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MAY 2019Product Innovation and the Pace of ChangeNEW PRODUCT PACESETTERS 2SPECIAL REPORTNEW PRODUCT PACESETTERS: Product Innovation and the Pace of Change IRIworldwideProduct Innovation and the Pace of Change“Change has never happened this fast before, and it will never be this slow again.” Graeme Wood, journalistConsumer behavior is an apt barometer for gauging the pace of change, particularly interaction with the CPG retail industry. Witness the rapid adoption of e-commerce purchases up more than 35% in 2018 from 2017, according to IRI data mobile payments, delivery and pickup adoption, and increasing usage of mobile devices for managing all aspects of daily life, be it personal well-being, work, home or social. A mantra for 2018 might well be “time = energy.” New Product Pacesetter trends support this, with many products working overtime so consumers dont have to, and making them feel theyve made smart choices for a well-lived life. Multi-benefit food products span dayparts and aim to pack various nutritional elements including high-protein, vitamins and natural ingredients with ease of use (Birds Eye Veggie Made Mashed, Eating Well Dinners, Quaker Overnight Oats). Perhaps over-represented accounting for nearly $800 million in sales in New Product Pacesetters are indulgent items (top food Pacesetter Kinder Joy, M and 56% of respondents buy new home care products because it “makes it easier for me to get my housework done.” What Were Buying, and WhySource: IRI 2019 New Products Survey I am an early adopter; I like to have the latest and greatestI tend to take a wait and see approach with new productsI generally dont purchase new products in this categoryWhat is your approach to new food and beverage products? 61%26%13%a miss with a new product. It also affords them bragging rights for discovery among their peers. Households with kids also over-index as early adopters, evidence that parents quest to find foods that keep the entire family happy is ongoing.Just as consumer confidence ebbs and flows, so too does the percentage of consumers identifying themselves as early adopters. IRIs Consumer Connect Survey of late 2018 indicates that confidence was high, which is mirrored in IRIs Early adopters might benefit from “discoverer” bragging rights, but most consumers prefer more information before trying new products.6SPECIAL REPORTNEW PRODUCT PACESETTERS: Product Innovation and the Pace of Change IRIworldwideThe continual enhancement and bundling of benefits for laundry products see top non-food Pacesetter Tide Ultra Oxi, and Tide Pods Plus Downy leads us to marvel that these products dont wash, dry and fold our laundry. Turns out, the Tide brand does. Tides national expansion of its wash-dry-fold laundry service leaves the laundry- averse or time-crunched to focus on other pursuits. While 2018 Pacesetter products dont quite answer the convenience call the way Tide Cleaners do, they do demonstrate multi-benefit or very specific time-benefit innovation, including Schick Intuition f.a.b. (forward and backward) razor; Arm or Flonase Sensimist multi-symptom nasal spray. Non-Food Product Usage Groups, 2018 Number of NPPsNPP Sales in Millions* % Dollar Share of Non-Food NPPBeauty Care 28 $511.9 22%Personal/Hygiene Care 22 $314.7 14%Pet Care 18 $474.8 20%Health Care 12 $437.2 19%Home Care 9 $357.5 15%General Merchandise 6 $144.4 6%Air Fresheners & Candles 3 $30.8 1%Baby Care 1 $34.1 1%Paper, Plastic & Foils 1 $12.7 1%Total Non-Food 100 $2.3B 100%*Numbers are roundedBeauty care is the perennial leader in Pacesetter non-food sales, and 2018 was no exception, with the category holding 28 Pacesetters. Eye makeup items alone include LOral Voluminous Lash Paradise, Maybelline Total Temptation, Maybelline TattooStudio, LOral Voluminous X Fiber, LOral Infallible Pro-Last, Maybelline The City Mini, CoverGirl Peacock Flare, CoverGirl Total Tease, Kiss Lash Couture, Maybelline Curvitude, LOral Brow Stylist Shape and Fill, and Maybelline Master Precise Ink. However, it is