Anticipating the Next Normal: Connect with your Consumer

Anticipating the Next Normal: Connect with your Consumer

Overview

Consumer Packaged Goods play a vital societal role in fulfilling both basic physical needs and more discretionary human ‘wants.’ During these times of change, we believe deep consumer understanding is necessary for the CPG industry to more effectively provide for needs during the COVID-19 crisis and pivot to address an emerging ‘Next Normal.’

Many are following changes in consumer spending and sentiment, which provides a lagging view of events as consumers deal with the global pandemic. We believe it is equally important to understand why consumers are making choices in the near term and identify how brands and retailers can better meet rapidly changing needs moving forward. The Seurat Group is fielding ongoing ethnographic discussions with consumers across the country to develop a real time understanding of the drivers of choice and how those will change based on disruptions brought on by the COVID-19 pandemic.

Changing Consumer Needs

More consumers are necessarily spending more time, energy and resources meeting foundational physical needs. At the same time, more unstructured hours spent at home affords some consumers a unique window to seek purpose and fulfillment. Both impact purchase decision-making and it is critically important for brands and retailers to understand how the needs of consumers are changing at a granular level, since the impact of COVID has been very uneven.

Disruption of Decision-Making

Over the past two months the consumer decision process has been completely disrupted. Prior to COVID-19, many consumer decisions were based on a habitual, subconscious process used to simplify a sea of options. Now, decisions are more deliberate as consumers match new priorities to a rapidly shifting consideration set.

While the negative human impact of the crisis cannot be overlooked, the current situation provides a unique lens into human decision-making, revealing how brands and retailers can better provide consumers with what the need and want, now and in the future.

Anticipating the Next Normal

Every brand in the world is emailing me some story. It won’t convince me to buy something. But I won’t forget the companies that are actually making things better for me.

While there is no crystal ball view to the future, we used our consumer ethnographies to develop a model of behavior to better understand, and predict, how choices made in the consumer goods space will continue to evolve. Applying the model at the category level reveals opportunities for brands and retailers to better meet consumer and shopper needs. It measures the change in consumer need prioritization, pain points, and desired benefits sought from goods and services. It is a forward-looking perspective that is crucial to prepare for the ‘Next Normal’ and reveals some of the changes we observe now are temporary while others will be far more enduring.

Example of the Consumer Model in Action: Baking at Home

Consumer Behavioral Change ‘Stickiness’

Understanding changes to consumer need priorities and pain points, along with the ability of manufacturers and retailers to consistently deliver against these changes during COVID, is key to mapping the near-term impact. Identifying the level of long-term change to consumer needs and assessing how well brands and retailers performed during the crisis shows us the ‘Next Normal’.

Growth Scenario: Delivering on changing needs, addressing pain points and building trust

I started shopping at Aldi to save money. Their organic produce surprised the hell out of me. I’m sold and don’t feel the need to go back to Whole Foods anymore.

Decline Scenario: Underdelivering on changing needs, not addressing pain points and eroding trust

I tried to order click-and-collect for groceries but things were out-of-stock, I couldn’t figure out how to use it efficiently and there were no delivery windows for 2 weeks. Not going to be trying that again.

1 in 2 online delivery grocery shoppers reported wait times of 2+ days

How should CPG Manufacturers and Retailers Respond?

During these unprecedented times it is critical for brands and retailers to stay connected with consumers and shoppers in real time to identify the impact of COVID on consumer needs and pain points and continually assess how they can adjust their offer to better deliver in the near term. At the same time, there is a need to use forward-looking insight to determine what the ‘Next Normal’ will be and develop strategies to deliver on this future state at a matrixed consumer, brand, occasion and local level.

Key steps for brands and retailers as they work to provide for consumers now and build enduring relationships:
 

1. Build deep empathy and understanding across consumer cohorts in real time
  • Build a view of consumer needs, pain points and the brand value equation
  • Re-construct the consumer / shopper journey
  • Focus on speed of perspective and depth over precision
  • Decisions will be made on incomplete data—declare a belief in what will happen, and don’t waver
2. Develop a clear, consumer-based vision for the future. Everyone is inundated with what’s happening day by day.
3. Implement a blueprint for the ‘Next Normal’ now, using a task force structure grounded in the consumer.
  • Track, learn and adjust based on the gapping between initial thinking on what will happen vs what does happen.

