By Jennifer Pelino, Media Center of Excellence, IRI
A grocery store with never-ending lines, empty shelves and outdated displays. Shoppers racing to the toilet paper aisle to grab the last rolls. Hand sanitizer out of stock for days. While this sounds a bit post-apocalyptic, it was the experience for many Americans during their first trip to the grocery store when COVID-19 first hit the U.S. earlier this year.
Although out-of-stocks continue to be a challenge for the industry and coronavirus cases are still rising, consumers are now having a relatively more “normal” experience when they go to the grocery store or shop online. Certainly, we are seeing some out-of-stocks as cases of the virus spike in certain areas, but it’s nowhere near what most of us experienced previously. However, the industry has seen some significant shifts this year, including larger baskets at the store, the rapid acceleration of e-commerce, and retailers limiting assortment and reallocating space for certain categories.
During these times, marketers need to ensure their share of voice at least matches their share of their category with lower media costs, and brands should be working to build awareness outside of retail environments. Even top-selling products need continued marketing support and ongoing innovation.
Five key strategies can help you achieve these goals:
1. Promote Value for the Money, Including with Premiumization
Economically, COVID-19 continues to burden millions of Americans, whether due to unemployment or reduced work hours, and we’re seeing increased numbers of Americans being food insecure, which has led to increases in SNAP and WIC benefits. Many CPG brands are stepping up to find ways to meet various consumers’ needs and providing more value. This is done by looking at your product range and understanding what benefits consumers are willing to pay more for and where your brand equity fits against national and private brands in the category.
For example, heavily promoted brands with greater substitutability will need to have a stronger price-value proposition. On the other hand, a premium product with a stronger brand equity and a unique benefit that appeals to consumers’ intrinsic needs won’t. In general, private label products need to paint a clear picture of what the product can offer (e.g. low sugar, high quality, no trans fat, etc.) as opposed to a premium product where the brand equity and long-term customer loyalty often speaks for itself.
Of course, higher-income levels can be cash strapped too, which is why value is so important. Marketers often only focus on income, but this view is limiting. By expanding the definition and layering on other financial cues – such as high monthly debt relative to monthly income, lower credit scores, $0 in investable assets, etc. – you may find that a household is operating under a tight budget, capturing the unseen aspects that could impact the items that normally go on their shopping list.
We are seeing some interesting stats on people at different income levels consuming more premium products. Even with price increases and fewer promotions – making items more expensive to buy – shoppers are trading up in grocery and other large-format channels, with premium/super-premium products often gaining share at the expense of value tier and private label. Both high- and low-income shoppers are trading up in many categories, including food and beverage, cleaning and personal care. Indulgence isn’t just for higher income levels.
Once you have an expanded understanding of your target audience, you can focus on the right appealing message. One good example of this is advertising that Kellogg’s ran during the 2008-2009 recession, highlighting its low price per serving.
2. Keep Your Brands Essential and Top of Mind
Households are more flexible in their product choices these days, perhaps because their preferred items are out of stock and/or due to pantry-loading, which has introduced them to lesser-known brands.
For this buyer base, it’s useful to focus on who is a new, lapsed or at-risk buyer. This includes pantry affinity buyers, as they can be potential new buyers who purchase categories with high co-purchase indices. Also, by addressing all the new e-commerce households who are highly likely to purchase CPG products online, you can begin reaching and retaining those who may be planning to shop this way from now on. In an IRI shopper survey, we found that 35% of those who have been ordering groceries for home delivery more often plan to get at least half their groceries this way even after the virus restrictions end.
Then, you must message these consumers quickly and frequently. Industry research and history prove the importance of continuing to advertise during economic downturns. In our COVID-19 series “Defending and Recapturing the Shelf,” we found that smaller brands are gaining share of total CPG sales since many large brands lost share after the initial COVID-19 stock-outs. Large brands have shifted their focus to restock the most demanded items, but during the Great Recession, retailers that grew their assortments also saw the strongest growth in dollar sales. Advertising will keep your brand top of mind, especially when consumers are tempted to switch.
