How DTC is Informing Brand Line Extension

As brands increasingly connect with their consumer, they are able to make better informed developments to their existing lines, evolving with the current consumer trends, tastes and habits.

In a recent blog entitled: ‘Direct to Consumer Strategy – Why is Now the Time to Pivot and Innovate?’ we discussed the emergence of a revolutionary new era for manufacturers, consumer packaged goods (CPG) and other categories as they are being forced to take on the direct-to-consumer (DTC) mindset and pivot towards a DTC model. We outlined some of the benefits of such a model (for the full article, navigate back to our blog homepage), including how a DTC model offers an invaluable means through which brands can build consumer relationships.

We found that digital engagement and data collection against target customers allows retailers to understand their consumer like never before. Data-driven feedback can ensure new product development (NPD) or product evolution is aligned with current moving consumer trends, tastes and new habits. This route to market allows brands to better understand their targets and iterate their products to serve our customers more effectively. In the long term, this should improve our customer lifetime value.

This route to market allows brands to better understand their targets and iterate their products to serve our customers more effectively.

Now, this renewed understanding of their customers is allowing brands to make informed developments and extension/adaptations to their existing product lines in a process off ‘product line extension’. A ‘product line extension’ is addition of new products that are slightly different to a company’s existing range.

But, whilst line extension can be a risk in it not being adopted by consumers who are loyal to an existing line, as brands connect with their consumer they are able to make better informed developments, co-creating with consumers when extending their lines to ensure the product is right first time.

Suddenly, brands are able to develop their pipeline to more effectively adhere to consumer needs and with focused target are able to position the new products on the market successfully. An example of this process may be:

– A large grocer has reduced footfall during the pandemic due to consumer safety concerns.

– Pre-lockdown they had used a delivery service (such as Ocado) to distribute their online orders.

– To cut costs, the grocer decides to explore alternative distributions channels, launching an online delivery service via their website and pivoting to DTC by terminating their contract with the delivery business. All online deliveries are now done directly through the grocers own site.

– Through sales tracking and frequent sales mix review as well as analysis of online bookings, the grocer is able to better understand their consumer buying patterns.

– They find that different consumers tend to shop at different times and that buying patterns change throughout the week. They find that meat consumption and alcohol is down during the week, but purchases of vegetarian alternatives and low/no alcohol is up.

– As such, the grocer direct NPD into meat-based alternatives, low/no alcohol substitutes and vegan products.

This is just one example of how pivoting to a DTC model could inform focused brand line extension.

If you are looking for commercial advice on pivoting your brand, or want support with your latest NPD, get in touch with a member of the KICR team to find out how we could fast-track and support your next project.