Company News • 03.09.2015

Low levels of repeat buyers challenge new product success

Less than 1 percent of shoppers drives sales volume for the typical new CPG product

Low levels of repeat buyers challenge new product success...
Source: Catalina

In the CPG industry, generally-recognized failure rates for new product launches range from 60 percent to 80 percent. Catalina released a new report, which demonstrates the critical importance of data-driven shopper engagement in growing the success of new products.

The research findings show that consumer concentrations of less than one percent drive the vast majority of volume for most new CPG products. In addition, the study uncovered extremely low retention rates for most new products, with just 11 percent of triers in the first six months of a launch still engaged with a new item after one year.

The study finds that just 0.7 percent, or 1 in 143 shoppers, accounted for 80 percent of volume for the average new product studied. Of the 50 new food and beverage products analyzed, just eight had shopper concentrations of more than one percent driving 80 percent of volume, and only one had a concentration above two percent.

“The percentage of households that make or break the success of new CPG products is very small,” said Marla Thompson, SVP of U.S. Strategy for Catalina. “Our study makes it clear that it is critical for brands and retailers to find likely triers and continue engaging them over time to sustain repeat purchasing. It also shows that purchase-based targeting can be a cornerstone of successful new product launches.” According to the report, engaging shoppers based on predictive modeling of their likelihood to buy can result in trial rates that are five times more than the natural trial rate.

The study also demonstrated a major distribution challenge for new products.  It took 28 weeks for the average new product to reach 75 percent of its peak distribution in stores tracked in the study. This long delay creates significant inefficiencies for national mass media campaigns.

New Product Retention Dilemma

Sustaining revenue growth for new products in the second year after a launch is frequently a challenge for the CPG industry. Even top-selling new items sometimes fail to survive their sophomore year. One major issue affecting those failures is a lack of repeat purchase, according to the report. The study finds that for the average new CPG product, just 11 percent of shoppers who tried the new item in the first six months of a launch remained engaged after 52 weeks.  Twenty-four percent of initial triers made at least one repeat purchase in the first six months, but more than half of those did not try again in the following six months.

“Our research demonstrates that retaining buyers quickly becomes at least as important as customer acquisition to the success of new products,” said Thompson. “Finding and engaging the consumers most likely to both try and repeat, and then delivering the right incentives and messages to efficiently sustain purchasing over time, should be a core strategy for growth.”

Getting the Timing Right

Catalina’s report also underscores the tremendous inefficiencies in national marketing campaigns for new products due to uneven distribution. On average, the new products tracked in the study took 28 weeks, more than half of their first year in stores, to reach mass availability. Mass availability was defined as reaching 75 percent of a product’s highest distribution.

This long wait for availability frequently results in either wasted media spend or lost opportunity, according to the report. For example, many shoppers may be hit with initial ads and promotions with no ability to purchase the product in their store. Conversely, a new product may have little or no advertising or promotional support while it sits on store shelves for months, as the brand manager waits for further distribution. As a result, only a small percentage of likely triers become aware of the product.

“Catalina provides the right data-driven marketing platform to efficiently drive awareness and trial among likely buyers of new products, particularly during the distribution build up,” said Thompson. “Catalina-powered marketing is activated store-by-store as soon as the new product scans at checkout for the first time. This ensures that the right shoppers become aware of the new item as soon as it becomes available in each store.”

Winning Over Existing Brand Buyers

For product line extensions, winning over existing brand franchise buyers can be an important opportunity for growth.  Across all of the line extensions studied for this report, an average of 76 percent of brand franchise buyers did not even try the new item.  Yet those who did spent an average of four times more than other franchise buyers.

A copy of the full study can be found at www.catalinamarketing.com/newproducttraction.

Source: Catalina

related articles:

popular articles:

Thumbnail-Photo: Out of Stock in Retail and innovative solutions to avoid them...
07.11.2023   #brick and mortar retail #customer satisfaction

Out of Stock in Retail and innovative solutions to avoid them

Due to various events, the availability of goods in retail will be increasingly restricted from 2022, with the result that customers cannot find in food retail the products they wish to buy, because those products are sold out, are temporarily ...