Reach out to the Seurat Group team for additional information on ways to build the insight foundation needed to prepare for the next normal and develop a blueprint to delight consumers and shoppers through this time of change.

Unlocking Growth Through Health and Wellness

Unlocking Growth Through Health and Wellness

Introduction

Food & Beverage are the primary tools for the majority of Americans to manage their overall Health and Wellness (‘H&W’). 1 in 4 Americans report using exercise to primarily manage their health and wellness, while 3 in 4 Americans do so through food.1

Unfortunately, US consumers are becoming less healthy overall. For example, 9.4% of the US population is diabetic, and another 25% is prediabetic; obesity levels continue to rise.2 Healthier eating and nutrition are widely discussed in culture, yet 2 in 3 consumers are confused about which products to choose as healthy.1

Helping consumers make better nutrition choices is clearly better for public health. It is also a critical growth strategy for brands and retailers as 2 in 3 shoppers are willing to pay a premium for healthier products.3

State of Health & Wellness1

Harnessing Health & Wellness

We believe every manufacturer can unlock growth through H&W, but it requires greater focus on truly understanding consumer H&W triggers, identifying the consumer role of H&W at retail, and engaging consumers along the purchase journey.

In this growth paper, we highlight how manufacturers can simplify H&W choices, engage shoppers along the purchase journey, and partner with retailers to grow category and brand sales.

H&W Playbook

Identify Consumer H&W Triggers

A one-size-fits-all approach won’t work as consumers have unique needs when it comes to H&W. Two segments of H&W consumers, Limiters and Seekers, are examples of how this is uniquely brought to life:

1) Limiters restrict how much unhealthy food they eat and seek physical benefits from their diet. They look for specific macronutrients and take a measured approach to support managing their body.

2) Seekers are eating natural and unprocessed foods regularly and are searching for help with holistic health and functional performance. They actively use food and beverages to enhance their physical and mental wellbeing.

Manufacturers and retailers need to understand consumer H&W motivations by segmenting and targeting consumers based on attributes and benefits they prioritize, as well as motivations and triggers that drive changes in behavior. Providing products and communication that resonates with the unique priorities of each specific segment is the foundation for growth.

Consumer Triggers

Segment H&W Customers

Manufacturers must understand the H&W development of their customer set to inform how they engage with retailers. Many retailers are looking to connect to growing H&W trends, but need help to do so in a way that is right for their shoppers.

Manufacturers should build a H&W retailer segmentation to inform how to position their portfolios and advise retail partners on how to grow through H&W. This starts with both

1) Identifying how important each H&W offer is for a retailer’s shoppers

2) Identifying how shoppers rate retailer performance on this offer

Understanding the intersection of importance vs. performance helps manufacturers prioritize investment and customize recommendations for retailers based on a shopper-first perspective.

We need MFGs to tell us what is right way for me to be a H&W leader for our shoppers.”–Leading US Retailer

Inform and Inspire H&W Shoppers

To truly unlock growth, manufacturers need a deep understanding of the role H&W plays in driving behavior along the shopper journey. Given the high degree of confusion among shoppers around which H&W products are best, brands have the opportunity to educate consumers and influence their choices.

Manufacturers also need to work with retailers to support shopper activations and evolve in-store conditions in a way that provides much needed H&W information for shoppers and drives category growth.

Through this process, manufacturers can better leverage H&W insights to inform the right distribution of items, optimize the shelf set, determine which benefits & attributes to communicate through merchandising and optimize pricing opportunities.

Shoppers are overwhelmed by the choices in the grocery store and the lack of transparency on what is actually healthy. It’s hard to know what’s good for you these days as diet trends keep changing and the ‘healthy’ options in the stores keep expanding.”4

It’s just product overload. There are tons of stuff in every single category. Everything is organic or inorganic or said to be ‘healthy.’ It’s hard to weed out what you should and shouldn’t buy.”4

Conclusion

To drive growth through health and wellness, manufacturers and retailers need to start with the consumer, identify their H&W needs, understand what they aren’t getting today, and let this drive decisions along the shopper journey. Those with deep H&W insight will better delight consumers, shoppers and retailers, and unlock a significant new source of growth.

