Olivier Blanchet is the Managing Director of PRS IN VIVO France. After spending two years in the US, he talks about the changes in the CPG industry and would be happy to discuss with you about the situation in France.
There are changes that we feel, almost like a subterranean wave, before we actually see the concrete signs that the change has fully emerged. And by then, it is tough to resist its effects or think of it as a passing phase. It is by definition the “new normal”. I have spent the last two years in the United States leading product innovation and client services for PRS IN VIVO. This time has allowed me to witness a paradigm shift in market research and some concrete trends that have materialized and are now anchored as a business evolution. At least in the US, but I suspect there is much we can learn from it in France as well. I have seen three dominant trends that should cause us all to question the old models:
- The return of the product and real benefits, the decline of the major historical brands and dated marketing …
The first major trend comes from the confiscation of growth by an “explosion of small brands” who manage to generate a surprising volume of market share thanks to strong competitive advantages: being agile, adaptive notably in the capacity to tackle new trends.
One example: Halo Top is a challenger brand in the ice cream category that reinvented the category from indulgent treat to an everyday menu item by activating a simple consumer need for lower calorie options. (Source: Les Echos 2/19/18).
There are many other examples like this one, for example the successful launches of Bai (low calorie beverage), Siggi's (yogurt start up) or Impossible Foods (plant-based burgers).
These start-ups dare to challenge well-known brands, entering the market aggressively with products that provide superior product experience. Their delighted consumers become the influencers providing the word of mouth that leads to sales growth, eroding the dominance of market leaders at the shelf.
These new comers know what brand promise messaging resonates authentically because often it is actually created by their consumers themselves, rather than by their ad agencies.
At the same time, the 2017 Pepsi advertising fiasco (which wanted to surf on protest movements) reminded us that big brand must be careful: authenticity in brand promise cannot be invented or bought anymore. (Source: ADN 4/6/17)
- Towards more consumer closeness, authentic and sustainable products, and towards more niche marketing ...
These new entrants “shake up” the old model at 3 levels:
- They are not afraid to be niche (the "average" does not interest them)
- They are relentlessly committed to developing "authentic" products (local sourcing, organic, healthy positioning and "better for you") and sustainability (recyclable packs)
- They aren’t afraid to tackle innovative distribution, even to the development of Direct to Consumer options (Dollar Shave Club as an example). This results in these new brands needing to rapidly acquire logistical skills often left to the retailer. It’s tough for a start-up but this new distribution model keeps them closer to the customer, giving them insights that are invisible to the more traditional, more well-known brands. They own the entire customer relationship, and can react more quickly to consumer preferences.
Large CPG companies often try to acquire this innovative mindset when they take over these start-ups (Unilever has bought Dollar Shave Club and Graze, Kraft Heinz has acquired Primal Kitchen). Others are trying to mimic the mindset in their innovation processes.
As such, the launch of Love Beauty and Planet in the United States (2017) and more recently in France are good examples. The brand went for:
- Niche marketing (“we cannot please everyone in a hyper segmented market”),
- Developing products more respectful of the environment and health (without silicon, paraben, recyclable packaging),
- Activation that breaks the marketing rules, avoiding major media and TV, embracing 100% digital communication, especially where the pack on the shelf is the first point of contact.
(Source: Le Monde 03/14/19 – Fortune 12/31/17)
- The digital revolution ...
The new model of attention. There is a striking comparison that summarizes the digital revolution progress quite well. In the United States, in the 70s, TV was the media king and a commercial lasted on average for 1 minute. In recent years, the consumption of TV by the 18 to 25 year olds is in free fall, in favor of digital media consumption, increasingly on the mobile phone … where the advertisements last on average less than 6 seconds!
In 8 years, the time spent by 12-24 year-olds watching "classic" TV (Live, VOD, DVR, broadcast) has dropped by 60% and 45% for 25-34 year-old!
The Economist, March 30th 2019
In digital, there is a duopoly Facebook / Google: in 2014, they captured 11% of advertising expenses; this figure has reached 25% in 2018. Said another way, they represent 60% of “spend” in digital advertising.
Shopping is no longer either “physical” in the “brick and mortar” stores, or “digital in online e-commerce”. The world of the shopper is growing “phygital” with the omnichannel path-to-purchase emerging as the key influencer of consumer choice. It can be said that Walmart was rather late to this drive compared to France or the UK retailers. They did not really invest until 2016 (when the drive was already well developed by most French distributors). The takeover of Whole Foods by Amazon reminded them that this was not a passing trend and the threat was there even in grocery.
But today, Amazon and Walmart share the bulk of online sales, with other grocery retailers catching up, even if 90% of CPG purchases are still made in physical stores.
If “phygital” will continue to grow, it is perhaps on the side of Asia that its future is being written (Source: jingdaily.com)
And what about market research in all this?
If we are to understand this new world of the omnichannel shopper we must become students of a new behavioral approach to generating and activating on consumer insights. If we do, that will actually translate to brands’ ability to drive growth.
For the first time in 20 years, I've met clients who are openly questioning traditional rational methods, insisting on a new way to test products in development (as well as other shopper marketing) with a three-fold demand:
- Faster (and ideally cheaper) but time to reliable decision support is the most urgent factor
- Integration of partner agencies’ best practice and key domain expertise (when they have some) from the beginning of the project, not at the end, to enable truly dependable co-creation
- More predictive behavioral recommendations that exceed the usual KPIs (like approval scores and purchase intentions)
Clients who have tried new automated tools (and have worked with purely tech start-ups) unanimously reach the conclusion that they need real expertise (that is relevant to their categories) because it saves time when it is integrated upstream in projects.
So what are clients looking for when it comes to expertise that informs their research projects?
- Truly behavioral and system 1 studies; unlike explicit questioning, observing behavior does not lie (our behavioral framework and the many case-studies we can share provide concrete examples), even when we work with agile online techniques.
- More holistic studies where the product-pack pair is central and is presented in the context most familiar to shoppers, rather than in isolation. This enables brands and their research partners to learn more and faster.
- Studies that integrate new short formats of digital advertising and researchers who know how to evaluate this limited attention in context.
- Studies that can inject real expertise to guide brands and agencies upstream, rather than simply evaluating steps in the process in isolation. As such, we are moving towards a convergence of pack, NPD or product expertise with creation. In a world that is going faster and faster, brands can no longer be satisfied with long processes and failure rates of 80% for their new products.
After these 2 years spent in the United States, I am now eager to see how these changes are at work in France and Europe, and I am eager to write this new paradigm with you. Contact me at Olivier.Blanchet@prs-invivo.com to discuss these trends and how it’ll affect your industry.