Thumbnail-Photo: Nedap teams with Foot Locker to extend RFID project...
05.10.2023   #omnichannel #software applications

Nedap teams with Foot Locker to extend RFID project

Foot Locker successfully matches supply and demand in newly opened stores in Eastern Europe using RFID technology

Nedap the global leader in RFID solutions, announces that multi-brand sports fashion and apparel retailer Foot Locker has successfully extended Nedap iD Cloud to its new, Eastern European stores. The objective is to offer the best possible ...

Thumbnail-Photo: Unified Commerce Platform in focus
24.10.2023   #omnichannel #software developement

Unified Commerce Platform in focus

Handover at REMIRA: Dirk Bingler supersedes Stephan Unser as CEO

REMIRA is setting the course for future development of the company: On November 1, Dirk Bingler (48) will become the new CEO of the supply chain and omnichannel software expert headquartered in Dortmund. The previous CEO Stephan Unser (62) moves to ...

Thumbnail-Photo: Trigo and Netto Announce Autonomous Supermarket with Real-Time Receipt...
24.01.2024   #Tech in Retail #artificial intelligence

Trigo and Netto Announce Autonomous Supermarket with Real-Time Receipt Capability.

‘Final step’ in frictionless shopping drives trust by enabling consumers to view their receipts BEFORE leaving the store
Full size 800m2 grocery supermarket powered by computer vision AI is Europe’s largest retrofitted frictionless store

Trigo, a leading provider of AI computer vision technology that transforms traditional brick-and-mortar retail outlets into digital smart stores, and discount supermarket chain Netto Marken-Discount (also known as Netto), have partnered to launch ...

Thumbnail-Photo: EuroCIS 2024 - technology special
11.12.2023   #online trading #e-commerce

EuroCIS 2024 - technology special

The latest technology solutions and trends for you and the retail sector

At EuroCIS 2022 from February 27 to 29, 2024, the Leading Trade Fair for Retail Technology, we will be looking at all the important and current topics relating to technology in retail: AI and Machine Learning, Payment, Connected Retail, Seamless Store and Smart Energy Management and many more.

Thumbnail-Photo: Payment as a success factor: more than just paying...
15.01.2024   #Tech in Retail #payment systems

Payment as a success factor: more than just paying

Flashback to 1994: databases and ERP systems, first commercial websites, mobile phones with colour displays, CD-ROMs, Java as a programming language ...

Thumbnail-Photo: MPREIS Transforms Operations with Zebra Workcloud Task Management™...
06.11.2023   #customer experience #software developement

MPREIS Transforms Operations with Zebra Workcloud Task Management™ Software Solution

Austrian food retailer to streamline communication in around 300 stores to improve staff engagement, inventory optimisation, and customer satisfaction

MPREIS has around 300 Austrian stores in regions across Tyrol...

Thumbnail-Photo: Tesco to introduce new scan-free technology on self-service tills at...
03.01.2024   #brick and mortar retail #Tech in Retail

Tesco to introduce new scan-free technology on self-service tills at GetGo store

Seamless Shopping Revolution: Tesco Tests Scan-Free Technology in London

Tesco is trialling an exciting new technology innovation that means customers don’t need to scan their items ...

Thumbnail-Photo: Ask the Bot: generative AI in retail
02.01.2024   #Tech in Retail #food retail

Ask the Bot: generative AI in retail

Revolution in retail: the era of generative AI and AI bots

They are able to analyse data, write product descriptions, answer shoppers’ questions or write codes...

Thumbnail-Photo: The global state of autonomous stores
18.12.2023   #Tech in Retail #self-checkout systems

The global state of autonomous stores

The stores are located in various retail segments such as food retail, fashion, electronics, convenience stores and fast food.

In a highly competitive global retail landscape, autonomous stores are an emerging force that addresses changing consumer behaviors, reduces operational costs, improves profitability, and powers revenue growth strategies. Advancements in autonomous ...

Supplier

Innovative Technology Ltd.
Innovative Technology Ltd.
Innovative Business Park
OL1 4EQ Oldham
Zebra Technologies Germany GmbH
Zebra Technologies Germany GmbH
Ernst-Dietrich-Platz 2
40882 Ratingen
Captana GmbH
Captana GmbH
Bundesstraße 16
77955 Ettenheim
REMIRA Group GmbH
REMIRA Group GmbH
Phoenixplatz 2
44263 Dortmund