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Posts Tagged ‘cpg’

The Consumer Quest for Affordable CPG Products

Monday, January 26th, 2015

IRI just released its latest Times & Trends report on Private Label & National Brands and the results are enlightening for CPG manufacturers and retailers alike. Even with the recovering economy, four in ten people remain financially challenged and are still seeking value, including affordability, when they shop for products. However, what people consider affordable can vary considerably by channel, category, brand and even need state. Deciphering the changing definitions of affordable in different situations can be confusing for private labels and national brands trying to compete in this increasingly fragmented and diverse marketplace.

While the report shows that one-third of consumers specifically seek out private label products to save money, national brands have been seeing some unit share momentum in some channels and categories. For example, national brands captured 0.2 dollar share points in the drug channel during the past year. In grocery, national brands are protecting or growing share across a majority of departments, and in the dollar channel they have actually taken some share away from private label. Health and beauty continue to be strong for national brands, likely because of their focus on innovation in these areas.

In response to the intense competition in packaged goods, some retailers have been looking at “opening price point” (OPP) private label solutions – essentially no-frills products that would appeal to the most cost-conscious consumers. But private label suppliers are concerned that this approach may negatively impact the perception of quality of their private label products – something they have worked hard to achieve.

One quarter of people said they are buying brands that are on sale over their preferred brands, and 23 percent are choosing products based on loyalty card discounts. They are also doing a lot of pre-planning, limiting purchases and making other adjustments to stay on budget. More than two-thirds (70 percent) of consumers said that store brands are a good option when their preferred brand isn’t on sale and they don’t have a coupon.

While IRI’s Shopper Sentiment Index for Q3 2014 shows increasing optimism, it’s clear that customers are still closely watching their purse strings. This means that, in order to grow, manufacturers and retailers need to develop programs that focus on value and affordability. This can take a variety of forms, from price reductions and buy-one-get-one to assortment stratification and co-marketing. At the same time, manufacturers and retailers need to understand their brands’ and products’ complete competitive frame—the products they are truly competing against, rather than the products they think they are competing against.

For manufacturers and retailers to win, every effort must begin with a very clear understanding of channel- and retailer-specific strategies and be developed collaboratively with partners to ensure overall category success. It may be a delicate balance, but it can be achieved without sacrificing brand image and margin goals. 

Want to know more? Join us for a complimentary webinar, Private Label & National Brands: Dialing in on Core Shoppers.

Measure the Sales Impact of Super Bowl Linked Social Media Campaigns

Thursday, January 22nd, 2015

With the Super Bowl just over a week away, many of us are thinking about the television ads, which are expensive, fascinating, and usually remembered by audiences for years. Ad Age tracks Super Bowl ads well before the game and also notes that some companies have already released pre-game ads to create the buzz. And, some CPG marketers are choosing to broadcast consumer generated ads.

However, the most effective Super Bowl ad campaigns are not just on television. They include a comprehensive digital plan with engaging social media posts, tweets, website landing pages and viral videos. Before and during the game, dedicated Twitter feeds, hashtags and related YouTube videos showcase the brand, providing specific messaging  and special offers, so that the message can spread and sustain itself virally.

But what’s the sales impact of these social media efforts around the big game? At IRI, we analyze this lift. For the Super Bowl in New Orleans two years ago, a leading CPG snack company pushed out a series of Facebook, Twitter and YouTube campaigns both before and during the game. The brand’s TV ad generated a 63.7% household rating on game day and a 77% household rating for L+3, including DVR effects within three days, according to Rentrak Exact Commercial Ratings. Based on TracX, a leading social media measurement tool, there were 350,000 total posts, likes and tweets for this brand in the three weeks before, during and after the big game. This was more than double the baseline of the previous eight weeks.

IRI combined these and other media figures with our own sales data and client media spend to develop a short-term media mix analysis. The results showed an estimated 7% sales lift the week after the Super Bowl, over and above the incremental sales trends from pricing and TV alone.

