- Circana
- 4h
- 5 min read
Table of Contents:
Successful brands leverage analytics and technology to understand shopper behavior and uncover market opportunities. By using robust shopper insights to guide assortment strategy, companies can ensure that any new product adds genuine value and can be a catalyst for growth.
Setting the Right Goals for Your Product Mix
When adding to a product mix, defining incrementality is a critical first metric. A new product must be incremental to the overall category, subcategory, and to the brand itself. For a retailer to support a launch, brands must demonstrate that the item will be incremental to the aisle and screen, driving increases in store sales, traffic, and overall basket size.
A combination of art and science is needed to show incrementality and distinguish between a product that offers staying power versus a fleeting fad. Brands can keep tabs on emerging patterns with tools that monitor buyer behavior and market signals while also embracing longitudinal data that provide crucial historical context.
Additionally, research helps brands determine if an expansion is necessary. By measuring consumer satisfaction with the existing assortment, brands can identify whether customers are genuinely seeking something new or if current offerings already meet their needs. This prevents oversaturation and ensures resources are invested where they will have the greatest impact.
Finding the Gaps in the Current Market
Line extensions or new innovations can address a gap in the marketplace. Effective market research reveals what customers want or might be drawn to but can’t currently find on the shelf.
Analytical techniques such as a principal component analysis or shopper purchase-based market structure examine attribute-level data across the market to identify whitespace opportunities where a new product can thrive. This data, combined with attitudinal data sets, paints a complete picture of consumer wants and needs.
A primary concern with any new launch, of course, is cannibalization. Will the new product attract customers by addressing gaps or actually draw sales from existing ones?
Here, too, insights help define the clear behavioral objectives for innovation, whether it’s bringing new people into a category, spurring new uses among current buyers, or enticing customers away from a competitor. By analyzing purchase behavior from verified buyers, brands can identify the likely source of volume for a new product. This insight is essential for building a business case that demonstrates true gaps for growth rather than a simple shuffling of sales.
Using Research to De-Risk a New Product Launch
Brands can fall into the trap of introducing a new item based on outdated category definitions. To avoid that, product developers should gauge how consumers view a category or demand space, not how the brand has historically defined it. For example, a beverage company might find that consumers are no longer thinking in terms of carbonated soft drinks versus water but in broader terms like "hydration" or “refreshment.”
Proper research also prevents choice overload that poses a growth risk. While innovation is attractive, an overwhelming number of options might confuse consumers and lead to lower overall sales. Research helps find the optimal balance, ensuring the product assortment is varied enough to be interesting but not so complex that it creates friction in the purchasing decision.
Further, it is crucial to ensure a brand isn't just listening to its most loyal, top-spending consumers. By analyzing data on customer mobility and spending habits across the entire market, brands can identify the right people to target and, at the same time, make sure that their new product resonates with a wider audience.
Ensuring New Product Interest Translates to Sales
It’s one thing to get shoppers to look at something different on the shelf and another thing to get them to put it in their cart. Consumers often express a desire for innovative products but often stick with what they know.
To move the needle from browsing to buying, a brand can use insights to uncover the powerful combination of who the consumer is, what they are looking for, what they value, and how they actually behave at the point of purchase. Techniques like concept testing, along with volumetric forecasting, are valuable. These methods simulate the shopping experience, whether through virtual shelf sets or other models, to see how consumers react when presented with a new idea in a realistic context.
Companies can also deploy other forms of advanced analytics to learn the trade-offs consumers are willing to make between different features, such as flavor, size, and price. This allows the manufacturer to pinpoint attributes that drive purchase decisions.
Proving the Value of Expansion to Retailers
Once research identifies a winning new product, that data becomes the most powerful tool for convincing a retailer to provide shelf space. A data-backed story that demonstrates incrementality, addresses a clear consumer need, and projects a positive impact on the category is far more compelling than a simple product pitch.
For example, a brand might use research to show that a new flavor will attract a younger demographic that the retailer is struggling to reach, thereby growing the entire category. This evidence-based approach transforms the conversation from a request for space into a partnership for mutual growth.
Ongoing research is also key to maintaining a healthy product portfolio. By continuously analyzing buying trends and monitoring performance, a brand can identify when an existing product is underperforming and know with confidence when it is time to swap it out for a new, higher-potential varietal.
The long-term benefit of this data-driven approach is sustainable growth. Instead of merely reacting to competitors, brands can proactively shape the market, build stronger retailer relationships, and create a resilient product line that consistently meets the evolving needs of consumers.
Optimize Your Product Growth Strategy with Circana
Circana empowers brands to optimize their product growth strategies by combining cutting-edge technology, robust data, and deep industry expertise. Our solutions integrate a vast, high-quality dataset with intelligent algorithms, enabling businesses to measure market share, understand consumer behavior, and predict future trends. This predictive capability allows brands to stay ahead in a fast-paced economy. Circana’s Growth Predictor tool allows brands to forecast the success of new products. By blending consumer behavior data with volumetric forecasting, this solution ensures that businesses can anticipate demand and strategically plan their product launches for maximum impact. Brands can also collaborate closely with Circana’s experts, who bring decades of experience across the CPG and retail industries.
