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New product development trends in store brands

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Title: New product development trends in store brands


1
New product development trends in store brands
  • Store Brands Decisions Innovation Marketing
    Summit - March 1, 2012
  • by Tom Vierhile Innovation Insights Director,
    Datamonitor
  • tvierhile_at_datamonitor.com or 585-396-5128

2012
2
Agenda
  • Introduction and overview
  • TrendSights Datamonitors mega-trend concept
  • Value seeking behavior is on the rise
  • Strong and weak areas for US private label
    launches
  • Why private label is rising consumer attitudes
    behaviors
  • Opportunities and innovations
  • 9 key themes have emerged for private label
  • Trending examples new product case studies
  • TrendSights in the context of new product
    innovations
  • Take-aways

3
TrendSights Datamonitors new trend-tracking
framework Overview
EIGHT MEGA-TRENDS ARE DRIVING CHANGES IN CONSUMER
PACKAGED GOODS Datamonitor has identified eight
mega-trends that recognize and explain evolving
consumer behavior. These mega-trends provide a
starting point for evaluating trends and are the
driving force of change across the consumer
packaged goods landscape.
HEALTH WELLNESS Health is addressed in a more
holistic and personalized manner.
INDIVIDUALISM EXPRESSION Todays consumers are
increasingly empowered and confident.
EVOLVING LANDSCAPES Socio-demographic and
economic trends are changing, long term.
SENSORY INDULGENCE The driving force behind
higher expectations of quality variety.
COMFORT UNCERTAINTY Rising stress and
uncertainty are catalysts for safety, tradition,
simplicity and reassurance.
SMART CONNECTED Technology is increasingly
changing and shaping consumer behavior.
SUSTAINABILITY ETHICS Shared social and
environmental challenges command attention.
EASY AFFORDABLE Maximization of scarce time and
money shape decision making.
4
Easy Affordable value seeking is the new
normal The recession of 2008-09 has permanently
changed consumer behavior
To cope with growing economic uncertainty,
shoppers are making trade-offs. The coping
strategies outlined here are likely to persist
for some time, pressuring the industry.
Source Datamonitor analysis global consumers
5
And consumers are buying more private label to
save money Seeing where US consumers stack up
globally in two different dimensions
QUESTION TO WHAT EXTENT DO YOU AGREE WITH THE
FOLLOWING STATEMENT FOLLOWING THE ECONOMIC
DOWNTURN I AM BUYING MORE PRIVATE LABEL WHEN
GROCERY SHOPPING TO SAVE MONEY?
private label penetration
agree
Sources Datamonitor Consumer Survey, 2011
Datamonitor analysis PL penetration as of 2009
6
But the shift away from national brands is
easing US consumers are beginning to move back to
brands, presenting a challenge
LOYALTY TO BRANDS IS FLEETING Significant
percentages of consumers are switching away from
top brands, per a recent Catalina Marketing
study. 70 PURCHASES TO ONE BRAND DEFINES
LOYALISTS HERE Catalina anonymously analyzed
frequent shopper accounts to study loyalty toward
one brand among the 100 top selling CPG brands in
the US loyalty was defined as 70 of purchases
in the same category for that brand. LOYALTY IS
PROFITABLE Average sales for the studied brands
grew 2.2 over 52 weeks, but would have grown
8.5 if brands had held onto their loyalists.
2011 LOST LOYALISTS
2009 LOST LOYALISTS
46
52
Category loyalists lost, 2011
Candy 79
Bakery 57
Snacks 53
Alcohol beverages 50
Refrigerated foods 49
Frozen food 46
Dairy, shelf stable meals 43
Beverages 37
75
75
37
Source Catalina Marketing Survey, published
September 7, 2011 in Advertising Age tie, 52
weeks ended early July 2011 Photos courtesy of
123rf.com
7
Some categories remain strong for private
label Top categories in the US for new private
label product launches, 2011
FOOD CATEGORIES DOMINATE THE LIST Of the top 14
categories for new packaged goods launched in the
US in 2011 food products accounted for 13 of
those categories. Juices came in at number 14,
the highest ranking beverage category. PERSONAL
CARE TRAILS Cough and Cold Preparations was the
top ranked personal care category at number 16,
with the Soap category coming in at the number 20
spot.
Category of skus, 2011
Vegetables 358
Pasta 229
Sweet spreads 193
Bread and rolls 176
Meat and meat products 169
Canned vegetables 166
Fruit 164
Other savory snacks 158
