CPG Brands That Position Their Products around the Attributes Sought by Shoppers Can Extend Their Appeal to Multiple Demographics and Gain Real Advantage as a Result
CHICAGO — Sept. 20, 2017 — American consumers no longer buy products based largely on category or brand, which has big implications for CPG brands as they seek new revenue opportunities. One way forward is for brands to utilize powerful framework tools to rethink old market-sizing assumptions, according to a new IRI® marketing innovation report, ”Realigning for Growth: Win by Innovating across CPG Market Segments.”
IRI’s research reveals that consumers’ actual choices mean that old market positioning ideas no longer apply. Increasingly, shoppers decide what to put in their shopping carts based primarily on immediate or anticipated needs. They are guided by attributes, such as single-serve packaging, minimal calorie counts or gluten-free, for example. They willingly pay more for products that promise benefits, such as improved digestive health or a healthier heart.
For most incumbent brands, this shift looms large as they confront slowing revenue growth and tough market share challenges. “If a CPG brand doesn’t offer a shopper the ‘walking attributes’ he seeks, it’s increasingly likely that he will ‘walk’ — he will switch to a brand that does have them or wait to make his purchase,” said Tom Juetten, executive and leader of the Innovation Practice for IRI Consumer and Shopper Marketing.
The Size of the Prize
Brands that recognize this shift — and act on it — can compete across multiple forms/types, significantly expanding their competitive stance. In the beverage sector, IRI found that one brand was able to identify an incremental market worth an extra $200 million a year by enabling its products to span multiple categories and compete with multiple product types. In another instance, a manufacturer of cold cereal identified a need for a new product enhanced with fruit. Designed to appeal to the whole family, the category-spanning product leveraged the company’s current brand equity to establish a new market space worth an estimated $600 million a year in incremental revenue.
Overcoming the Challenges of Change
However, competing across categories calls for big shifts in pricing, messaging, packaging and more — starting with a major change in mindset. “Traditionally, the CPG industry has viewed its world in terms of categories or types, which are defined by sources of ingredients or by packaging size, for example,” said Rima Nair, principal of IRI Consumer and Shopper Marketing–Innovation. “Legacy operations — ‘the way we’ve always done it’ — present significant obstacles to change.” Another obstacle to change for many brands, large and small: the shortage of skills needed to translate ideas into actionable insights.
A Tool for Seeing What Shoppers See and Seizing Maximum “New Market” Potential
To help CPG marketers pinpoint pockets of growth and white-space innovation opportunities, IRI can enlist its powerful Hendry Market Structure software. This proprietary solution, which integrates IRI’s big data capabilities and analytic expertise, gives marketers a 360-degree view of the new, benefits-driven marketplace. Using this new market lens as their frame of reference, CPG marketers can:
- Understand the new, broader competitive marketplace: The Hendry solution clearly illuminates associated competitive, pricing and benefit implications. It helps to answer the question, “How can we forecast the impact of marketing and innovation if we don’t know where our sales will come from?”
- View the CPG market through the shopper’s eyes: Compared with other approaches, the Hendry solution addresses multiple categories, not single or perceived broad categories. It isolates true competitive sets of actual consumer behavior and the associated product benefits. Marketers who use Hendry find it easier to reach shoppers who seek benefits rather than products defined by their primary ingredients or brand equity. As such, they can position their companies to compete effectively across multiple categories/product types.
- Optimize programs and budgets to maximize impact across high-value customers: By knowing the shopper — seeing things through his or her eyes — CPG marketers will be well-positioned to deliver the right product at the right time and with the right message. They can then turn, with confidence, to tactical programs that engage consumers. “Marketers can experiment with fun ways to tell shoppers about new trends,” added Nair. “And they can involve leading-edge shoppers — those setting the trends — in co-curated marketing initiatives that inform, educate and engage.”
About the Report
“Realigning for Growth: Win by Innovating across CPG Market Segments” is a free report available from IRI. To download the report, visit: https://www.iriworldwide.com/en-US/Insights/Publications/Innovate-Across-CPG-Market-Segments.
About the IRI Hendry Market Structure
IRI’s Hendry Market Structure helps you size white-space opportunities and forecast new product concepts by building broad-based shopper-defined category definitions. The tool uses a proprietary switching model instead of basic regression analysis or judgment-based groupings, which indicates less reliance on robust data. The foundation of this model is actual shopper behavior augmented with attitudinal and usage data or even data that is custom collected. Neuroscience research at the University of California, Berkeley, suggests 95 percent of decision-making is done subconsciously. By relying on actual shopper behavior over claimed behavior, the Hendry model uncovers the unconscious trade-offs behind purchase decisions, producing more reliable and more specific results. This allows you to innovate early and accurately, double your new product success, and avoid expensive failure.
IRI is a leading provider of big data, predictive analytics and forward-looking insights that help CPG, OTC health care organizations, retailers and media companies to grow their businesses. With the largest repository of purchase, media, social, causal and loyalty data, all integrated on an on-demand, cloud-based technology platform, IRI helps to guide its more than 5,000 clients around the world in their quests to remain relentlessly relevant, capture market share, connect with consumers and deliver market-leading growth. A confluence of major external events — a revolution in consumer buying, big data coming into its own, advanced analytics and automated consumer activation — is leading to a seismic shift in drivers of success in all industries. Ensure your business can leverage data at www.iriworldwide.com.
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