The Seurat Group is an insights-driven consumer packaged goods consulting and private equity firm whose mission is to delight consumers. We help our clients and portfolio companies by artfully integrating multiple lenses of insight to unlock new perspectives & uncover new growth opportunities.

We’d love to hear from you! To discuss any of these ideas further, please contact us at info@seuratgroup.com or visit us at https://seuratgroup.com/

 

 

2 CDC.gov
3 Seurat Benchmarking 2018
4 Food Navigator and Bernstein

2019 Top 10 Revenue Growth Ideas: Leveraging Insights to Drive Growth

2019 Top 10 Revenue Growth Ideas: Leveraging Insights to Drive Growth

Introduction

As has become tradition, we are sharing our annual top 10 revenue growth ideas with our network. This year we are using our platform to focus specifically on the role that Insights can play in unlocking growth.

We believe that the Insights function has the mandate to play a more transformative role in a company’s growth strategy. Insights should be a growth function, acting as an inspiration generator and conviction creator that empowers teams to make bold decisions.

With that in mind, we are highlighting the top 10 ways to leverage Insights for revenue growth. These concepts span all levels of the growth strategy framework, further reinforcing how Insights should be involved in every step of creating and updating a firm’s demand-generation strategy.

Top 10 Ideas: Growth Strategy Framework

Where to Play

Map for tomorrow
Develop a proprietary, predictive view of where to play that defines the consumer frame of reference, addressable market, and best opportunities to commercialize strategic choices.

Why it Matters:
A common insights foundation guides innovation and brand strategy, allowing brands to stay ahead of tomorrow’s opportunities and anticipate where to play in the future.

Role of Insights:

  • Develop a proprietary consumer definition of the category that combines learnings from leading-edge consumers, emerging trends, and other industries
  • Update and evaluate annually as a key input into annual business/strategic planning

Result:
This forward-looking market map empowers the team to plan ahead and creates the right to win.

Assess your job prospects
Expand thoughtfully by regularly assessing and re-assessing which jobs your brand can win.

Why it Matters:
Breakthrough revenue growth comes when brands successfully expand their reach into new spaces.

Role of Insights:

  • Build a deep understanding of brand resonance and consumer benefits to identify which jobs your brand will be “hired” for
  • Reconcile these potential jobs with the firm’s capacity to support expansion based on category and company dynamics

Result:
An effective insights foundation identifies the brand’s repeatable growth model and enables smart and sustainable expansion.

Create conviction
Know where to play – and just as importantly, where not to play.

Why it Matters:
As organizations grapple with big choices on how to prioritize multiple opportunities, they need the clarity to make difficult decisions, especially when that means challenging convention.

Role of Insights:

  • Actively seek new lenses of insight to inspire different outcomes
  • Arm the organization with these insights to enable teams to make, communicate, and defend difficult decisions
  • Use insight to create the case for change and future-proofing

Result:
Insights-driven decisions that build widespread support for broader organizational direction.

How to Win

Champion your leading edge
Inspire disruptive innovation by learning from the leading-edge consumer—that is, consumers other than your category’s mainstream core consumer.

Why it Matters:
Research based on today’s core results in close-in line extensions and product modifications, not forward-looking innovation that creates the right to win.

Role of Insights:

  • Identify what “leading-edge” means for your business. It may be lapsed users, ultra-heavy shoppers, younger shoppers, or the most informed shoppers
  • Understand how these shoppers use, avoid, or “hack” your focus categories
  • Connect these leading-edge behaviors to unlock growth from mainstream shoppers

Result:
Understanding the leading edge allows the team to disrupt by better meeting unmet or emerging needs.

Embrace omnichannel
Think outside the traditional channel structure when researching or planning go-to-market efforts.

Why it Matters:
The siloed “channel-first” approach fails to account for the increasingly cross-channel nature of shopper journeys. As methods to engage consumers and shoppers become more fragmented, it is critical to understand shopper journeys and key trigger points from an omnichannel perspective.

