Small number of shoppers shape success

23 May 2012

NEW YORK: Less than 2% of shoppers play a central role in deciding the success of new products in the consumer packaged goods industry, a US study has revealed.

Catalina Marketing assessed 25 of the top CPG launches made during 2010, using data from 20,000 stores and 41m people. It also stated that only 2% of all new lines in the category logged sales of over $50m that year.

More specifically, it discovered that 1.5% of customers delivered 80% of sales for these 25 offerings. Moreover, members of this audience were 64% more valuable than the average new product buyer.

Even for the biggest-selling items, an enhanced bottled water and a Greek yoghurt brand, these figures stood at 1.4% and 2.7% respectively.

"With such small shopper concentrations driving the success of product launches, it's critical for a brand's advertising and promotions to reach the consumers who are most likely to try and repeat," Todd Morris, executive vice president, brand development, at Catalina, said.

Elsewhere, top category buyers – defined as those individuals together yielding 80% of sector spending – were found to be 3.8 times more valuable than the normal clientele that these fledgling products attracted.

Having bought a new brand or extension, their repeat purchase levels were also 19% greater than was the case for the average person trying these goods, Catalina Marketing added.

When discussing the 17 line extensions forming part of the sample, the "top brand buyers", providing 80% of sales, were also 5.8 times more likely to try one of these offerings compared with all shoppers.

Similarly, their repeat purchase rate was 28% higher for all customers that used the brand in question for the first time.

But the analysis also showed 42% of "new item dollars" attributable to these 17 extensions were transferred from other SKUs in the same brand's portfolio, thus effectively "cannibalising the parent".

As such, while existing buyers delivered 63% of all new brand sales during the entire timeframe monitored, exactly half of this group had switched from another product in the same portfolio.

More positively, the remaining 36.5% boosted their sector spending or switched from a competitor. A further 19% were category, but not brand, customers, and 18% were entering the segment.

Data sourced from Catalina Marketing; additional content by Warc staff