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The Other ‘1 Percent’ — Only A Sliver Of Shoppers Drive Sales For New CPG Items

With so much resting on so few consumers, targeting specific retail locations can make the difference between a sales boost or bust, says Catalina.

On average, just 0.7 percent of shoppers made up 80 percent of volume for 50 top-selling new food and beverage products, Catalina's found.
On average, just 0.7 percent of shoppers made
up 80 percent of volume for 50 top-selling new food and beverage products, Catalina’s found.

Adding a new line of consumer packaged goods from an established brand product has never been harder, even though the amount of such label extensions have dropped considerably in the past few years, research from Catalina has found.

The big takeaway from the CPG-focused data and ad network’s report, New Product Traction Through Targeted Shopper Interaction: How New Product Success Hinges on Small Concentration of Shoppers (registration required), is that a mere 0.7 percent of shoppers (put another way, 1 in 143 consumers) made up 80 percent of volume for 50 top-selling new food and beverage products.

Meet The Less-Than-1-Percent

“If I look at the big picture, CPG dynamics are continuing to change — and consumers are continuing to change,” said Marla Thompson, SVP of U.S. Strategy for Catalina. “It has always been difficult to launch new products and have them be successful. It’s harder to achieve that now.”

In other words, since a tiny portion of shoppers can make or break success, whether it’s a new yogurt flavor, salad dressing, lite beer, frozen dinner, or baby food, capturing and then retaining that less than 1 percent subset of consumers becomes one of the most crucial missions a brand manager can take.

As Catalina’s report points out, those “brand franchise buyers” who purchase the “new and different” offshoot of a known product label are 11 percent more likely to stay with a new offering for a few weeks after the initial test purchase. Not only that, these new adopters also buy 4 times more than shoppers who stick with the established brand versions.

Catalina's Marla Thompson
Catalina’s Marla Thompson

The Limits Of National Brand Advertising

The reason so few shoppers have such outsize impact on a new line extension’s sales success has much to do with logistics, Thompson said. A national ad campaign, by its nature, tends to go for mass awareness. The problem is that distribution to retailers’ shelves is much more scattered and haphazard when compared to the blanket mass broadcast and print advertising buys.

What often happens is this: an ad touting a different twist in a familiar brand hits primetime airwaves. The consumer considers it briefly, perhaps the next time they’re in their local market. But the new product is no where to be found.

“This is a relatively recent predicament for brands, because the new product launches are taking an average of 28 weeks to reach mass availability,” Thompson said. “It’s a no win situation. If the brand manager starts the marketing process too soon, they’ll waste money because it’s not in the store. If they wait, that new product is sitting on store shelves with no marketing support.”

The Media Channel Is Not The Message

Stores are looking for sales lift over days, not weeks. If something doesn’t seem to sell quickly, it goes immediately to the discount rack before ultimately disappearing. That’s why, as Catalina’s report cites, the number of product launches has declined for two years running, falling by 4.2 percent in 2013 and by another 4.6 percent in 2014, according to IRI.

“New titles are the lifeblood of existing brands,” Thompson said. “And although failure is common, it can be minimized. Getting the launch right is more important than ever. Being able to identify and engage high value buyers as soon as products hit the shelves.”

If “untargeted and demographically targeted” national ad campaigns are failing retailers, brands, and consumers alike, Thompson’s remedy is for locally targeted ads that are timed when consumers are most receptive — and the stores are most ready to serve their specific choices.

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A past Catalina study, Deconstructing Demographics (PDF), attempted to show that demo-based media plans treat all buyer groups equally, no matter what their value to a brand. Geo-targeting and other location ads that can match available product distribution to consumers willing to try something new is the best bet retailers and brands have, Thompson said.

But she warned against focusing on one particular channel as opposed to another. The idea is not to pit mobile and social against TV and print, it’s simply about being local and relevant to consumers via whatever medium they prefer.

“I don’t think the media channel is as important as the actual targeting and direct appeal to local shoppers,” Thompson said. “If you can do the targeting in any channel in an attempt to reach the 0.7 percent, that’s where the focus should be. I would advise being channel agnostic and working on attracting and building on that concentrated shopper segment.”