The lesson? Always include a coordinated, incremental social campaign with your TV ad spending to further your sales lift. Then, talk to us about how to best measure this for your brands.

The Aerosol Opportunity

Tuesday, January 6th, 2015

Every good marketer knows that packaging is one of the key ingredients of a successful product. It’s at the point of consideration, when a consumer is staring at two similar products in the store and trying to make a decision between them, that packaging can help make or break the sale.

Aerosols are one packaging option that have slowly but surely been increasing in popularity. Used for more than fifty years now, aerosols offer several product benefits, such as a pre-measured flow and an airtight on/off valve so that the product stays fresh, and they are tamper resistant.

The market

These are probably just a few reasons why aerosol product sales and the number of aerosol units have been increasing. Aerosol sales have grown 1.1% over the past year to $3.3 billion1, representing a quarter of all category sales, while the average number of aerosol units per store has grown from 220 to 258 over the past five years (a 12% increase).2

The power of aerosols becomes much more obvious when they are in a consumer’s basket. When aerosol categories are purchased, basket value is nearly twice as high ($74.60)3 as when they are not purchased ($38.23)4. This is even more pronounced when looking at food categories with an aerosol presence (basket value is $88.20 versus $40.30)5. This is something manufacturers should pay attention to when working with retailers to manage promotions and drive trips as well as innovation teams as they strive to offer consumers more efficient alternatives in their busy lives.

While consumers have moved away from certain types of aerosols (spray deodorants, air fresheners and furniture polish, in particular), food products have significantly ramped up their use of aerosols as a delivery agent, driving nearly a quarter of total aerosol sales.

The search for value

The increase in aerosol products and sales has been happening at the same time our mindsets around shopping have been changing. Over the last six years, most of us have become more value conscious, no matter what our household income level. Even high-income consumers are focused on value, according to IRI research.

With this seemingly unending search for value, consumers are shifting shopping channels more than ever (see our recent report on Channel Migration). In some cases, they’re moving away from grocery stores to more affordable channels like club, dollar, Walmart and mass merchandisers.

So, the idea of value is something manufacturers can and should be using to drive their innovation agenda.

Recommendations for growth

In addition to leveraging the growth of value channels like dollar (which grew 2.1% year-on-year6), manufacturers should consider the aerosol category overall. Do they already have products that could be innovated to work in aerosol form? Is there an opportunity to get onto the aerosol growth curve?

If a manufacturer already has aerosols, could they re-engineer the can to include a pre-measured metered spray of food or a cleaning product? This could be one useful way to extend the idea of value to consumers.

Non-food manufacturers should think about whether similar aerosol innovation opportunities exist for products like air care and sun care products, where recent product development has found success in other forms.

The 3% year-on-year growth of food aerosols7, despite the flatness of the food category, could be a viable point of entry for food brands considering new forms of their product. The impact of adding a trip or two to the aerosol food categories could be huge for both manufacturers and retailers.

What do you think? Write to me at Larry.Levin@iriworldwide.com.

1 IRI Infoscan; Total US MULO & Convenience, 2014 L52 Wks ending November 2, 2014
2 ibid
3 ibid
4 ibid
5 ibid
6 IRI Worldwide, “Channel Migration: The Road to Growth Has Many Lanes”, October 20, 2014
7 IRI Infoscan; Total US MULO & Convenience, 2014 L52 Wks ending November 2, 2014

Optimizing Your Product Assortment: Design for Growth

Tuesday, December 16th, 2014

Trends in the marketplace – busier-than-ever shoppers, localized competition, and the impact of digital – are making the retail environment more complex. Deciding which products to have in-store and online continues to be a universal challenge for both manufacturers and retailers. Manufacturers know that product availability is the key to product selection, while retailers are trying to hone their offerings to maximize baskets and sales. Both are motivated to understand what shoppers want and to make it available in the right locations.