notable that there were 40 Pacesetters in the beauty category in 2017. Other categories bubble up in a number of new offerings but havent been able to best the beauty category.Source: IRI Market Advantage, new products that completed their first year in calendar year 20187SPECIAL REPORTNEW PRODUCT PACESETTERS: Product Innovation and the Pace of Change IRIworldwideOn the food and beverage side, protein-rich Jimmy Dean Simple Scrambles and Healthy Choice Power Bowls, as well as ultra-convenient Keebler Pita/Flatbread and Hummus, and Barilla Ready Pasta meals all deliver by leveraging the all-important convenience factor. Barilla not only offers pouches of cooked pasta, it also offers full meals. No need to boil pasta or open a jar of sauce. Kelloggs Keebler brand has taken the extra step of pairing its pita crisps and flatbread with hummus for an on-the-go snack. IRIs 2019 State of the Snack Industry webinar states that 47% of consumers eat snacks more than three times a day, up 4 percentage points over 2015. Food Product Usage Groups, 2018Number of NPPsNPP Sales in Millions* % Dollar Share of NPPDinner Solutions 17 $433.3 19%Breakfast Solutions 15 $429.7 19%Candy & Gum 13 $418.9 19%Salty Snacks 10 $210.0 9%Carbonated, Sports & Energy Drinks 6 $194.3 9%Desserts 7 $137.5 6%Meal Makers/Light Meals/Appetizers 6 $98.5 4%Sauces, Spreads, Dressings, Dips & Condiments 7 $83.2 4%Juice, Milk & Waters 6 $66.5 3%Sweet Snacks 3 $57.3 3%Coffee & Teas 4 $43.2 2%Baby Food Products 4 $39.4 2%Beer, Wine & Spirits 2 $23.3 1%Total Food & Beverages 100 $2.2B 100%*Numbers are roundedSource: IRI Market Advantage, new products that completed their first year in calendar year 2018Dinner Solutions and Breakfast Solutions categories had the most Pacesetters in 2018, 17 and 15, respectively, accounting for nearly 40% of total Pacesetter food dollar sales. All beverage categories combined included 18 Pacesetters products, with energy drinks and sports drinks out-muscling traditional soft drinks and beverage alcohol products.18 beverage products contributed $327.3 million in Pacesetter sales.8SPECIAL REPORTNEW PRODUCT PACESETTERS: Product Innovation and the Pace of Change IRIworldwideNearly 75% of respondents to IRIs consumer survey balance health and wellness with indulgence, albeit to varying degrees. Edging out the 80% healthy/20% indulgent group (35% of respondents) are the 38% who “eat healthy about half the time and eat whatever I want the other half of the time,” which is up from 36% who reported this approach in 2018. Households with kids are most likely to take this 50/50 approach as they strive to feed children healthy foods, but often cave to their kids demands and use treats as a reward or bribe just being honest, here, folks. Consumers age 55+, those with high household incomes and Asians are more likely to put themselves in the mostly healthy 80/20 cohort.While Rx to OTC products stick to the clinical approach of their prescription precursors, most products promote the ease of adopting healthy habits. Ollys mission is to “make nutrition delightfully easy.” And Activia Dailies promote the ease of working probiotics into a healthy routine. Oui by Yoplait works from the base of healthful probiotics, but changes the yogurt experience with a simple, crafted, French approach to pleasure and food. Snacks with a healthy halo are also hitting the mark with consumers. Portion control (Duncan Hines Perfect Size for 1), more nutritious ingredients (RXBAR) and even healthier manufacturing methods (think baking vs. frying) (Lays Poppables and Ritz Crisp & Thins) deliver indulgence with a smaller slice of guilt. Moderation Gains MomentumSource: IRI 2019 New Products Survey Which of the following best describes your attitude toward eating?I eat healthy about half the time, and eat whatever I want the other half of the timeI eat healthy about 80% of the time, and allow for indulgence the other 20% of the timeI pretty much eat what I want, with little consideration for nutritional intake and calorie countI follow a strict diet, monitoring