Brand Planning: Strategic approach to ensure implementation

After almost 2-years without writing essays (articles) about the input industry, I decided to organize my day to keep writing about this subject that I am very passionate about. In this week, I will try to explain a process that I think should be the best approach to build a product or brand plan for any company. Here, I will share a general overview of this process and explain differences between R&D and Generic firms that may help to clarify different approaches. In the following weeks, I will break down this process to go deeper into each pillar of this brand/product planning process. 

What is the product or brand planning process?

It is a process that allows companies to ensure a successful product or brand implementation in the market. This process must consider the top brands (or products) that financially impact the company's performance (80/20 approach) in both the short-run goals and long-run growth. Additionally, this activity must be done yearly (either created or updated) because it helps to ensure that the commercial department (Marketing and Sales) has a strategic and aligned plan.

Key components of the product/brand planning process: Companies to successfully grow their business and implement their strategies need assets. In the input industry, there are 2-types of assets; active ingredients and genetic materials. In both cases, they are the backbone of a product (AgChem and Seed firms, respectively). In consequence, if companies want to grow their business, they need a schematic way to approach the marketplace in order to maximize their growth opportunities. In other words, companies need a process that considers a holistic approach that allows them to position their brands (or products) in the marketplace. In this brand planning process, I am proposing a way that takes into account five pillars that may help product managers (PMs) to implement their business strategies and tactics into the market: Technical product positioning, market insights, financials, supply & logistics, and registration plan. 

1. Technical Product Positioning: This is the most important pillar of the process because sets the expectations about the product. Here, the PM must consider the technical features of the product in order to translate those differentiators into key positioning messages that support the product (or brand) positioning into the growers' mind. For instance, in order to do so, the PM must need to compare product technical features with the best alternatives to that product. Then, the PM must consider those features to assess whether those are relevant to the grower; this activity is known as validating Key Buying Factors (KBF), which allow marketers to maximize the communication points about their product and align those key core messages with the grower's needs. In a nutshell, the technical product positioning is crucial because provides you with scientific evidence about the product's performance, which can be used to build the strategic plan about the product considering brand positioning, price positioning, go-to-market (GTM) strategy, and sales training.
2. Market Insights: This is a complementary pillar that helps to create more realistic scenarios for the strategy and tactics (long-run and short-run, respectively) for the product. Information such as market size, market share, biological targets, treated acres (or hectares), cost per acre (or hectare), potential new entrants to the market, crop prices, active ingredient prices, and so forth allow marketers to build a robust plan that can be executed in the market accordingly. 
3. Financials: This pillar allows the PM to understand the contribution or profitability of the product. So, to calculate it, the company needs to know the cost of the goods sold (COGS), which is crucial, and company's behavior will depend on the type (R&D or generic) and size (large, medium-size, or small-size) of the firm. For instance, large R&D firms tend to use standard costs, a process that calculates the cost every year to simplify commercial operations (it is calculated approximately 4 to 5-months before the start of the next fiscal year). This invariable cost allows companies to be focused on the market and avoid fluctuations that are not related to the end-user. On the other hand, the vast majority of generic (off-patent) firms tend to work without standard costs, which impact directly their monthly operation because the commercial teams tend to be focused not only on what is happening with the end-user (or customer) but also in the supply side because any increase in raw materials will impact the product profitability. Why financials are so important? Financials are directly related to price setting. However, they will be crucial for the Cost plus Margin approach and less relevant for Value Pricing approach. The first one considers a minimum margin and requires continuous monitoring of such factors that impact the cost of the product to set the price. The main risk of this approach is that it may lead to setting higher prices for growers willing to pay less for a similar alternative and lower prices for growers willing to pay more for a similar alternative. Conversely, the Value Pricing approach (click here for more details) considers internal and external factors; as internal factors, it considers the technical features of the product and tries to match those of with the KBF of the end-user (external factor). As external factors, it considers the best alternative prices of the product. To conclude, in this approach, the most important factor is the willingness to pay (WTP) of the grower, and the contribution margin is considered as a threshold and does not have a direct influence on the price-setting decision.
4. Supply and Logistic: This strategic pillar allows PMs to understand how to forecast volumes accordingly. Many organizations have built a forecasting process that covers 24-months. The first 12-months are the ones forecasted by the sales team. The remaining months are the ones forecasted by marketing. In both cases, the alignment of both departments is crucial because it helps to understand the risks of not fulfilling the purchase orders (PO) compromised to the customer (distributor). Why is so important the supply and logistic plan? Because it allows the company to match the supply with the demand of each product. Thus, it aligns expectations of the commercial teams based on the availability of products (defined as the sum of active ingredients and other raw materials). What happens when we have a shortage of raw materials or active ingredients? It may create a shortage on the supply side, and the company must decide what orders should be fulfilled based on certain KPIs such as contract obligations, profitability, and the importance of that product in the respective market. In these cases, companies may have to decide whether to increase the price of the product or not. That decision will depend on how long this raw material shortage may last. For example, when the shortage is more than 1-year, it is recommended to increase the price in order to adjust the product demand. Conversely, when the shortage takes less than 1-year, the final decision is debatable and will depend upon how that company manages those raw material restrictions.
5. Registration Plan: This pillar is relevant when we talk about R&D firms; especially, when they try to launch a new product with patented active ingredients in the market. The most common strategy to launch new products is by using waves. For example, the first waves are focused on the largest markets such as the United States, Brazil, France, Germany, Spain, Argentina, India, Mexico, etcetera. The second wave and the following waves are focused upon the relative importance to the organization of the other markets (countries). What happens with generic companies? It will depend on how robust is the marketing structure. For instance, when R&D firms introduce a new brand (that contains a patented active ingredient), they tend to design the logo and register the brand globally. For that reason, you can see the same branded products in several countries (this applies to many industries). However, sometimes there are cases that those firms need a backup plan with a second or third brand name when regulations of some countries impact registration of either brand name or prefix or suffix. On the other hand, generic firms tend to be different. For example, most of the time such companies do not have those robust marketing structures that allow them to build global brands. In consequence, they have to create a different brand for each country in which they operate. Nevertheless, even with this huge disadvantage, these firms have a tremendous advantage while registering products because they tend to have a fast track to register an off-patent molecule (previously registered by an R&D firm many years ago). As you can see, the registration plan is crucial for the success of any new product launch or label extensions because it helps the PMs to forecast sales of the new products accordingly (considering the local restrictions or regulations). For instance, to register an off-patent product in the Dominican Republic takes approximately 6-months. However, if you want to register a new product in Costa Rica it may take at least 7-years.

To conclude, there are many ways to approach the market, in the approach proposed, I try to explain the importance of planning and building processes that allow companies to go to the market considering a holistic view. In the following weeks, I will double click in each of these 5-pillars in order to build a robust presentation that allows PMs and Marketing managers to convey the strategic plan effectively to the commercial and strategic teams within the organization.