There has been a significant shift in how companies view product assortment. The push strategy that moved a set of products into all stores is no longer viable – “one size fits all” is dead. Effective assortment optimization is now driven by a pull strategy, which identifies the items that consumers value so that assortment can be designed to drive category sales.

While it’s not easy to get product assortment right, there’s no doubt it’s vital for manufacturer and retailer success. For example, almost half (46%) of all CPG sales are in urban markets, paving the way for small format stores in those areas. But this means less shelf space for manufacturers and retailers to work with and more competition for that space.

With shopper demand varying significantly across channels, regions and neighborhoods, CPG companies need assortment optimization analysis that take the guesswork out of what to put on shelf by leveraging information that evaluates how people are actually purchasing in-store for specific retailers. The location of the store can give you some idea of the demographics of the neighborhood but it doesn’t tell you anything about who’s actually in the store and what they’re buying.

Instead, advanced algorithms should leverage sales data to identify key product attributes (flavor, pack size, brand name, etc.) and quantify relative importance to shopper decisions. By assessing the true contribution of each product in a category, manufacturers and retailers can take a fresh look at the impact of the items on shelf, physical or virtual. This includes understanding which brands or products drive the highest incremental sales for the category and how products interact, via demand transfer, to understand today’s portfolio and pull in the right products to create future growth. Companies can also use these insights to anticipate where new products may have their best impact.

Working together, manufacturers and retailers can make very specific product assortment decisions to bring the right product/s into the store, which will engage customers and drive profits. Finding opportunities to regularly enhance their assortment helps companies continuously optimize their product mix, select products more objectively and efficiently, and track business impact.

Want to know how your product assortment could be improved to deliver more growth to your business? Contact me at John.Porter@iriworldwide.com.

PepsiCo, Walmart and McKinsey Discuss Innovation in Retail and Consumer Shopping Habits, and Big Data Analytics

Friday, December 12th, 2014

While innovation is crucial for any company that wants long-term growth, it’s become increasingly difficult to anticipate and meet shopper needs through new product introductions. A massive 80 to 90 percent of new product introductions fail to meet their goals. This means that marketers must constantly update their understanding of what customers want and need in order to be part of the sliver of new products that do well.

Steven Williams, PepsiCo’s Senior Vice President and General Manager, Global Walmart Team, invited me to moderate a panel of senior thought leaders from PepsiCo, Walmart and McKinsey on this very subject during the recent 2014 Enactus Partner Summit. The panel discussed some recent innovations in retail and consumer shopping habits as well as Big Data analytics. Here are some of my top takeaways for achieving product success, whether you are a CPG manufacturer or a retailer:

Consider micro-marketing – Chris Turner, Partner at McKinsey & Company, noted that successful marketers are increasingly planning at the very micro level, such as focusing on their top 100 cities instead of the mass market. Micro-marketing can take this even further with campaigns that have a highly personalized view of individuals based on their previous direct interactions with a brand, such as through social media, email and other digital engagement. Focusing on this type of granular growth can help companies make the right choices about where to compete.

Big Data offers bigger challenges…and bigger opportunities – Walmart’s Senior Vice President of Global Customer Insights Matt Kistler discussed his company’s Big Data challenges – specifically the depth of data they have been able to acquire. Walmart has access to almost 30 petabytes of customer data (one petabyte has 15 zeros!) so just imagine the extensive data mining required to find relevant data and then map it to meaningful consumer insights. But Walmart is doing it – they’ve moved beyond just capturing traditional point-of-sale data into social media, analytical applications and weather patterns, and they use that data to optimize local store assortment, tailor promotions and more. With Walmart’s latest efforts to apply Big Data to marketing as well as its mobile strategies, the company is continuing its trajectory of using Big Data to drive retail innovation.

Effective data analytics can uncover gaps in the market – Simon Lowden, Senior Vice President and Chief Marketing Officer for PepsiCo Beverages, outlined how his team created a plan that leveraged behavioral science and demand spaces (aka market gaps) to better understand consumers’ decision making process and set growth strategies for the future. This included a landmark study that explored the true drivers of consumption for the company’s brands so that PepsiCo could map shoppers’ path to purchase. One key insight was to encourage consumers to pair PepsiCo products when eating and drinking during the day, hence the company’s recent Better Together marketing approach.

