According to the recent NielsenIQ publication 2022 Trademark Balancing Act Survey, about half of global consumers said they buy a wider variety of brands than before COVID-19, but the brands they ultimately support and the products they put in their shopping carts need to always meet certain basic criteria, including function, offering an emotional connection, resonating with their personal or cultural identity, and being within their financial reach.
Unfortunately, for many small and midsize brands with limited analytics budgets, identifying and meeting these criteria can be a high-risk challenge. That’s why NielsenIQ has developed a new framework to help companies of all sizes assess opportunities and understand the characteristics of successful innovation so they can scale and grow.
In this episode of FoodNavigator-USA’s Soup-To-Nuts podcast, Andrew Criezis, senior vice president and general manager of NeilsenIQ SMB, shares information about the four pillars of this framework, which included preference, performance, cycles trend of innovation and differentiation. He also shares examples of how CPG companies have successfully implemented innovations and lessons learned.
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“The most dynamic landscape we’ve seen in decades”
The last three years have brought unprecedented changes with the emergence of global concerns, transformation of consumer habits influenced by inflation and adoption of technology, and dramatic changes in operating costs – which have all impact companies’ go-to-market strategies and consumer engagement approach.
And while change can be difficult, Criezis notes that it also presents opportunities, especially for small and medium-sized brands that have traditionally struggled to break into the market, but are more flexible than their larger counterparts and more established.
“There is not just one disruption. The shift from store to online store, massive supply chain disruptions, labor shortages, inflation…consumers are driving higher expectations for sustainability – all of which means that as a brand, it’s probably the most dynamic landscape we’ve seen in decades,”criezis said.
How brands respond depends in part on their size with smaller, more centralized companies with shorter supply chains and local companies able to adapt more quickly than larger companies that rely on marketplaces. international markets and longer supply chains, he explained.
Additionally, local small and medium-sized businesses are more likely to cut costs because they often don’t have to transport their products as far, resulting in savings they can pass on to consumers who feel impacted by inflation, he added.
And while larger companies may offer savings through bundles, smaller ones are more likely to have lower opening prices and smaller bundles that reduce trial risk for unfamiliar consumers. not be their offers.
Online shopping levels the playing field for small and large businesses
The need for increased safety and social distancing during the pandemic has also accelerated the adoption of online and omnichannel shopping, which Criezis describes as one of the biggest transformations the industry has seen in recent years and a driver of major growth for small brands and emerging brands.
He explained that smaller brands can compete more directly with big brands online because the shelf space is “totally different”. Unlike stores where big brands can dominate with far more exposure, small and big brands online appear side by side when consumers search for generic terms, like “cookies,” rather than brand names, like Chips Ahoy. !.
“This change in buying behavior has allowed smaller brands to have better visibility with consumers, and it has also allowed consumers, as we learned from this study, to obtain a greater variety of products. “,he explained.
“What we found is that SMEs or emerging brands contributed about 52% of CPG growth in Q! of this year even though [they] represent 30% or one-third of overall sales in the US market,”he added. “That means they’re getting more and more space in shopping, and that’s a great story for emerging brands right now.”
A new framework to help small businesses grow
To help small and medium-sized brands better seize these opportunities and identify further areas for growth, NielsenIQ has undertaken a global survey of how consumer needs have changed over the past two years and how the industry should react to recognize these changes.
The result is a new framework comprised of four foundations around which Criezis says brands can operate to accelerate their growth.
“The first base we refer to is called ‘preference’, where we basically look at data and understand what consumers want” to see in the market and to buy, he says.
The study reveals that four in 10 consumers consider themselves “brand agnostic shoppers”, who have no preferences and are open-minded, and these are the ones that small brands should target in their marketing efforts. did he declare.
Based on the survey results, Criezis says their purchases and preferences are heavily influenced by affordability and perceived value.
While the balance may currently tip in favor of small and medium-sized brands, Criezis noted that large companies learn quickly from their smaller counterparts and innovate or forge partnerships accordingly through incubators, joint ventures and investments. minority.
Performance Benchmarking Reveals Where Smaller Brands Win
But there are a few areas where Criezis says smaller brands continue to hold the upper hand, as revealed by the second base of the paradigm, which is benchmark performance.
“Small brands are definitely challenged when it comes to competing with big brands, no doubt. But there are two areas where they are making huge inroads, and that’s in fresh produce and meats. fresh”,he said, noting that a quarter of shoppers in the NielsenIQ study prefer to shop small when it comes to fresh produce.
“Another area where consumers are looking for emerging brands is in confectionery and snacks,”where the survey showed that about 44% of consumers have no brand preference, he said.
Criezis hypothesizes that smaller brands do well in these spaces in part because consumers are more open-minded or actively seek out local brands, which they perceive as beer to offer fresher products. And because opening portion and prices tend to be lower, like individual candy bars or cookie packs, and therefore the bar for the initial try is lower. With that in mind, he recommends brands in these categories consider these strategies when thinking about their packaging and messaging.
Combine innovation trend cycles for opportunities
To gain traction in other categories, Criezis advises small and medium brands to prove their value – and relevance – to shoppers by offering relevant but also new products. To help brands balance product development with other pressing priorities, like price, the third pillar of the paradigm focuses on analyzing the innovation trend cycle.
“Around four in 10 shoppers seek innovation and want to try new things. So brands shouldn’t just provide the same thing at a low price,”They can offer something new and tap into a wider group of consumers, he said.
Top areas for innovation where Criezis says it sees growing consumer demand include sustainable and, as you’d probably expect, plant-based packaging. But above all healthy vegetable products.
Meaningful differentiation helps brands get ahead
Given the popularity – and increased competition around plant-based and other emerging fields – a key to success is to deliver meaningful differentiation, the fourth pillar of NielsenIQ’s platform for evaluation. opportunities.
As Criezis explains, differentiation isn’t just about differently colored packaging or flavor, it’s about educating consumers about the essential differences and tapping into different lifestyles or values by offering products that respond to specific problems and needs.
“Is there a different way of life that you are helping to adapt? And do you own this lifestyle? So again, whether it’s sustainability or ketogenic compatibility or something that helps someone with an allergy – those key innovations, those trends, then drive or should be incorporated into a style brand of life. And that leads to that pillar of differentiation and leads you down the path of innovation,”he said.
As useful as this paradigm is for assessing opportunities, it also highlights how daunting entering a market can be for small and medium-sized businesses. But while there’s heavy work to be done, Criezis says now is the time for small and medium-sized brands to carve out a niche and build a customer base.
“There hasn’t been a better time for emerging brands to help transform the CPG industry – to be true agents of change within the category or to create entirely new categories in the market,”he said, adding: “There are more and more people looking for local emerging brands, and so if you embrace some of these key trends, adopt some of the key strategies around performance measurement, tell your story – you have a great opportunity to sell both online as well as retail and start taking up more space in the store.”
Companies interested in learning more check out the full Brand Balancing Act report, available on NielsenIQ’s website, or Criezis recommends checking out NielsenIQ’s Byzzer.com platform, which focuses on democratizing data and insights. analytics so that smaller businesses with more limited resources can still build their story, understand the competitive landscape, measure their sales, and ultimately win in retail, both online and offline.