Role of Insights:

  • Reinforce a “consumer first” mindset, instead of a “channel first” approach
  • Map the end-to-end consumer journey to understand where consumers want to discover, learn and buy
  • Assess the most critical inflection points for reaching your target shopper

Result:
Insights functions can enable organizations to make go-to-market decisions and integrated demand plans through the lens of the consumer.

Spark digital transformation
Reimagine your organization’s approach to digital by placing the consumer and shopper at the center of your strategy.

Why it Matters:
Your shopper’s path to purchase increasingly involves fragmented digital touchpoints, and she expects a seamless brand experience across these points – on her terms.

Role of Insights:

  • Build the fact base and vision required to orient strategy and justify investment in digital transformation
  • Infuse digital and ecommerce perspectives into all research initiatives

Result:
Organizations can transform to align with this new consumer reality, justifying their investment with a solid fact base.

Activate the 4Es
Elevate the value equation from the traditional 4Ps to the new 4Es: Experience, Exchange, Evangelism, and Everywhere.*

Why it Matters:
Today’s consumer has more choices than ever, requiring brands to work harder to win trial and build loyalty. Consumers want to engage with brands on their own terms before “rewarding” them with a purchase.

Role of Insights:

  • Understand the consumer and shopper beyond their interactions with your product.
  • Elevate your brands’ value proposition with broader cultural and lifestyle contexts
  • Spark a mindset shift from “marketing against the 4Ps” to “providing consumer experiences”

*In the digital age, a successful brand must engage consumers through the 4Es. The Product becomes an Experience that delivers memorable moments. Price evolves to an Exchange that goes deeper than a transactional relationship with the consumer, offering value beyond price. Promotion turns into authentic, consumer-led Evangelism. And Placement becomes Everywhere: a consistent product and brand story available everywhere your consumer expects to see it.1

Result:
Mindset shift equips brands to authentically deliver against new growth levers and strengthen consumer loyalty.

How to Action

Prioritize packaging
Reimagine packaging to enable the 4Es and elevate the brand value equation.

Why it Matters:
Packaging is often under-utilized for growth but plays a vital role in unlocking new consumer engagement and distribution opportunities.

Role of Insights:

  • Consider the role of packaging in research initiatives such as leading-edge consumer research and price-pack architecture
  • Understand packaging’s ability to deliver multiple benefits, such as ecological credibility, functional benefits, new need states, superior storage, seamless fulfilment, and badge value

Result:
Full leverage of a critical growth lever.

Leverage e-commerce learning for rapid iteration
Use digital as a learning channel in addition to a sales and marketing channel.

Why it Matters:
The rapid acceleration and “failing fast” needed to win in eCommerce can fuel success in other channels, too; this is a critical part of the challenger brand playbook.

Role of Insights:

  • Use digital learnings to optimize product mix, refine messaging, and more deeply understand the consumer
  • Own coordination of insights and application across the demand landscape

Result:
Better-informed omnichannel planning and successful retail launches.

Unlock the value equation
Drive revenue growth by better elevating the consumer value equation and proactively addressing ecommerce-driven pricing challenges. If not already existent, establish a Strategic Revenue Management leadership function to guide decision-making.

Why it Matters:
Among global top-50 CPGs, two-thirds of revenue growth is driven by pricing and mix, not by volume gains. ecommerce-driven price transparency makes revenue and profit growth even more challenging.2

Role of Insights:

  • Understand consumer jobs, shopper missions, and customer needs to identify incremental opportunities
  • Pair these insights with knowledge of current price-pack architecture to build consumer-driven architecture
  • Offer unique, customer-specific architecture that delivers and captures more value

Result:
Brands can thrive across retail environments even as price transparency issues increase.

