Marketing your products and services
Market entry
Suppliers of natural health products in the UK have a variety of channels:
- Traditional retailers
- Mail order sellers and e-tailers
- Clinics and to health care professionals
- Direct sales to consumers - this requires a high level of logistical support
UK retailers rarely buy direct from overseas companies. Category management is common, and buyers reduce sales costs by limiting the number of suppliers. Market entry strategies include:
- Appointing a distribution partner to handle importing and customer liaison
- Managing the customer base from Australia and find a fulfilment company to warehouse and ship to the customers
- Setting up a UK office
- Sending one of your staff to the UK as a representative
- Sharing distribution with another Australian company – preferably with a synergistic product range
- Manufacturing your products in the UK under contract or license
- Undertaking a joint venture with a UK company
Of these options, the most effective is probably appointing a distribution partner. A UK company will understand how to best present your products, comment on changes to your packaging and will understand how to place the product in the market. These skills take time to acquire and demand exposure long-term to the market.
UK based companies expect to have long-term relationships with their suppliers, working together to achieve sales targets. This means that Australian exporters should consider the UK as a long-term strategic destination.
Smaller distribution partners often specialise in a particular product sector and may service customers on a regional basis or may supply only certain types of retailer. This means that an Australian exporter may require more than one UK distribution partner in order to access the entire market.
It should be noted that the number of experienced distributors is limited, and it is important to check for conflicts of interest. You may need to work with a smaller or less experienced company as a long-term project and build sales gradually.
UK consumers are very discerning when it comes to packaging and presentation of the product. It is best to work with a UK-based specialist to develop packaging or branding suitable for the market. Your distributor should be able to help. The wrong packaging or marketing will mean that the product won’t get listed with any larger stores, and that sales are likely to be restricted. Don’t assume that your British consumer will have the same characteristics or habits as your Australian consumers.
When presenting your product to a UK retailer, either direct or via your UK distributor, you will need to consider the following:
- What is the value to the retailer of listing your product
- How your product ‘fits’ in the current product offering
- Who the target consumers are
- Projected level of sales
- What the retail price will be
- What margins the retailer and distributor expect
- How you are going to promote the product?
- Are you willing to change the product ingredients or packaging to suit the retailer?
- Is an exclusivity deal appropriate?
- Are you ready to provide product samples?
You will need to tailor your presentation to each retailer in order to be successful. Visit as many stores as possible to build up a picture of the retailer’s consumer base and consider how your product fits their needs and aspirations.
Research the sector and your potential competitors thoroughly before making contact with customers. Take advice from your UK distributor.
British companies prefer to have brochures and product samples, rather than relying on websites for information. Use of the Internet is widespread, but a physical brochure or sample in the buyer’s hand tends to make a faster impact. Brochures don’t need to be expensive, but they should:
- Accurately project the values of your company
- Include technical information
- Give full details of all products in the range
- Mention the benefits of the product to the retailer – perhaps including a case study of an Australian retailer
Don’t talk about the curative properties of your products, as this means the brochures can’t be used as sales material under UK law.
Pricing information should be provided separately to keep the brochure up-to-date. It should also be in UK pounds where possible, or at least in Australian dollars with reference to a current exchange rate.
There are many business-to-consumer e-tailers and information sites active in the UK health sector. These include:
Business-to-business e-commerce activities are less well developed in the UK. If you do offer your products for sale to the UK and Europe over the Internet, you will still need to comply with British and European laws.
Distribution channels
An approximate percentage share of the natural health sector is as follows:
- Pharmacies – 60 per cent (declining)
- Supermarkets – 19 per cent (increasing)
- Health food and specialist stores – 19 per cent (steady)
- Direct selling – 2 per cent (increasing)
Pharmacies
Leading pharmacies include: Boots (claims 30 per cent of the entire UK natural health sector), Lloyds and Superdrug. Pharmacies, or chemists, sell a wide range of prescription, over the counter medicines and natural remedies. They also stock an increasing range of consumer-type cosmetic and toiletry products, many with a natural or organic element. Some pharmacies have a pharmacist trained in homoeopathic medicine on site to offer advice.
Supermarkets
As in Australia, almost every aspect of day-to-day shopping is dominated by the ‘top multiple’ supermarkets. The UK’s leading supermarket retailers are: Tesco, ASDA, Sainsbury's and Morrisons.
Most of the stores have at least a couple of aisles of healthcare products, and many have a full-scale pharmacy in-store. The big retailers prefer health and bodycare products because the margins are greater than on foods, and the products are usually easier to store.
Almost all retailers will want to buy from one of their known suppliers, or from a company based in the UK. Some direct selling companies will buy direct in order to keep costs down, but almost all of the other companies will want someone to handle the import issues for them. This means you will need to have a UK distributor, or some form of representation in the UK.
Health food and specialty stores
Leading health food and speciality stores include: Holland and Barrett, Julian Graves, Whole Foods Market and Planet Organic. The number of health food stores is declining as supermarkets offer an ever-widening range of natural foods and remedies. Holland and Barrett remains the largest company in this sector, the other players being small chains or with a regional focus. A recent trend is the emergence of specialist organic retailers, many of whom stock more than foods.
Direct selling
Direct selling by mail order is a popular and relatively cheap sales method for health products. All mainstream magazines and newspapers have advertisements for bulk purchase herbal supplements. Many of these companies also have e-commerce sites on the Internet.
If you set up your own direct selling operation in the UK, you will need to be aware of consumer protection legislation. It is worth becoming a member of associations such as the Direct Selling Association, which provides a code of practice for members.
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