Vijoy Gopalakrishnan, SVP, Product Management, Innovation and Media, Circana

It’s the holy grail for CPG manufacturers: Find the market gap and fill it with a product that resonates with consumers and is a winner for retailers. But doing this effectively requires a deep understanding of consumers’ needs and a willingness to solve them with new, relevant solutions. The industry is replete with research asking consumers what their needs are. This is structurally flawed. Consumption is not always an overt conscious choice and is not future-proof. A better approach is to shadow a consumer’s purchase behavior and identify the product attributes that matter in their shopper journey. 

Our research shows more than 50% of retailer- and manufacturer-defined categories don’t reflect the way consumers shop today. They ignore consumers’ desire for specific attributes (like hydration or energy), product benefits (like higher levels of performance or nutrition), and their willingness to go beyond traditional category definitions to solve their needs.

Our research shows more than 50% of retailer- and manufacturer-defined categories don’t reflect the way consumers shop today. 

Circana’s 2023 New Product Pacesetters, highlighting the top 100 new food and beverage and top 100 new nonfood consumer packaged goods, shows how manufacturers successfully delivered to today’s consumers. We’ve identified brands inching their way down the aisle (for example, Hostess Bouncers, Alani Nu Fitness Protein, Remington Shine Therapy) or even jumping the aisle (such as OREO frozen desserts, Nutella B-ready, and Betty Crocker Cinnamon Toast Crunch cake mix). By leaning into consumer behaviors and needs, these brands and products found success in a new category or disrupted a category with new benefits and usage occasions. 

Aligning to consumers

So why do some companies stick with constructs rooted in outdated product definitions? These companies may have the basics of branding and messaging down, but they should be adapting category definitions aligned with consumers’ evolving need states. As with so much of the CPG retail industry, consumers are ahead of us. They don’t consider strict category boundaries when solving a need. It could be specific nutrition requirements, on-the-go convenience, experiential flavors or scents, or new formats from their favorite brands. 

Observing the product attributes and strong loyalty of consumer purchases can reveal their reason for buying and expose opportunities for further innovation. How can you identify these critical attributes? Purchase-based market structures like Circana’s predictive approach can help unlock this paradigm. 

Let’s illustrate the gap between the marketer and the consumer (Figure 1). A marketer working within static product hierarchies likely considers coffee to be a $10 billion market. Millions of people drink it daily! But consider the reasons consumers drink coffee. Is it the caffeine? The convenience? Maybe an interesting flavor? By expanding the view with the consumer lens, the marketer can see coffee is part of a $40 billion liquid refreshment category. It now encompasses in-home and multiservice occasions, on-the-go convenience, energy infusing or caffeine-free, sustainably produced, and potentially offering unique flavor experiences.

Case Study: Applying the shopper lens reveals new innovation opportunities. 

A leading coffee manufacturer was delighted to learn that they were competing in a $40B market, not $10B market.

More Breakfast Benefits

We recently worked with a leading breakfast cookie brand to identify a strong purchase connection with breakfast bars compared to traditional cookies. By uncovering the attributes fueling shopper loyalty, including portability, nutrition, and portion control, we found additional attributes fitting that construct, including protein, energy, and new flavors. These fit the client’s brand seeking to anchor itself in the morning consumption occasion. Traditional cookies are usually consumed later in the day as a treat, not as on-the-go nutrition. 

These attributes, what we call walking attributes, help predict shopper loyalty and spot what drives them to fulfill that need. These insights lead to broader sources of volume and new product incrementality. They can also inform how to better target potential new product buyers. Purchase-based data validates attribute preference and helps build the most appropriate audiences.

Consumers no longer fit into marketers’ strict category definitions. To deliver consumer needs and achieve sustainable growth, marketers should be reviewing their own market structure gaps. By taking the consumer approach of solving a need and identifying beneficial attributes, you’ll be able to unlock growth opportunities for your current portfolio and gain direction for future innovation.