We’d love to hear from you! To discuss any of these ideas further, please contact us at info@seuratgroup.com

 

 

1 Brian Fetherstonhaugh, Ogilvy & Mather.

2 BCG: How Net Revenue Management Boosts the Top and Bottom Line.

Future of Packaging:  Re-thinking Plastic  Solutions

Future of Packaging: Re-thinking Plastic Solutions

Overview

Core to unlocking disruptive growth for manufacturers is identifying new consumer trends and quickly moving to innovate against them. Identifying these trends is often grounded in understanding your leading-edge consumers. For example, Blue Buffalo built a dog food brand that tapped into burgeoning needs of pet parents underserved by established brands. The idea: meat should be the first

ingredient in the ingredient panel. By curating the brand in channels where pet parents relied on store associates for nutritional advice and fueling social media mavens, they were able to accelerate the meat-first trend and disrupt the dog food space – leading to General Mills’ acquisition of the brand last year for $8 billion.

The Next Leading-Edge Trend & Why Now?

Listening to leading edge consumers and social media conversations, it is clear to us that the volume around the environmental impact of plastic packaging has turned up a few notches. We believe one of the next leading-edge trends primed to transition into the mainstream is alternative packaging solutions.

Manufacturers tapping into the alternative packaging trend is not a new concept. Water filtration systems (Brita, Pur, etc.) have grown over the last 20 years and were predicted to make bottled water obsolete. Yet, today bottled water remains the fastest growing beverage category in the US at 9%.

We believe this time is different.

The negative impact of plastic among leading-edge consumers is at a tipping point. Consumers are more invested than ever in brands that demonstrate a conscious effort to support sustainability. Social media disseminates this message and connects consumers that share this sentiment like wildfire.

 

At the same time, Big CPG’s efforts to connect with these consumers – and social pressure accelerating around reducing plastic waste entering the oceans – is ushering this concern into the mainstream.

 

Eliminating plastic is quickly becoming a standard, with company after company coming out with their own sustainability pledge.

Plastic Disruption is Already Occurring

Big CPG can only go so fast. Supply chain complexities and profitability concerns require them to pick their spots and manage against longer time horizons. This opens the door for Challenger brands to strike quickly, putting the consumer first. We’re already seeing brands succeed in positioning alternative packaging solutions as a core piece of their consumer value equation:

Lush Cosmetics

 

Boasts minimal, 100% recyclable packaging on all its products; it is one of the fastest-growing beauty retailers in the U.S., with North American sales increasing 25% in 2017 and reaching $550 Mil.

LOLI

Educating consumers that most beauty products are >95% water and use more plastic than necessary is a core focus. The brand minimizes its packaging footprint by removing water from beauty products, using glass and offering consumers a unique “blend it yourself” experience.

Carlsberg

Danish brewing company introduced new pilsner six-packs held together with adhesive rather than plastic rings in a bet that the eco-friendly packaging will attract younger consumers.

We believe the manufacturers that can act quickly and short-circuit the time horizons of big CPG will create advantage by appealing to consumers and customers that desire plastic alternatives.
What to Do

Be truly consumer-first
Core to the DNA of Challenger brands is an understanding of your leading-edge consumers’ values and a commitment to use packaging to better meet their needs. Manufacturers must identify the role packaging plays in consumption occasions and shopping trips and bring to market a solution that makes sense. Lush & Carlsberg represent examples of this in action. Lush defined minimal packaging as a core principle of its brand to connect to its millennial consumer base, while Carlsberg’s desire to attract these same consumers led to a solution to reduce plastic rings as a key component of their packaging.

Get to know your leading edge
Define the key consumer segment that will lead change within the category and identify the triggers to mainstream the experience. Banza commercialized leading edge food value insight in dry pasta to disrupt traditional boxed pasta – millennial moms rely on pasta as a dinner staple for their families, but value the carrier aspect of the meal (fresh vegetables mixed in with tomatoes) and want to replace the starchy carbs. Brands should speak to and learn from their leading-edge consumers, use these insights to fuel their solutions to reduce packaging within their categories and most importantly message how they are participating in this shift.

Map demand occasions more broadly
While the core of your business may be grounded in traditional brick & mortar occasions, there is an opportunity to re-think how demand occasions are mapped for your business. Channels such as foodservice and on-premise offer opportunities to reduce your packaging footprint while still accessing your core consumers. For instance, growth of WeWork locations have increased awareness and consumption in the absence of packaging for Kombucha, while Pepsi’s purchase of SodaStream highlights how brands think about accessing new consumption occasions outside their core plastic package.

