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ROADMAP

STAGE 1

e) Route to Market
Continued

Understanding the inancial relationship with your distribution partner

In order to facilitate a productive discussion with your distributor and consumers, you irst need
to conduct some speciic pricing research designed to help you fully understand the value of
your proposition in the marketplace. Your analysis should include the following steps:

Observe
Observe your key competitor’s pricing and promotion activity on-trade or of-trade from a
consumer’s perspective. What do consumers see and experience? Does it motivate them to
purchase one brand over another?

Talk
Talk to retailers, publicans and distributors about their needs and margins in the sector. Explore
any lexibility or special arrangements needed for new products.

Determine
Determine your own cost of goods (COGs) and include a sustainable margin for you & your
business to succeed in the long-term. You’ll need suicient margin to generate enough funding
for your advertising and promotions (A&P) activity on an on-going basis (see: A&P Budgeting -
link)

Please note that your pricing tree must also contain provision for VAT & excise duties which are
signiicant in the drinks sector and will vary greatly by market. See example that follows.

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