• by Jack Loechner , Staff Writer @mp_research, June 6, 2012

Launching a successful CPG product is difficult, even in the best of times, reports Catalina Marketing, in a recently released study of consumer purchasing dynamics surrounding 25 of the top new product launches of 2010 across a variety of departments, including frozen foods, boxed dinners, dairy, bakery, snacks, and beverages.

Purchase-based targeting for new product launches show that extremely small concentrations of shoppers make or break the success of new products. The odds improve dramatically when targeting buyers based on past purchasing behavior. Heavy category buyers, and even more so, top brand buyers in the case of product line extensions, are much more likely to be high-value buyers for new products.

Key findings in the study include:

• 1.5% of shoppers made up 80% of volume for the average new product in this study. These shoppers were worth 1.6 times the value of the average new product buyer
• Top category buyers were 3.8 times more likely to try a new product than the average shopper
• Top brand buyers were 5.8 times more likely to try a new brand extension in the category
• Top category and brand buyers repeated at a significantly higher rate, 19% and 28% greater than average, respectively
• For the average brand extension, 27% of purchases cannibalized existing brand sales. However, existing brand buyers contributed to new product sales, even after accounting for cannibalization

Just 1 out of 67 shoppers was responsible, on average, for the success of 25 of the top CPG new products launched in 2010, says the report. Said another way, for the average new product in this report, only 1.5% of shoppers drove 80% of product sales during a 12-month window following their launch.

Even for the two biggest selling new products tracked in the study, line extensions for an enhanced water beverage and a Greek yogurt, just 1.4% and 2.7% of shoppers, respectively, accounted for 80% of sales.

The trial rate among top category buyers was 3.8 times that of the average shopper for the 25 products reviewed in this study. Once these top category buyers made a new product purchase, their repeat purchase rate was 19% greater than the average new brand buyer. Top category buyers were defined as consistent shoppers who in aggregate accounted for 80% of total category sales across the study group during the year prior to a launch in that category.

 Among the 17 product line extensions tracked for this study, top brand buyers were 5.8 times more likely to try than the average shopper, and they had a repeat purchase rate that was 28% more than the average for all new brand buyers.

On average, 42% of all new item dollars from existing brand buyers were shifted from other brand products, says the report. In other words, almost half of all existing buyer purchases cannibalized the parent brand. Yet, these buyers still played a huge role in driving brand sales: they accounted for 63% of total new brand sales, or 36% after accounting for cannibalization. In other words, over one-third of new brand sales came from current brand buyers growing their total category spend and/ or shifting dollars from the competition.

Purchasers of Product Line Extensions:

• Non-Franchise Category Buyers... 19%
• New to Category... 18%
• Brand Buyers: dollars from category growth or shifted from competition... 36%
• Brand Buyers: dollars cannibalized from franchise brands... 27%

Source: Catalina Marketing, April 2012

The report concludes by reiterating the fact that very small consumer concentrations represent a tiny, highly valuable audience that is difficult to reach efficiently through traditional media like television and FSIs. Indeed, the report says, the 1.5% of shoppers who drive 80% of sales for the average new product are worth 64% more per capita than the average shopper who tries the brand. These findings argue for new, more focused marketing approaches, opines the report, such as purchase-based targeting, to engage the buyer audiences that drive successful product launches. 

To access the complete report as a PDF file, or the Executive Summary, please visit Catalina Marketing here.