Innovation starts at the store level – understanding the real drivers of purchase behavior – so marketers must know how to meet the needs of retail’s specific customers. (Millennials, for example, like to be communicated with differently, and they want more transparency and choices.) Also, with the vast amounts of customer data now available, there are huge opportunities for companies to focus on personalization and one-to-one marketing, even at the store level.

Marketers still spend a lot of time and effort on traditional insights instead of looking at and leveraging data analytics for key decisions and foresight. Finding and understanding these hidden insights can set up brands for a successful future, more than just focusing on what’s happening today.

How to Grow in a Flat Category: Household Cleaning Products

Wednesday, December 10th, 2014

As the U.S. economic recovery continues, shopper behavior is mixed: some shoppers have continued their frugal ways while others have begun spending again. The $23.3 billion home cleaning business has faced several years of challenges as a result of consumers’ ongoing efforts to shop more efficiently, including a 0.9 percent decrease in sales over the past year. Though the category is flat, IRI’s National Consumer Panel data shows that 99.6 percent of households purchase home cleaning products. On average, a single buyer completes 28 shopper trips and spends $231 per year on cleaning products. Despite stagnant sales, the home cleaning products industry contains numerous significant pockets for growth, particularly within private label and branded innovation.

During my recent Cleaning Products Conference presentation, “Making Cents of the Cleaning Products Shopper,” I spoke about some of the strategies and tactics that enable household cleaning and home care manufacturers to successfully identify, target and activate their value-oriented shoppers.

By understanding value shoppers’ behaviors and attitudes, home cleaning product manufacturers can make smarter decisions regarding what products to develop, how to determine assortment, pricing and promotion, and how to reach consumers along the entire path to purchase.

Value continues to remain critical to shoppers of household cleaning products, but delivering on the promise of value is complex. One proven strategy for conveying value is to promise multiple uses. For example, all-purpose cleaners appeal to shoppers since they can save money by purchasing one product rather than several. In fact, the all-purpose cleaner category saw a 22 percent increase in the past year, reaching $1.1 billion in total sales. Positioning cleaning products as sustainable is also an effective way to convey value.

There is plenty of room for innovation in the home cleaning product space, particularly for new products that deliver on three key macro trends: simplicity, wellness and excitement. Two product segments that have delivered on these key trends are laundry prewash additives and drop and go detergents. Laundry prewash additives have had a seven percent increase in sales over the past year, while drop and go detergent had an astounding 22 percent increase in sales.

Making sense – and cents – of the cleaning products shopper begins with conveying value, finding pockets of growth within private label and branded innovation, and gaining a deep understanding of the highest value shoppers. Brands that fully comprehend their best shoppers’ behaviors and mindsets will be ideally positioned to reach their target audiences efficiently and effectively along the path to purchase.

If you’d like a copy of my presentation, “Making Cents of the Cleaning Products Shopper,” contact IRI.Marketing@iriworldwide.com.

Marketers Positioned to Unwrap Higher Sales this Holiday Season

Friday, October 17th, 2014

With the 2014 holiday season drawing near, marketers should have a lot to feel good about, according to IRI’s Q3 2014 MarketPulse™ survey. Consumer confidence is on an upward trajectory, and shoppers say they’re planning to spend a bit more during this holiday season. The National Retail Federation predicts retail sales will be up by 4.1 percent this November and December, with overall 2014 holiday sales projected at $616.9 billion—an increase of more than 3.1 percent over 2013.

For consumers rolling into the holiday season on a high note, spending plans may include a more extravagant holiday meal. Five percent of consumers plan to spend more on holiday celebration related food and beverages this year, compared with 4 percent loosening the purse strings in 2013 and 3 percent in 2012. Additionally, fewer shoppers are focused on cutting back. Approximately one-quarter of consumers (28 percent) intend to spend less this year than last year, as compared to 33 percent in 2013 and 36 percent in 2012.

