Living a healthy lifestyle has never been as popular as it is now.
While most of us already have bad habits to kick and others to adopt, now more than ever it is becoming imperative we start taking our physical health seriously. The COVID pandemic showed us what preventative health measures can really do for your longterm health and well-being.
This is in no way a “we told you so” moment as the point has been received loud and clear by the general population. Slowly but surely, more and more people are turning towards healthier options in grocery stores and online shopping.
Let’s be real, we all know making a serious lifestyle overhaul is not easy, especially if you don’t know where to start; what if you’re someone who was never into cooking, or just prefer to eat out/order in? What if you don’t have the proper nutritional in-take education to make the change?
If we’re being honest, there are those of us who would make the change, if we didn’t have to think too much about it.
Fair enough. So, what can brands and retailers do to help? There is clearly a growing need in the market for healthier options at every opportunity. But what about the in-store execution - how can you make sure you are not messing anything up?
This was the question on our minds when we launched our latest study. We set out to discover if the innovation and introduction to new and 'better-for-you" products is worth the time and investment for both brands and retailers alike. Is there a need for such products? If so, what are shoppers willing to pay? Where to merchandize the product? And who exactly is the target audience?
Introduction to the Innovation Problem
- A fast-growing snacking company is planning to roll out its new better-for-you product at a major regional retailer.
- New product is labelled as gluten-free, vegan, 30% less fat and zero artificial flavors. It did great in blind flavor tests.
- Company needs shopper insights regarding the right placement, pricing and assortment, with the end goal to remove guesswork out of the process and create a winning retailer case study.
- Identify the right placement: Two placement hypotheses: mainstream snacking range vs gluten-free range
- Optimal assortment: Product comes in eight SKUs, need to narrow down the selection
- Identify the right price: Couple of price levels are considered, from premium pricing to just above mainstream.
- Accurate projections for the retailer case: Get sales projections and define the target market in terms of socio-demographics and lifestyle traits.
Shopnosis simulates product launches in virtual environments. There are four steps to the Shopnosis approach:
- Aisle Setup
- Online Shopper Recruitment
- Dashboard Results
- Executive Summary
1. Aisle Setup
In about a week, the Shopnosis team built the virtual environment - replicating the actual retailer layout and assortment
The virtual aisle was built in three variants:
- Control: Current state at the retailer (without the new product)
- Mainstream Scenario: New product placed at mainstream range
- Gluten-Free Scenario: New product placed at gluten-free range
2. Online Recruitment
- Shoppers were recruited via an online panel - 1,500 shoppers overall, split into three groups of 500
- Each of these three groups of 500 shoppers was shopping in just one of the mentioned above scenarios (control, mainstream scenario, gluten-free scenario)
Click here to see how the shopper experience looks in 3D.
*Note: Shopnosis 3D shopper app works on any OS, and on any device. Shoppers loved the experience, saying it was way more interesting than surveys!
3. Dashboard Results
Upon recruitment completion in three days, dashboard results were instantly available.
It was immediately visible which scenario and which new SKUs had the most potential.
To wrap things up, the Shopnosis team undertook additional statistical modelling: TURF analysis to discover the optimal assortment, and, to produce price sensitivity curves.
4. Executive Summary
Snacking company CEO and senior management received the executive summary in PPT and attended a personal presentation.
1. The right placement? Mainstram vs Gluten-free
First, we wanted to tackle the question of placement: would this new product be more successful and profitable in the mainstream scenario or the gluten-free scenario?
Shoppers show more affinity towards new products if placed in the mainstream snacking range, acheiveing penetration of 12% (vs 5% in the Gluten-free range). Furthermore, new product could grow the entire category by +2%.
2. Next, we wanted to see which assortment showed the best potential for the client's new product to grow.
Out of the eight potential new SKUs tested, we identified four that would maximize client sales and are complimentary to the current range. The remaining four showed indications of cannibalisation and would not fit with the current range.
*Note: assortment optimisation comes from a TURF analysis based on virtual shopping data.
3. Pricing: is the premium pricing the client wants to attach to this new product justified?
Research discovered that premium pricing is justified - but only up to a certain point.
We identified a pricing threshold, i.e a sweet spot, that would maximise profit. Any price above this level leads to a disproportionally large drop in sales, and price levels below leaves money on the table.
4. Finally, our sales projections for the retailer and target market analysis
Based on trial rate and the estimated purchase frequency, we made a sales projection.
Our sales projections indicate within a year of being on-shelf, in the mainstream scenario, the new products have the potential to sell over 110,155 units, give or take 10%. They also show the potential of growing the total category sales by 2%.
Extra: Target shopper
A target audience might arguably be the most important piece of information a new brand needs, otherwise, how do they know who they are catering to? As per the client's request, we put together some comprehensive target shopper graphs to help the client better market their product.
So what can we and the client learn from this study? Well, for one thing, health consciousness is on the rise and as we've said before, while it is very slowly gaining traction, it would behoove brands and retailers to get ahead of the curve.
These new health-conscious innovations will soon become key players in the shopper decision making process as people are looking for quick and easy solutions that fit their lifestyle change. It is important to mention that while customers are looking to make healthier choices daily, they are also looking for options that will fit their on-the-go lifestyle.
Healthy snacking options, like the one tested here, could be the first step brands could take to help their customers start taking their longterm health more seriously. Once again, the customer is placing the onus on their favourite brands to meet them (more than) half way.
Don't leave anything to chance, it pays multiple times to pretest the roll-out of a new product.
It's best to be prepared.
For the full study results, contact us firstname.lastname@example.org