How to target shoppers when ingredients drive the sale
Mark Bees is vice president of product marketing for Catalina and is responsible for translating disruptive industry trends into marketing and commercializing innovative solutions. He is a retail, CPG and ad tech industry expert and thought leader, having held roles in in entrepreneurial startups in mobile advertising, CPG digital promotions and online to in-store attribution businesses.
“Alexa—find me a non-GMO, non-glyphosate kids cereal sweetened with honey.”
In the wake of an explosion of information and product options, consumers have never been more educated about the ingredients that go into the food, health and beauty products they buy. This is creating new challenges for marketers who need to stay ahead of changing consumer preferences and demands for product transparency.
In the past, consumers generally trusted the marketing claims and quality of the products developed by leading manufacturers. This allowed marketers to focus more on emotional value. A past Revlon tagline, “It’s right because it’s Revlon” created a feeling of trust and value. Done right, there was an implicit pact between brand value and consumer need.
Today, savvy consumers place product ingredients and processing methods at the top of the consideration set. Purchase decisions are often made only after a close examination of both the front and the back of product packaging. This shift in consumer attitude and behavior is flipping the traditional brand marketing model. It’s no longer enough to rely on emotional equity or recall. Instead, the product attributes and ingredients consumers seek—and those they avoid—build the brand and ring the register.
Marketing messages from new and fast-growing brands illustrate the point. Kind Bar: “Real Food, Wholesome Ingredients.” Annie’s Homegrown: “Good ingredients.” Health Valley Soups: “Delicious taste without all of the sodium.”
Emerging brands are capitalizing on the change in shopper preferences toward brand authenticity. Innovative products, new flavors, category reinventions, additive-free clean label products, and natural, fresh ingredients, which previously were aimed at smaller niche audiences, are now being propelled forward by much larger groups of increasingly prescriptive consumers who demand greater transparency and benefits from their products.
A recent Catalina study titled “The Center Store Revolution” underscores the trend. Many of the fastest-growing products and categories in center aisles feature healthy attributes and natural ingredients.
For example, Catalina found that non-fat/low-fat/light ice cream experienced dramatic growth in 2017, generating more than a half million new trips and a 67% increase in dollar sales per store. Meanwhile, the regular and premium ice cream categories declined in both trips and dollar sales. Los Angeles-based Eden Creamery, makers of Halo Top, created an entirely new subcategory of low-sugar, high-protein ice cream, tripling its retail distribution in 2017 and dramatically increasing sales and trips per store.
Health-oriented organic frozen entrees like Bird’s Eye Super Foods blend was another fast-growing subcategory. Trips were up 24%, and dollar sales were up 33%.
The selective, ingredient-savvy shoppers behind these brand success stories are buying products with similar attributes in other categories. Take low-fat/non-fat ice cream. The average shopper of this subcategory spent $13.47 in 2017. But shoppers who tended to avoid trans fats spent almost four times more, or $52.19, and heart healthy shoppers in the category spent an average of $56.76.
Sparkling and seltzer water is another fast-growing category in center store, with average buyers spending $17.71 in 2017. However, low glycemic shoppers spent more than twice as much, or $38.45, and paleo shoppers spent $33.77.
Even as consumer trends toward health and transparency are easily observed, new product success is not any easier. Each year, more than 10,000 new products hit retail shelves, according to IRI. A staggering 85% fail within two years.
I see four big challenges for brands today:
Differentiation – How do you articulate your unique brand attributes on a store shelf filled with a sea of competitors?
Media efficiency – How do you efficiently reach and effectively influence a hyper-target that represents 2% of the category audience, but drives 80% of your sales volume?
Choosy consumers – Shoppers are constantly seeking what’s new, and only 11% of shoppers will remain loyal to a brand over 12 months. How do you build equity with consumers who are often more loyal to your ingredients or attributes than they are to your actual brand?
Legacy brand perception – How do established brands marry their heritage with innovation? How does the Green Giant efficiently let low-carb dieters know that his Veggie Spirals are a great replacement for pasta?
The solve starts with telegraphic definition of product value, precise audience targeting and efficient media delivery. Legacy targeting models no longer deliver high ROI. Demographic audience data might reveal shopper inclinations around health and well-being, but inefficiencies are high when trying to precisely reach a gluten-free buyer across multiple categories. Only an estimated 8% of shoppers are true gluten-free shoppers.
What marketers need to win today is an efficient way to match a product’s benefit with the audience of known buyers.
The solution: Ingredient-based targeting
Deterministic shopper data based on ingredient-level purchases didn’t exist until now. Ingredient-based targeting delivers a new means to identify and reach ideal buyers by matching in-store purchase history with a refined ingredient-based definition of the products purchased. This purchase/ingredient combination breaks shoppers into “shopper personalities”—audiences based on individual spending preferences like gluten-free, dairy avoidance, heart healthy, low sodium and high-protein seekers -- plus clean label choices like natural and recognizable ingredients. This lets brands with increasingly narrow target audiences find the right shoppers based on actual ingredient-level preferences, and create high-performing targets that deliver the right product messages to the right buyers.
Here’s a detailed explanation of how it works:
22,000 product attributes across more than 400,000 products are identified and segmented for each of the 50+ shopper personalities.
Advanced analytics scores more than 188 million shopper card IDs on their propensity to choose products that contain that personality’s unique product attribute profile across categories for the latest year.
Shoppers for each personality are clustered into groups for easy insights and targeting based on the strength of their propensity (very strong, strong, weak).
Brand and category affinities are then assessed to determine how well they resonate with each shopper personality.
These are scaled audiences with the granularity marketers need. Want to market to high protein seekers? You can reach 9.3 million of them with a targeted message. There are 11.4 million low ingredient count seekers. High fructose corn syrup avoiders represent 7.6 million shoppers. There are 10.8 million Earth-friendly shoppers and some 5.4 million who have adopted a paleo lifestyle.
With the shift in consumer behavior toward product transparency and functional benefits in full swing, marketers need to rethink not only their product strategies to remain relevant, but how they reach and engage consumers on their path toward more enlightened purchase decisions. You can bet that ingredient-level targeting will play a significant role in driving efficient growth by connecting consumers with the products and ingredient profiles that matter most to them.