Cookies (sweet biscuits) 153
Breakfast cereals 151
Chilled meat/seasonings (tie) 150
Wet cooking sauces 147
Juices 138
47
75
75
37
Source Datamonitors Product Launch Analytics
8
But private label has been slow to embrace health
wellness Percentage of US private labels
making health claims trails all products
PERCENTAGE OF NEW FOOD AND NON-ALCOHOL BEVERAGE
PRODUCTS LAUNCHED IN 2011 IN THE US MAKING
SPECIFIED HEALTH CLAIMS
42
Source Datamonitors Product Launch Analytics
photos courtesy of Glennys and Organic For Me
9
And some retailers are trying to make up for lost
time Walmarts new Great For You rollout
A NEW FRONT OF PACK ICON Great for You will
appear on products with low or reduced levels of
fat, sugar and artificial additives. Walmart
says that 20 to 25 of its Great Value brand
food products meet the criteria for the new icon.
47
165 Food items reformulated so far including
ketchup and canned vegetables
75
75
37
Source Walmart www.walmartgreatforyou.com Photo
s courtesy of Walmart
10
New tactics are being used by some to broaden
interest Waitroses new Love Life line puts a
positive spin on better for you
MAKE BETTER FOR YOU FUN Debuting in the summer
of 2011 with a new wave of products for 2012,
Waitroses Love Life line focuses on foods that
are packed with nutrients. The first salvo of
270 products hit stores in June 2011, and
Waitrose dedicated a quarterly magazine and
section of its website to the new brand.
NEW APPROACH TO HEALTHY EATING Usually, this
area is seen to be more about the restriction of
choice, but Love Life is about eating more
variety and more of the right things. -
Rupert Thomas, Waitrose marketing director
Source The Guardian, UK June 4, 2011 Photos
sourced from Datamonitors Product Launch
Analytics
11
While others are finding clever new ways to get
healthier Sainsburys innovative new fruit juice
carton
PORTION CONTROL WINDOWS Sainsburys new 1 liter
juice packaging features four see-through windows
to help measure a serving of juice. Each window
measures 200ml of juice. The packaging
accomplishes the goal of introducing portion
control without limiting the size of the package
itself.
A NEW WINDOW TO HEALTH We launched the new
packaging to make it easier for consumers to
measure one of their five-a-day and lead a
healthier lifestyle. - Louise Wilkerson,
Sainsbury juice buyer
Source Packaging News, UK Photos courtesy of
Packaging News, UK and Sainsburys
12
Many categories are weak, with very little PL
penetration Selected bottom categories in the US
for new private label launches, 2011
PERSONAL CARE OVERALL IS WEAK Fragrances,
Styling products, Deodorants, Toothpaste, Nail
Make-up and more are high on this list, showing
low innovation levels for private label. STRONG
FOODS DRINKS Categories like Chewing Gum, Beer
and high-end Ice Creams represent a tough
challenge. OPPORTUNITY KNOCKS IN AIR
FRESHENERS? The Air Freshener categories as a
group have lower than expected private label
penetration.
Category of skus, 2011
Male fragrances 1
Chewing gum 2
Meat substitutes/beer (tie) 3
Styling agents/deodorants (tie) 4
Artisanal ice cream 5
Toilet cleaning products 6
Savory spreads 8
Toothpaste 10
Continuous air fresheners 11
Spreadable fats 16
Nail make-up 19
Fabric conditioners 20
Hand care (skincare) 28
Source Datamonitors Product Launch Analytics
categories were selected based on a combination
of launches size of sector
13
Differences exist because value is about more
than price Other measures of value are more
important to US consumers
QUESTION IN DECIDING WHAT GROCERY PRODUCTS
BRANDS OFFER GOOD VALUE FOR MONEY, HOW MUCH
INFLUENCE DO THE FOLLOWING HAVE? SAYING
HIGH OR VERY HIGH INFLUENCE
The product features best address your needs
Source Datamonitor Consumer Survey, July/August
2010
14
Strengths aside, private label is entering a
critical new era A broad range of drivers
inhibitors will guide where it ends up
DRIVERS
INHIBITORS
Source Datamonitor analysis Datamonitor
Consumer Survey - 2011
15
Agenda
  • Introduction and overview
  • TrendSights Datamonitors mega-trend concept
  • Value seeking behavior is on the rise
  • Strong and weak areas for US private label
    launches
  • Why private label is rising consumer attitudes
    behaviors
  • Opportunities and innovations
  • 9 key themes have emerged for private label
  • Trending examples new product case studies
  • TrendSights in the context of new product
    innovations
  • Take-aways