3. Have a Strong Strategy for New Brand Buyers
Brands must be quick to capture and retain the brand buyers they’ve acquired due to the pandemic. On average, reaching new brand buyers after their first purchase helps convert 35% of them into repeaters. But this is decreased by 50% if you miss that opportunity and will continue to decrease at that rate for every buying cycle thereafter.
For example, research on consumers’ reactions to out-of-stock products showed that 34% went elsewhere, 20% went back later, 14% bought something else and 33% didn’t buy it.
New consumers are most likely to become repeaters if you can reach them with the right message within four weeks of their first purchase. For new products or new buyers, it’s important to reach early to convert.
The best way to ensure that you are connecting with known new buyers is to use scaled deterministic data to see where consumer reemergence is occurring at the county, category and brand level, as well as tracking changes to individual venues with daily visitation data. This helps you understand and segment audiences so you can choose appropriate messages for regions and households by how much they are reemerging as the pandemic continues.
4. Focus on Higher-Order Brand Messaging
Traditional brand marketing is not always the right approach. The importance of the issues facing us today including social injustice and climate change, plus the sense of community that the pandemic has instilled in many of us, has made consumers care even more about brand purpose. 63% of Americans believe that CEOs have a responsibility to take a stand on important social issues, especially if the issues are related to their business. Putting views into action via supportive corporate policies and then promoting those actions can be very effective – both for company culture and the bottom line. We’ve all seen successful examples of this, including CVS Health ending cigarette sales and Chobani Yogurt hiring refugees.
Human equality, in particular, is especially important to Gen Z, including racial equality, gender equality and sexual orientation equality. Fundamentally, they honor and celebrate what makes each person unique. For them, it’s not about being “color-blind” when it comes to race; it’s about seeing color – or any other defining trait – and embracing it. This is a generation that isn’t willing to pretend that differences don’t exist. Instead, they celebrate them.
IRI and ANA SeeHer have proven that gender equality in advertising is good for business. In a groundbreaking study using GEM™ (Gender Equality Measure™), developed by SEEHER to uncover unconscious gender bias in advertising and programming, the study found that ads that accurately portray girls and women garner higher GEM scores and up to 5x sales lift.
And, IRI research with NYU’s Stern Center for Sustainable Business shows that sustainability is still important to consumers, and actually increasing in importance, during a time when many may have expected this to take a back seat to economic drivers of behavior. While millennials are more likely to buy sustainability marketed products, most sustainable purchases are attributed to Gen X and Baby Boomers due to the size of their cohorts.
Brands that actively do the right thing and connect that to their brand value are more likely to inspire brand purchase and brand loyalty.
5. Have an Innovation Mindset with Media Too
With the life-upending events we’ve seen this year and consumer shifts in behaviors and attitudes, marketers must consider consumers’ new needs and focus areas when thinking about innovation and the longer term. Three areas, in particular, will continue to matter to consumers – nutrition, safety and sustainable packaging – and investments in these areas will pay off, both for a better environment as well as CPG sales and profits.
In 2021, CPG will continue to be competitive. For brands to maintain their edge, they must focus on being where their consumers are and being contextually relevant, and perhaps stretching beyond their typical media buys. Consider this:
- 62 percent of American adults consume news via social media
- Gaming revenue content has increased 18%
- The average time spent with digital video has increased 5 seconds
There are still so many untapped opportunities to get relevant messages in front of the right consumers. As one example, rap artist Travis Scott recently did a one-hour concert online with 12.3 million people tuning it, but not a single brand was represented. And this was just one event. With so much having shifted online, at least for the near-term, and consumers spending more time in front of their devices, it opens up more opportunities for brands to reach their target audiences.
Using the five strategies above, CPGs can more easily help their brands be relevant and more top of mind to consumers, stay on the virtual and physical shelf, and increase growth for them and their retailers.
Want to ensure your advertising leads to maximum sales lift? Read more about how IRI can help you improve your media performance or reach out to me at Jennifer.Pelino@IRIworldwide.com.