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10.10.2007

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Consumer Appetite For New Products

Grocers' shelves are bulging to the breaking point, laden with thousands of products all vying for consumers' attention to "take me home." In the broadest terms, new product introductions are the lifeblood of continued success for food and beverage manufacturers and retailers alike. Yet, few consumers have a clue as to the dynamics of what goes on behind the scenes to create and develop the new food and beverage products they encounter on a weekly basis. Conversely, food and beverage manufacturers and retailers would be well advised to pay close attention to the shifts occurring in what consumers are choosing to eat. (Hint: Most consumers have changed the kinds of foods they eat on special occasions and this shift impacts what consumers now eat on a routine basis.)

Certainly, consumer desire drives new product development. Scan any grocer's shelves and you'll see attempts by CPG companies to remain relevant with consumers through products focused on an array of health and wellness concerns - reflected in everything from functional foods to organics. Consumers encounter these new products in a variety of ways: as brand extensions (new flavors, features, reformulations, etc.), routine product updates (health claims, package redesigns, etc.), variations on a theme (competitor knock-offs) or as flat-out innovation (first-in-category or first-of-its kind).

Reverence for retail

In this age of consumer enlightenment it seems odd that many marketers still believe the retail setting itself is the critical "place" for diagnosing the interplay between consumer behavior and consumer experience. This persistent thinking feeds into the misguided myth that retail alone is the breeding ground of brand-building for traditional CPG brands. Through our groundbreaking research in Shopper Insights, we know that this is not true and that in reality traditional CPG brand orientations and loyalty are formed mainly in the household. Some of the most basic cultural elements of home life such as taste/preference formation, consumption occasions and orientations (however fragmented) toward food, personal care and health, affect shopping behavior. These and other elements of everyday life (the at-home experience) shape the cultural tasks that drive home-oriented occasions for shopping.

And yet...

Food and beverage marketers and retailers persist in expending the bulk of their energy (e.g., defined in terms of research and promotional dollars) on technologies and programs within the store to gauge traffic patterns, consumer exposure to in-line product sets, end displays and the like all in an attempt to better understand shopper behavior and something as fuzzy as marketing effectiveness. This industrial strength reverence for retail will not provide the answer to the most fundamental of questions, namely, "Why is the consumer in the store in the first place?"

From this perspective of cultural occasions for shopping, supermarkets are unlikely places for many consumers to go merely (or primarily) to browse to see "what's new." The one exception to this would be a destination shopping occasion. Destination shopping occasions are typically driven by the perception that some item(s) can only be found at a particular retailer. It might also be that a certain kind of shopping experience is sought, rather than specific products. In other words, the destination occasion is one in which the shopper (often with other family and friends) goes out of their way to visit a particular retailer because they believe that retailer is the only (or best) source for a particular product or kind of shopping experience. (Think: Trader Joe's or Costco.)

Original tastes in transition

There are many changes now happening with surprising speed in the food world. One does not have to look deep into the major food trends impacting the marketplace to see that consumers are seeking higher quality foods and distinct new flavor and taste experiences. Today, we see, as one example, a growing number of consumers looking at food through the lens of multicultural food products. What's more, virtually all consumers now eat (at least some of) the same foods every day that were once reserved for special occasions (see figure below).


94% of households have incorporated the same brands and products once used for special occasions into everyday eating occasions

Further, consumers are definitely making conscious decisions to seek out higher quality and more distinctive flavors (see figure below).


Four in 10 households are intentionally choosing higher quality brands and more distinctive flavors

How do consumers describe their approach to shopping for new products in the supermarket? About one-fourth of consumers (22%) are adventurous and actively seek out new products while the largest number of consumers (61%) take a more casual, non-proactive approach to new products. Overall, 83% of consumers don't just look for new products, but try them as well (see figure below).


Eight in 10 consumers notice and try new products

The importance of cues for freshness and minimal processing is evident in the actual choices consumers make between alternative brands and products. As food and beverage developers and marketers contemplate new product offerings, keep in mind that selecting higher quality foods is not reserved for special occasions and that a growing number of consumers are choosing higher quality foods. Higher quality, from the consumer's vantage point, means:

• Seeking distinctive flavors
• Seeking less processed (i.e., fresh) foods
• Interest in locally produced foods
• Seeking hand crafted or artisan produced foods
• Willingness to spend more for quality

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