How long is the long tail in CPG product innovation?

Every day, new CPG product ideas are born, many for niche customer bases. For how long can the long tail be profitable? Let’s discuss.

grocery, retail, shelf, CPG, innovation, product, sales, marketing, strategy, customer
With retail shelf space at a premium, how do new CPG products find their niche?

On this episode of the Food & Restaurant Marketing Podcast Dan and Adam look at the uphill climb of CPG products clawing for shelf space. Every brand is born from the idea of solving a need for an ideal customer, but most aren’t able to distill that vision. We discuss the challenges from the brand and the retailer side of the issue.

How can new CPG products and brands make the leap from idea to success? Let’s dive in.

Prefer to read along, have at it with our transcript, here.

Transcriptions by Go Transcript.

 

Growing an emerging brand: three key factors for success

watering can, new product, CPG

Growing an emerging brand in the CPG space takes a special focus and attention.

A growing consumer package goods company can efficiently and effectively create demand and generate trial with limited distribution and a limited budget. The way it’s done is by doing a few things well and with great precision.

It’s important to remember when setting a precise strategy, you must sacrifice some things you think you want to do. Staying focused on what’s working will prevent you from straying to random tactics and getting off message. There are three critical components to an effective marketing strategy for most emerging brands. They’re designed to focus your limited budget on the optimal tactics and messages through a test and optimize approach. More on that later. The three critical components are: geo-targeting, target audience, and optimal messaging.

1. Geo-targeting

Geo-target your promotional investment in your best markets. Examine your ACV in each market to ensure people will be able to find your product once you create an interest.

You need to understand who your best and most likely customer is.

Start by identifying your top five designated market areas (DMAs) based on where you have the best distribution. Your primary objective is to generate awareness so you can generate trial. Several great ways to generate that awareness include: paid search, paid social, and online video. All tactics can be implemented relatively inexpensively.

2. Target audience

Have a precise target audience for your product. Do not try to reach broad demographics like “Adults 25-54.” It’s not efficient. You want to understand who your best and most likely customer is. You’ll base this not only on gender and age, but also with a clear psychographic profile. Understanding who your raving fans are is important so you can use all the digital targeting tools available today to go find more people with the same profile. When setting your target there are several tools available, like social listening, Facebook Insights and Google Analytics.

3. Optimal messaging

Create optimal messaging that will resonate, engage and motivate your audience. Because you are implementing the test and optimize model, there is no need to limit your message options. Since you’re early in your marketing efforts you want to test a variety of approaches to determine which ones resonate with your audience and creates the best click through rates and conversions.

As you learn what advertising messages and types are generating click through and conversion, you optimize your advertising spend on the most effective ads.

Consumers are looking for new products all the time. They’re interested in new flavors, new options to replace old favorites or they’re just trying new products out of curiosity, and they use a variety of channels to seek them out. Whether it’s search, social channels or websites; emerging brands need to get their message out there so we can discover your great new product.

How recalls create category parity

frozen food, grocery, shopping, cpg, Eggo
Consumers might freeze Eggo out in light of their recall

Last month, Kellogg’s announced a voluntary recall of their Eggo Whole Grain products due to concerns about potential listeria contamination. They deserve kudos for proactively taking that action. Especially with the knowledge that many brands never fully recover from recalls.

For example, Perrier, which built its brand on natural purity was forced to issue a wide-sweeping recall in the early ’90’s due to the discovery of benzene in their product.

Ironically, the product was being used as a control by a US government agency testing local water supplies when the chemical was discovered. Perrier was forced to recall hundreds of millions of bottles and their share price dropped by $40 after returning to the stock market.

Perrier was once the gold standard for bottled water, and helped invent the category. Though the brand stabilized after being purchased by Nestlé, it lost its leader position.

Things are just as dire for Kellogg’s. Cereal sales are ever-slowing, and all non-protein rich (or perceived) breakfast products are out of vogue. Eggo is a staple in a lot of homes, but sales have also suffered.

Like Perrier, Eggo lovers will now seek out alternate brands in the freezer case. What’s worse, the new generation of shoppers has told us in multiple research studies that they aren’t shy about switching to store brands. Millennials add a new wrinkle with this behavior.

Unlike Perrier which owned first-mover status in their category and had built the brand of a premium or luxury product (depending on the market) Eggo is essentially a commodity. Though a fine product, and well-branded for awareness over my lifetime, it doesn’t occupy a specific emotional niche.

That’s supposed to be why we choose branded products over store brands or unknown brands.

Not only are there other waffles that can fill that space in the freezer, but there are others that share the unique attribute of Eggo – the shape. That some or all of those are also produced by Kellogg’s is a conversation for another article. Once a product in this situation is replaced in the shopping cart once or twice, it is awfully challenging to reclaim that place, especially when private label waffles can be up to 35% cheaper.

That’s the biggest problem here. What did the recall trigger in the minds of consumers? Yes, this event is a literal instance of Eggo being unable to guarantee the safety of its food product. But subconsciously, it’s something bigger. That’s supposed to be why we choose branded products over store brands or unknown brands. That’s why Eggo has been advertising since its inception in the 1970.

Before brand love comes brand trust. If consumers can’t trust the brand, they won’t buy it and can’t come to love it. Young consumers have proven that they are more open to store brands, so instances like this can open the floodgates of customers straying and leaving permanently. A recall is a serious strain on trust that tests the brand in question.

What is a brand to do?

First, Kellogg’s did the right thing for its customers and brand by being proactive. They deserve credit for taking action. They have to find a way to take credit without reminding shoppers (or tipping them off in the first place) that there was a health concern. They might wait until the threat is proven null to do anything.

Since they got proactive with safety, they should get proactive with outreach. Use their owned channels to communicate as the brand returns to stores and offer other Kellogg’s product before that happens. Push complimentary products now to build favorability for those, then offer a compelling offer for Eggo as a bounceback.

Think about the box. Assuming a 6-8 week absence from the shelf, consider this a new product launch. How can Kellogg’s capture the attention of their core shoppers – and new ones – to get them to pick up the product again?

Recalls are never good. Does a health-based recall kill a food brand? Not necessarily, but it won’t be an easy road back to pre-recall sales.