established a predictable sales rate and the new vendor can be put on regular terms. Many times these new vendor terms substantially restrict a company’s working capital that could be used to successfully open up many other retailers. We often will begin with high volume regional chains that have the greatest ability to sell your products. Once we have an established rate of sale and better understanding of your product’s turnover rates, we are able to more intelligently expand your presence in the market place while maximizing your working capital and free cash flow at the same. At BMG, we have the experience and knowledge to come up with the best long-term strategies for our clients and their brands.
While gaining distribution in a major retailer is a remarkable success on its own, there is still much more work to be done. Products do not just sell because they are on the shelves of retailers. We use consumer research to determine product positioning and data analytics to make product pricing decisions. Through a combination of ad frequency, pricing metrics designed to drive trial and conversion from trial, and the PR we generate if the manufacturer invests in the right resources, we can create awareness for the brand.
Making consumers aware of a brand and making the brand identity memorable to consumers, are equally important in developing a long-term brand strategy. Getting onto shelves is one thing, but selling the product to continue generating free cash flow is another challenge. We do not focus solely on getting products into stores, we focus on ensuring the product continues to sell.
At BMG, we think about the future of our clients’ brands. Products evolve at a rapid rate. To stay competitive and keep our clients at the forefront of the market, we meet with retailers to understand what trends are in the pipeline and what they are looking to sell to their customers. This information allows us to work with manufacturers to re-imagine their products and move in a direction that gives them a competitive edge, while also proving beneficial to the retailer and the consumer. Major retailers expect brands to have new products every year. We ensure our clients have an ongoing program for generating new products beyond the original one and that their new product introduction is at a rate equal to or greater than the new product contribution to the category they are competing in.
We do not sell products, we sell asset value. There will always be more affordable (cheaper) products on the market. That is why it is important to show the value of the product. It is impossible to create long term asset value by being the cheapest out there. We must prove to retailers that our products are more than a specific price, but that they add value to and have a place on their shelves. Consumers have needs, and we focus on bringing solutions to these needs. We build strong brands that wrap around consumers in a way that make them want to stay loyal to our brands and continue buying our products, even if there is a cheaper one on the shelf.