Regarding the holiday meal, MarketPulse also revealed the following attitudes:

  • 62 percent will prepare the best meal possible but will work to keep cost down
  • 18 percent view holidays as a time to splurge and will put on the best meal possible
  • 65 percent will buy as many or more gourmet/premium products this year versus last year

These insights certainly indicate many opportunities for marketers to boost sales and enjoy a nice piece of the holiday spending pie. To reap the greatest benefits, marketers will need to communicate value throughout the shopper journey. One essential tactic this year will be getting onto consumers’ shopping lists. List making is key for holiday shopping, and 33 percent of shoppers say they will cut back on unplanned purchases this year.

That said, there is still an opportunity to attract impulse buyers. For example, one-third of consumers say they will leveraging in-store promotions, meaning compelling in-store promotions will be an absolute must for CPG marketers.

For further MarketPulse insights, please visit: http://www.iriworldwide.com/Insights/Publications/MarketPulseSurvey.aspx.

Q2 MarketPulse™ Results: Cautious Optimism and Calculated Splurges

Monday, August 4th, 2014

Just as the economy has been slow to recover, consumers have been slow to loosen their purse strings. Though consumer confidence rose drastically in Q1 2014, IRI’s Q2 MarketPulse study found consumer confidence leveling off, with 46 percent of consumers stating they feel the “same” about their current financial situation as they did the previous quarter. Sixteen percent of consumers indicated they feel “a little better,” while 22 percent feel “a little worse,” and 13 percent feel a “lot worse.”

Despite having suffered greater economic hardship than other groups, millennials have reported feeling more comfortable over the last two quarters. Sentiment among baby boomers and Generation Xers, on the other hand, dipped slightly this quarter as compared to Q1 2014.

This quarter’s continued cautious optimism aligns with many consumers’ expectations that their homes and investments will increase in value this year, as well as their ability to save. Though cutbacks are still widespread, IRI’s MarketPulse shows an uptick in splurging:

  Q2 2011  Q2 2014
Cutting back on nonessential items                                 60%  51%
Buying more private label than previously bought                     47% 43%
Trying new brands priced below regular brands                        46%  39%
Giving up some favorite brands                                             39%   31%
Buying fewer healthier products because more expensive 31% 28%
Splurging on premium or gourmet products                             19% 22%

Though calculated splurges are on the rise, thriftiness has become engrained in our culture over the past several years, so most spending will still be done cautiously. Additionally, consumers remain dedicated to finding the best value: one-third of consumers say they will continue shopping at multiple stores to find the lowest prices.

As consumers continue to focus on value and savings, CPG marketers must constantly apply new tactics to attract customers, and should focus their product and pricing strategies around addressing consumers’ most pressing needs and ensure that they’re doing so in a highly targeted fashion. For more details on how CPG retailers and manufacturers can demonstrate value and incite more instances of splurging behavior, please read our Q2 2014 MarketPulse press release.

Times & Trends Report Finds Golden Opportunity with Seniors and Boomers

Thursday, June 26th, 2014

Today, baby boomers and seniors account for the majority of all CPG expenditures. Over the next 25 years, the population of Americans aged 65 and older will double, and spending by this group will exceed $230 billion in less than a decade. This segment of the population spends heavily on healthcare, and embraces proactive prevention in attempt to minimize the need for disease state management down the road.

With these significant statistics in mind, CPG marketers should develop strategies focused on activating these shoppers, as increasing market share even slightly can translate into hundreds of millions of dollars in increased revenue. Our latest Times & Trends report, “Aging America: Carving Out Growth in Mature Markets,” examines the consumer behavior of boomers and seniors, and offers market insights into how this sizable segment will shift throughout their golden years.