16
9 key themes have emerged for private label
development What is trending in private label
right now?
1.
Tiered product ranges to attract a broader range
of consumers.
2.
Greater focus on the premium credentials of
private label offerings.
3.
Proliferation of discount lines to counter the
threat posed by specialist retailers.
4.
More consumer third party involvement in new
product development.
5.
Intensified marketing efforts, with higher
profile and flamboyant promotions.
6.
Aggressive delisting of under-performing national
brands replacement with PL.
7.
The sale of private label outside of the
retailers own store, including online.
8.
Co-branding between PL national brands and
added retailer involvement in NPD.
9.
Reintroduction of some national brand skus and
focus on optimum PL penetration.
Source Datamonitor analysis
17
Trending examples Asda invests 100m to overhaul
its private label offerings
1.
Tiered product ranges to attract a broader range
of consumers.
Tiered product ranges to attract a broader range
of consumers.
  • SOLVING AN IDENTITY CRISIS
  • Private label is about 50 of Asda sales, but
    consumers were confused about what the brand
    meant.
  • Consumers perceived Asda as competing strictly on
    price, not quality.

WHY
  • SPLITTING PL INTO THREE RANGES
  • Asda PL range now split between Chosen By You,
    Extra Special and Smart Price.
  • Chosen By You is the result of taste tests
    involving 40,000 consumers and aims to bolster
    Asdas UK foodie credentials.

WHAT
Source Datamonitor analysis The Guardian
September 21, 2010 photos sourced from
Datamonitors Product Launch Analytics
18
Comfort Uncertainty a cautious consumer US
consumers want more local products, increased
label regulation and more
LOCALISM ETHNOCENTRISM ARE TOP THEMES
59
54
42
59 of American consumers deem that choosing
grocery products that are made in the US to be
either important or very important
54 of American consumers deem that choosing
grocery products produced locally in the region
they live to be important or very important
LOCAL IMPLIES TRUST TO CONSUMERS Local food
is as expensive as organic food, but people are
interested in buying from farmers they
trust. - Shawn Bossard, Morrisville State
College
Sources Datamonitor Consumer Survey, 2011 USDA
Agricultural Marketing Service Albany Times
Union January 15, 2012 Photo courtesy of Taiga
Company
19
Trending examples Safeways In Kind personal care
line showcases distinctive premium packaging
2.
Tiered product ranges to attract a broader range
of consumers.
Greater focus on the premium credentials of
private label offerings.
  • AFFORDABLE NATURAL BEAUTY
  • Safeways In-Kind line includes lotions,
    shampoos, body washes and more.
  • All are made with more than 90 natural
    ingredients, and are free of parabens,
    phthalates, sulfates and more.

WHAT
  • DEPARTMENT STORE QUALITY
  • The curvy packaging suggests the gentle features
    of the products themselves.
  • Line uses ingredients like grapefruit and mint
    extracts, but is 20 less expensive than
    comparable brands.

