Marsha McGraw has been supporting and driving value for the CPG industry for more than 20 years. As Catalina’s SVP, President U.S. Market, McGraw is responsible for continuing to bring value to her customers through efficient, omni solutions that convert today’s consumers into buyers.
New product launches are a high-stakes game too often bound for failure. Every year some 10,000 new CPG products are unleashed onto an indifferent marketplace. Within two years 85% of them are gone. Today, the margin for error is shrinking further as brands target increasingly narrow segments of shoppers who have an ever-growing array of product choices and buying options.
To improve the odds, brands need greater science-driven precision around the timing and performance of launch campaigns. They need to understand who their buyers really are and why they’re buying, with a focus on reaching them to drive trial and repeat purchases based on product availability in stores and where they are in the purchase cycle.
Smaller, more targeted brands are the new normal. CPG product launch growth is coming from these emerging and often niche brands that cater to new consumer preferences around health and wellness, dietary and lifestyle needs, greater transparency and authenticity.
This year’s New Product Pacesetters report from IRI graphically demonstrates the scope of change taking place. In 2017, approximately half (49%) of the top 200 new products in the CPG industry came from smaller manufacturers with revenues below $1 billion. Two years earlier, only 29% of Pacesetters came from these companies.
Changing product launch dynamics
Today, new product launch success relies upon scientifically creating a permanent bond between an item’s core benefit and the shoppers who see value in that benefit. Converting triers into repeat buyers is obviously essential. Yet, typically only 11% of triers are still engaged with a new product after 52 weeks.
Shopper intelligence from Catalina shows a fraction of 1% of shoppers drive 80% of volume for the typical, successful new product. For a $10 million product, $7 million comes from repeat purchases, while $2.2 million comes from trial, illustrating the importance of maintaining an extended relationship with buyers beyond the initial launch.
The marketer’s distribution dilemma
Mass media marketing efforts are inefficient for even established brands, but the inefficiency is even greater for new products. Timing for the launch of a national marketing campaign typically has to be delayed until the product reaches critical mass — often taking up to 28 weeks before new products reach 75% of their maximum distribution in stores.
This is the product marketer’s dilemma. Launching a campaign early results in wasted impressions and highly inefficient ad spend. Waiting means new products sit on store shelves without the support needed to reach shoppers who would otherwise buy.
Data gaps lead to guesswork
To improve results, new product marketers need to find the shoppers most likely to buy and repeat, and then closely track the sales performance of new products in stores to continuously fine-tune their targets, optimize messaging and offers, understand regional differences and adjust their marketing plans. Unfortunately, too often there is a sales data gap during the early months of a new product launch and virtually no information about the shoppers who are buying new products. Panel data is typically not available until after six months of being on shelves, and retailers provide minimal sales performance data in the first three months, which leaves brands guessing rather than utilizing a data-driven scientific approach.
Using buyer science to improve results
Fortunately, marketers can leverage the latest advances in shopper science to radically improve the efficiency and success of new product launches. Here are five data-driven best practices for product launch marketers.
1.) Understand your target shoppers’ buyer DNA
Know which shoppers your new product is designed for and aim a significant portion of your new product marketing efforts at those buyers most likely to care. By tapping a robust database of shopper buying history, marketers can use purchase-based insights and predictive analytics to find the shopper segments that will be most valuable to their launch. Catalina research shows that effectively targeting shoppers via online and in-store media based on these traits (the shopper’s Buyer DNA) such as ingredient preferences or avoidance, dietary regimens or lifestage delivers significantly better results. In a recent launch, Catalina saw an 80% higher average trial rate and a 17% higher repeat rate based on A/B testing.
2.) Target based on lifestyle and ingredient preferences
Make sure you are using the most precise targeting. Category-level targeting alone will potentially miss valuable shopper segments and waste media on buyers unlikely to try a new product. Instead, identify shoppers based on lifestyle, ingredient and category preferences. New shopper profiling techniques that segment shoppers based on motivations such as natural ingredients, gluten-free, high-protein or low-carb will allow you to reach an audience that aligns with the specific attributes of your new product. Catalina data derived from recent campaigns show organic item seekers, for example, purchase products with these attributes at a rate five to 15 times higher across all categories.
3.) Track and time your launch based on store-level data
Utilizing real-time, store-level data can significantly reduce marketing waste and optimize the results of your launch campaign. Marketers can then activate campaigns on a store-by-store level, reaching specific targeted shoppers as soon as their new product has reached that buyer’s store, but not before. Real-time data access also allows marketers to not only track performance, but to adjust campaign parameters and messages as the launch progresses to optimize results.
4.) Incent discovery and repeat
Although brand building is effective for engaging with consumers on an emotional level, direct methods are needed to drive trial and repeat. In a recent study conducted by Inmar, among consumers who used a coupon in the last three months of 2017, 83% reported the coupon changed their shopping behavior — motivating them to buy more or buy a brand they would not have otherwise. With the right data inputs, AI and targeted delivery, marketers can not only incent trial, but understand how each shopper is behaving following a trial purchase and deliver additional offers to encourage follow-on purchases from those shoppers who have not yet bought again.
5.) Drive loyalty through personalization
To keep consumers coming back for more, calibrate your personalized marketing to the shopper’s purchase cycle. Timing offers and ads based on a personalized understanding of when each shopper is likely to shop for the brand will help drive relevance and continue to drive repeat purchases and brand loyalty.
Odds are stacked against new products succeeding as the market continues to shift to address evolving consumer preferences and increasingly selective shopper behavior. Marketers need to be more precise in the audiences they target based not only on who they are, but also where their new item is stocked and when it hits the shelf. More precise shopper targeting based on a deep understanding of household purchases and motivations, combined with continual shopper activation and real-time insight into product and campaign performance, will increasingly become a requirement for success. Applying a buyer-scientific approach can make all the difference between launch failure and success.