To help CPG marketers maximize growth opportunities with this large and growing segment, “Aging America: Carving Out Growth in Mature Markets,” also outlines three strategies to engage and activate boomers and seniors.

CPG retailers and manufacturers must invest to understand mature consumers’ current needs and wants and use that knowledge to identify opportunities to simplify and expand ongoing wellness-related efforts. IRI’s 2014 New Product Pacesetters study showed that healthier-for-you products and product innovations are making a huge splash with consumers; and while health and wellness products include prescription medications and typical over-the-counter healthcare solutions, healthier-for-you is not limited to the healthcare aisles. Instead, CPG retailers and manufacturers should seek opportunities across store aisles.

Educational programs and messaging are solid activation tools within the mature marketplace. In order to stave off the high costs incurred by chronic disease, this segment has embraced proactive self-care, prompting above average sales growth in products such as vitamins and gastrointestinal liquid. CPG retailers and manufacturers must have an intimate understanding of what health concerns and conditions older consumers are facing and educate them on ingredients/products that will help them prevent and/or treat these conditions. It is critical to clearly communicate product benefits to boomers and seniors.

Finally, to effectively reach older consumers in the home, where many purchase decisions are being made, marketers must integrate digital media into their marketing programs. Though traditionally boomers and seniors skew more to circulars and coupons, more than 27 million people over the age of 55 are now using social networking sites, with upwards of 59 percent reporting daily use! As technology becomes more commonplace in mature households, CPG retailers and manufacturers must integrate traditional and new media strategies in a way that reflects progression along the adoption curve.

Unprecedented size, growth and buying power makes the mature marketplace a must-win for CPG marketers.Developing an adept ability to serve the many and varied needs of this disparate marketplace concisely and consistently will require frequent and granular assessments of consumer needs and near real-time implementation and management of finely tuned shopper marketing programs.

For further insights into these findings and their implications, you may download the full report here.

Leveraging POS Data and Location-Based Targeting for Mobile Advertising Success

Friday, June 13th, 2014

Mobile is not only becoming a prevalent mechanism for media consumption; it is also disrupting the advertising industry. Traditionally, mobile data was subject to cookie tracking, which has long dominated the digital media measurement/targeting ecosystem. Yet, cookie tracking as it is applied to mobile has come under scrutiny and been found wanting.

The most obvious issue is that neither iOS nor Android apps are cookie based. Furthermore, iOS does not even allow browser cookies. In the past, cookies were used for audience targeting in the digital displace space – if you wanted to activate a specific audience segment, you could do so by finding computer cookies associated with that segment. The lack of cookies in mobile renders this practice null and void; the sophisticated audience targeting tools used for web targeting cannot be leveraged in the mobile world.

But this isn’t news – the failure of traditional targeting practices in mobile is a well-known issue, and with billions of media dollars being reallocated to mobile, various stakeholders have started to address the problem. Almost all attempts to overcome this challenge have focused on creating a cookie-like mechanism to identify the users in scenarios when cookies cannot be dropped (such as wifi or statistical modeling). These attempts are quite laudable, but a clean, convincing solution has yet to be found. As mobile media spending grows, media practitioners cannot afford to simply wait for the industry to develop a workable ID-based targeting schema.

The bad news is that a solution is probably years away; the good news is that we’re not as helpless as it seems. If we dig a little deeper into our existing arsenal, we’ll find an established targeting mechanism that not only has mobile at its core, but is also already familiar: geo targeting.

In a nutshell, geo targeting allows advertisers to target users based on location, which, incidentally, is a cookie-free approach to targeting. When combined with POS data, this approach is well-suited for CPG. Combining geo targeting with POS data allows advertisers to target mobile devices at locations that have higher potential to generate sales. While the targeting precision is slightly less accurate than data based on activation at the cookie level, geo targeting remains a viable ID targeting solution at the user level. Plus, this approach can be implemented immediately to target selected geo locations via purchase data. Until the mobile industry develops a more comprehensive system, geo targeting combined with POS data is our most viable opportunity for success.