WHY
Source Datamonitor analysis photo courtesy of
My Private Brand
20
Sustainability Ethics social responsibility
matters A sizeable percentage of US consumers
want to do the right thing
How much influence does the following claim have
when making food and beverage choices?
How much influence does the following claim have
when making personal care or beauty product
choices?
Claim High Very high Totalhigh
Natural or contains all-natural ingredients 26 18 44
Produced locally 23 16 39
Environmentally-friendly 24 14 38
Certified organic 17 12 29
Certified Fairtrade or fair trade 15 10 25
Vegetarian or vegan 10 9 19
Claim High Very high Totalhigh
No animal testing 19 22 41
Natural ingredients 23 16 39
No petro chemicals 17 14 31
Packaged with recycled-recyclable material 19 10 29
Organic 16 11 27
Fairtrade-fair trade 13 9 22
CONSUMERS DESIRE GREENER PRODUCTS, BUT DONT
THINK COMPANIES ARE SINCERE Just 11 of
consumers globally believe that corporations
launch environmental programs because they
actually care about the environment 54 agree
they care more about their image.
Source Datamonitor Consumer Survey, 2011
21
But private label personal care has been very
slow to react Branded products are 2x to 3x more
likely to tout green credentials
PERCENTAGE OF NEW PERSONAL CARE PRODUCTS LAUNCHED
IN 2011 IN THE US MAKING SPECIFIED GREEN CLAIMS
42
No animal no animal testing or no animal
ingredients
Source Datamonitors Product Launch Analytics
photos courtesy of BFHS Network and NGO News
Africa
22
Trending examples Supervalus Wild Harvest
private label brand aims for affordable green
2.
Tiered product ranges to attract a broader range
of consumers.
Greater focus on the premium credentials of
private label offerings.
  • STREAMLINING GREEN
  • Supervalus Wild Harvest streamlines its better
    for you private label brands.
  • Wild Harvest will be integrated into conventional
    product sets as much as possible.

WHAT
  • HITTING A SWEET SPOT
  • Line addresses the top impediment to organic
    sales the price premium.
  • Wild Harvest is priced 5-10 higher than
    regular lines, but 10-15 below branded
    natural/organic lines.

WHY
Sources Datamonitor analysis Supermarket News
23
Trending examples Walgreens Nice! private label
brand takes on dollar stores, and more
3.
Tiered product ranges to attract a broader range
of consumers.
Proliferation of discount lines to counter the
threat posed by specialist retailers.
  • BEYOND TYPICAL PRIVATE LABEL
  • Walgreens Nice! brand goes beyond usual
    drugstore private label with 400 items including
    soups and bakery items.
  • All will sell at prices up to 30 percent below
    other national brands.

WHAT
  • PLAYING TO SMART SHOPPERS
  • Aggressive pricing and a bold, clean packaging
    design serve to simplify the shopping experience.
  • The fastest-growing sector of PL buyers in the
    US is 100k plus households.

WHY
Sources Datamonitor analysis, Nielsen research
photos sourced from Datamonitors Product Launch
Analytics
24
J.C. Penneys brave new strategy in price
rationalization Penneys simplifies shopping by
streamlining its price structure in 2012
PERCENTAGE OF ITEMS US CONSUMERS BOUGHT AT A
DISCOUNT
  • PENNEYS FAIR SQUARE PRICING
  • J.C. Penneys new CEO, Ron Johnson is
    spearheading a campaign to simplify the
    retailers pricing into three categories
  • Every day low price (40 to 50 less than the
    prices Penneys used to charge)
  • Discounted seasonal (changes monthly)
  • Clearance merchandise (2x per month)

10 1990
40 2011
590 There were 590 different sales at J.C.
Penney in 2011 alone. Nearly 75 of Penneys
revenue comes from goods sold at half or more off
list price less than 1 of sales come from full
price merchandise
Sources A.T. Kearney, Time magazine February
13, 2012 photos courtesy of PSDGraphics and
Sublime Stitching
25
Trending examples Marks Spencer leads the way
with a new line of weight management foods
4.
More consumer third party involvement in new
product development.
Tiered product ranges to attract a broader range
of consumers.
  • DESIGNED BY HEALTH EXPERTS
  • Simply Fuller Longer was developed with advice
    from the Rowett Institute of Nutrition and Health
    in the UK.
  • Line is based on research that high protein diets
    produce more weight loss.

WHAT
  • ONE LINE DOES IT ALL
  • Study participants lost 5 of total body weight
    in 4 weeks eating SFL products.
  • Line is exclusive to Marks Spencer, and
    features substantial main meals for true unisex
    appeal.

HOW
Sources Datamonitor analysis Marks and Spencer
photos sourced from Datamonitors Product Launch
Analytics
26
Trending examples Waitroses Heston line of
celebrity-inspired foods adds excitement
5.
Tiered product ranges to attract a broader range
of consumers.
Intensified marketing efforts, with higher
profile and flamboyant promotions.
  • BRITAINS MOST INNOVATIVE CHEF
  • Heston Blumenthal is famous in the UK his The
    Fat Duck restaurant is noted for pushing
    cultural boundaries.
  • Waitrose expects to ramp up the Heston line to a
    total of 60 items by April 2012.