Lead the way with eCommerce
Estimates show that roughly 165 billion packages are shipped in the US annually, using cardboard equal to more than 1 billion trees. The tremendous growth of eCommerce will only increase CPG’s contribution to this number. Move beyond transactional goals for ecommerce and use the platform as an insight tool for rapid testing and learning, to refine innovation and the value equation before launching across B&M channels. While packaging changes may require a price increase, test consumer demand online to determine what drives the most value for your consumers while positively impacting the issue of packaging waste online.

Price Pack Architecture:
Given today’s omni-channel environment and the realities of radical price transparency (see growth paper), companies are in constant struggle with customer partners to manage their price pack architecture. Leading companies have used reduced packaging solutions and smaller sizes to access unique consumer needs, such as Coke’s introduction of 7.5-ounce mini cans. Not only do these products meet new needs, they also offer manufacturers the opportunity to reduce overall packaging – and margin up – through smaller, opening-price-point items. Consider offering reduced sizes to both participate in this trend and meet consumer needs that may exist for your product portfolio.

Conclusion

We are at a tipping point for alternative packaging solutions. This trend should be an opportunity to reimagine packaging as both an outsized influencer for core consumers and a positive difference-maker on the sustainability front. Manufacturers must evaluate their own brand priorities and consumer set to find areas in which they can participate and lean in to be at the forefront of this change.

As always, we want to hear from you! If you’d like more information on how to re-think packaging, or want to share how your company is addressing this issue, please reach out at info@seuratgroup.com.

Social Communities

Social Communities

3 Reasons Why They’re the Best New Research Method
Introduction

Social communities are market research’s best-kept secret. They allow researchers to tap into natural avenues for communication where people are comfortable: social media.

As a result, consumers are incredibly engaged and eager to offer up rich insight. In a world where emerging CPG
companies are disrupting the industry with their ability to hit

the pavement, learn from consumers quickly, and react strategically, social communities are invaluable.

They give big companies the opportunity to be agile. Not sold yet? Great, we’re going to explore three big reasons why they’re the best new research methodology you’ve never heard of:

Social communities are powerful because they are already ingrained in consumers’ lives (think: Twitter, Facebook, Instagram). They’re also painless for participants (unlike traditional communities which require significant behavioral change).

We’ve heard time and time again how much consumers enjoy participating to the point where they are sad to see their community end. Traditional research methods like focus groups, in-home ethnographies, and in-store research, on the other hand, are more arduous for consumers because they require a substantial time commitment (usually in the middle of the day) and take place in artificial environments.

These methods help marketers understand general usage and shopping patterns, but they do not provide the same sense of authentic interaction as social communities. They are planned interviews, no matter how much you emphasize that they should reflect consumers’ “typical behaviors.”

Social communities yield insights that ultimately drive innovation, inform consumer messaging, and help refine shopper strategy.

Take a fictional case of a toothpaste manufacturer, for example. In our scenario, the toothpaste manufacturer leverages social communities to generate a breadth of insights related to the areas above (innovation, consumer messaging, and shopper strategy.) The company’s marketers are able to pick out the best insights and use them as the foundation for action.

Example: Toothpaste Manufacturer

You might be wondering: “If social communities are so great, why don’t we hear more about them in CPG?” The big reason is that they are labor intensive. They take a lot of time to facilitate, require a flexible research plan, and often necessitate extra buy-in from key stakeholders.

Despite the added effort, however, researchers who go the extra mile LOVE social communities because they elevate their qualitative insights. If you are hungering to foster an authentic connection with consumers and generate new, rich insights, you should consider them too.

Researchers LOVE social communities…and you will too!

“At the beginning, I thought ‘boy, this is going to be a long process.’ Now all I’m thinking about is how worth it communities are.”

“I never thought we could get such great data from social media.”

“This is truly a frontier in market research. In all my time in Insights, I’ve not seen qualitative learning this robust.”

To learn more about Social Communities, please contact us at info@seuratgroup.com