Earlier this week, I highlighted an Advertising Age article about the shift in the CPG industry as marketers move resources from traditional to digital ad campaigns. Another study, this one is from Catalina, suggests that a move to general digital isn’t cost efficient for most large food marketers. Catalina’s research shows that marketers are better served by personalizing their promotions based on ‘buyergraphics’.
Food marketers typically roll out nearly 2,000 new products or product extensions each year. Of these, fewer than 68% achieve a sales level of more than $7.5 million. U.S. consumers go into the food store knowing what they will purchase. Each shopper tends to stay within a narrow range of the brands available in any specific category, a pattern of behavior which helps to explain why new products often don’t succeed.
The following data shows the percentage of the overall UPCs, product types, purchased in general by each consumer:
- Dairy 1.7%
- Cookies, crackers, bread 1.2%
- Frozen 1.0%
- Snacks and soft drinks 1.0%
- Center store, grocery 0.9%
- Center store, non-food 0.5%
- HBC 0.2%
In any given year, the typical consumer purchases 260 UPCs (or product types). This reflects 0.7% of the average 35,372 types of items available to them on the grocery store shelves.
The Catalina analysis also considered the results of a Memorial Day circular promotion done by a major retailer. Only 30% of the shoppers who visited the store actually purchased 1 of the more than 1,100 items being promoted. When purchase statistics are combined with a consumer tendency to block out marketing messages, analysts say the need for personalized promotions is clear. As marketers get a handle on Big Data and use ‘buyergraphics’ to profile individual shoppers, promoting new product launches to the right target audience should become easier and deliver a higher ROI. The idea behind ‘buyergraphics’ is that each shopper presents a unique profile and should be marketed to as such.
If you’re working with food marketers, have you suggested personalized campaigns, maybe through a loyalty program that analyzes previous purchasing patterns?