WHAT
  • COURTING FOOD LOVERS
  • Michelin-starred Heston offers exclusivity new
    thrills to private label.
  • Heston and beloved cook Delia Smith will act as
    food ambassadors for Waitrose, forming The
    Dream Alliance.

WHY
Source Datamonitor analysis photo courtesy of
Waitrose product photo sourced from
Datamonitors Product Launch Analytics
27
Sensory Indulgence consumers seek variety But
US consumers seem to prefer innovation in
measured doses
Like 65
CONSUMERS LIKE TRYING NEW THINGS, BUT WILL NOT
ROUTINELY EMBRACE THE NEWEST, BOLDEST FLAVORS AND
SCENTS
Dislike 8
Making or trying new and/or different foods
Agree 46
Disagree 22
Taste in food has changed as a result of exposure
to food from other cultures
The pursuit of novelty is linked with
impulsiveness, and is somewhat at odds with the
recessionary mindset toward more careful,
measured spending and budgeting.
Disagree 25
Agree 31
The stronger the flavor, the better the taste
Source Datamonitor Consumer Survey, 2010
28
Private label can lead the way when it comes to
innovation Ability to move fast on emerging
flavor, fragrance or ingredient trends a plus
Bathroom tissue with shea butter
Dinner and dessert flavors, for chips
Tescos Christmas dinner selection range of
Handcooked Crisps is unique. New in the UK,
flavors include Roast Norfolk Stuffing with
Onion Gravy as well as Mince Pie flavor crisps.
New in the UK, Asdas bathroom tissue not only
contains shea butter, but is made with Forest
Steward- ship Council certified pulp, for
sustainability.
A more portable form of lasagna
Dessert-drink inspired hand gel
New in the UK, the Tesco Italian Lasagne Sandwich
makes an Italian food favorite an on-the-go
treat. The boxed sandwich features lasagna
between two thick slices of bread.
New in the US, Bath Body Works Pocketbacks
Anti-Bacterial Hand Gel is said to be inspired
by delicious dessert drinks. Scents include
Raspberry Ganache Swirl and Caramel Cocoa Whip.
Source Datamonitors Product Launch Analytics
(product photos)
29
Trending examples Fat Foam demonstrates that
private label can lead on innovation
8.
Tiered product ranges to attract a broader range
of consumers.
Co-branding between PL national brands and
added retailer involvement in NPD.
  • USING A FIRST TO MARKET STRATEGY
  • Walmart launched Fat Foam into the US market more
    than 6 months ahead of its national brand
    competitors.
  • Fat Foam was the first colorant to use drip-free
    foam, applied by hand.

WHAT
  • CLOSE COLLABORATION WAS THE KEY
  • Walmart worked with the Japanese manufacturer
    Hoyo Co. which owns the masstige haircare brand
    Samy.
  • The partnership ensured that Fat Foam was sold
    exclusively through Walmart.

HOW
Source Datamonitor analysis photo courtesy of
FatFoam.com
30
Take-Aways Where is private label going in the
future?
SOME TIPS FOR MAKING PRIVATE LABEL EVEN MORE
COMPETITIVE
Watch the Perimeter The center store has
rebounded during the recession, but the greatest
growth opportunities are in perimeter categories.
Think Young Younger consumers and their kids
represent the largest future growth potential for
private label in coming years.
Turn the Tables Brands are living on close-in
product extensions, starving product innovation.
Bold initiatives will stand out as a result.
Mind the Buying Gap Up to one-third of consumers
in a given category are not acting on the belief
that PL products are credible alternatives.
Keep Improving Consumer expectations of private
label are rising, and offerings will have to
improve continuously to maintain grow interest.
Go Tiered Tiered private label helps capture
affluent consumers and broadens the overall
market for private label.
Source Datamonitor analysis
31
Thank you! Questions Tom Vierhile
Innovation Insights Director Datamonitor tvierhile
_at_datamonitor.com 585-396-5128
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