Learning more about target audiences, investing in product development to expand product lines, developing a branding strategy to differentiate products in the marketplace and entering new markets are some ways to expand direct-to-consumer marketing strategies.

As the dairy industry evolves to meet the diverse needs of consumers, product innovation has become essential. Recently, Cal Poly hosted a short course titled “Farm-to-shelf: Sales and marketing essentials for dairy brands” at the Dairy Products Technology Center, where Dr. Carmen Licon leads the way as director. I co-taught this short course with Meg Faibisch Kühn, and we had the pleasure of educating both established and aspiring cheese and dairy brands with practical strategies to thrive in today’s dairy industry.

For dairies considering diversification, here are 10 important suggestions, inspired by the workshop’s insights, to help ensure a smooth and successful roadmap into innovation and diversification.

1. Market research and customer insights. Before exploring diversification, it’s great to conduct in-depth market research to discover promising niche markets. By gaining a solid understanding of your target customers – like their preferences and buying habits – you can tailor your product to truly meet their needs. Are they fans of organic dairy, unique specialty cheeses or functional items such as high-protein or lactose-free products?
2. Operational capabilities. Review your current operations and evaluate whether they support new product lines. Some diversification options might require minor adjustments, while others demand significant upgrades or new equipment. Will your expansion disrupt current operations?
3. Investing in product development. Niche markets thrive on innovation, so invest in recipe development to create new products. Artisanal cheeses and premium butter use specialized techniques that set them apart from mass-market options. Consider testing in small batches to gauge customer reactions before a full launch.
4. Brand storytelling and marketing strategy. Diversifying typically involves creating a distinctive brand identity that appeals to a specific consumer. By developing a consistent narrative that emphasizes your dairy’s heritage, sustainable practices or unique production methods, you can differentiate your product in the marketplace. Are you showing “behind the scenes” on your social media? This can enhance your storytelling.
5. Distribution channels and partnerships. Entering new markets often means finding new ways to reach customers. Direct-to-consumer (DTC) models, like farmers' markets, direct partnerships with local grocers or food festivals, may be ideal for innovative products.
6. Sustainability and certifications. For niche products, especially organic, non-GMO or grass-fed, certifications and claims are helpful. These not only build consumer trust but also open doors to retailers that prioritize specifically sourced products. Ask your store buyer what claims are most important to their shoppers before you invest in the time and expense of anything new.
7. Financial planning and risk assessment. Entering a new market can be financially scary. Create a financial plan that outlines projections and potential risks. Risk assessment helps identify potential challenges and establish contingency plans to navigate the inevitable new hurdles.
8. Pricing strategy and profit margins. New products often command higher prices, but analyze costs carefully and set margins that allow for growth without undercutting the value of your premium product. Cost of goods sold (COGS) can change monthly.
9. Brand collaborations. Brand collaborations amplify reach, tap into new audiences and enhance visibility. By combining strengths, brands create unique offerings that generate buzz and drive loyalty, opening doors to a wider audience than your own.
10. Artificial intelligence (AI) automation. AI tools can drive product innovation by streamlining administrative tasks, allowing teams to focus on creative work, like product innovation. Automating routine duties like scheduling and data management frees up time for developing new ideas.