the types of food I eat and portion sizes38%35%22%5%36%36%23%5%Total Respondents 2019Base: 2,468Total Respondents 2018Base: 11,4859SPECIAL REPORTNEW PRODUCT PACESETTERS: Product Innovation and the Pace of Change IRIworldwideTotalAvid Early AdopterNew Product Enthusiast LaggardBase: 197 Base: 427 Base: 1,844Taste 93% 96% 96% 92%Price 83% 84% 82% 82%Healthfulness 67% 81% 68% 65%Convenience 65% 80% 70% 62%Simple ingredients 64% 81% 70% 61%Sustainability 39% 63% 42% 35%Complies with a special diet 31% 51% 39% 28%When asked about attitudes toward food and beverages, more than 6 in 10 (62%) agree “the food and beverages I consume play an important role in supporting my health.”Those who consider themselves Avid Early Adopters dramatically over index in agreeing with this statement, as well as, “eating well will improve my quality of life,” among other nutritional statements. Avid Early Adopters, just more than 25% of U.S. consumers, dramatically over index in their response to a number of attributes new products promote, including sustainability, healthfulness, convenience, simple ingredients and compliance with a special diet. These are the “super consumers” marketers should be targeting. They demonstrate theyre looking for healthier, convenient offerings and theyre willing to buy. If the experience matches or exceeds their expectation, theyll not only come back, but theyll share their “find” with others. Consider them your coveted brand ambassadors. How much of an impact do the following have in your interest in new food and beverage products?Source: IRI 2019 New Products Survey of U.S. consumers areAvid Early Adopters 26% 10SPECIAL REPORTNEW PRODUCT PACESETTERS: Product Innovation and the Pace of Change IRIworldwideWhen journalist Graeme Wood penned the quote “Change has never happened this fast before, and it will never be this slow again,” he was referring to social media and its influence on the ways and speed at which we communicate. Digital Information World estimates that internet users are spending an average of 2 hours and 22 minutes per day on social networking and messaging platforms. As Norty Cohen writes in “Join the Brand: Building Loyal Communities and the Need for Belonging” (2018, Idea Press), today, everyone is a smartphone content creator. People want to connect with others, and a shared like or dislike of a brand is a great way of “acting like a friend.” As much as brands are part of social media conversation, consumers want to talk to friends, not with brands. And when friends make a recommendation, its 2.5 times more effective than TV, Facebook and YouTube advertising combined. For brands to become “friends,” they have to build genuine communities, which starts with a compelling reason for people to join, including perceived value or reward for being an engaged member. Becoming Part of the (Positive) Conversation Total Respondents 2019Avid Early AdopterNew Product EnthusiastLaggardTelevision or radio advertising 25% 51% 38% 19%In-store flyers 33% 62% 41% 28%Signs or displays in the store 32% 64% 45% 26%Item price 74% 85% 79% 71%Product label/packaging 37% 67% 53% 31%Shopper loyalty card discounts 56% 78% 68% 51%Previous usage/trust of the brand 80% 87% 87% 78%Newspaper circulars from home 34% 61% 36% 30%Coupons from home 55% 77% 66% 50%Information from website or email 31% 61% 42% 25%Information from blogs/social networking sites 23% 56% 34% 17%Smartphone apps 24% 56% 35% 18%In-store kiosks 21% 49% 29% 16%In-store touch screen digital signs 14% 41% 21% 10%Mentioned/recommended by store clerk 22% 48% 32% 16%Mentioned/recommended by family or friend 60% 75% 73% 55%Source: IRI 2019 New Product Survey New Product Consumer Sources of Influence: How does each of the following sources influence your awareness of new products?(Top Two Box)Social networking sites have more influence on consumers than television or radio advertising. Recommendations from family/friends carry nearly the same weight as loyalty card discounts and coupons.
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