Shopper Digest: Know who you are competing against

Let’s face it! We are all getting very creative in how we are dealing with changes. With all the uncertainty, like prices going up and how we adapt our lifestyle post-pandemic, there’s no doubt there has been a noticeable shift in spending habits. But to where? That is the million-pound question. In this era, it is all about balancing our budgets based on our spending priorities. While everyone thinks twice about where their money goes, some are still willing to spend more in certain areas they consider more important (yes, even at a premium). In response to that, they are trading off by cutting down spending in areas deemed less important and less relevant.

Today, we are going to share with you a case study about the Hot Beverage category, which is considered essential to a household, where we noticed a clear difference in how different family types manage their spending.

Coming to our topic for the day, we have noticed the overall category growth is quite flat and is mainly cushioned by higher pricing, while seeing a drop in market volume. The questions are often: Is this temporary? Or is this something category players should be worried about? Everyone knows about the growth, but not everyone knows what is driving it. That is the beauty of shopper insights, where we can dive into understanding what drives the growth (or the decline). This provides another point of view in helping brands identify the direction and plan their strategies to win the market.

Shopper measures can highlight the opportunities (and also threats) ahead, and we often suggest first identifying WHO is causing the decline of the category. In this instance, we are seeing the decline is mainly driven by Teen Aches and Full Adult Families – and the most worrying group is the Teen Aches families, who are the core shoppers of the category.

Why not the Full Adult Families, where they are showing a steeper decline? It’s likely because lighter shoppers are leaving the category based on the trajectory of both Penetration and Frequency, which is temporary (short-term hopefully!) and typically an easier win back to the category. The Teen Aches issue seems to be more long-term, where both Penetration and Frequency have consistently been on a decline over the last 2 years. We flagged that as a huge threat to the category, which is slowly losing relevance within the household (plus they are the core group of the category).

While the category is competing for a higher share of throat, we recommend that it is crucial to understand (1) where the LEAKY BUCKET is – is it more towards the adjacent hot beverage categories (which is a preference change) or more towards the F&B beverage offerings (which is a change of lifestyle experiences). 

And (2) what ROLE does the category play – do the shoppers view this category as a commodity (which is undifferentiated) or more of an experiential and convenience factor (which means product offerings will be a good leverage) and at what occasion should the category target to grow. 

Each gives a very different action plan for the category players, and understanding how the behaviours of critical shopper groups were affected and their product choices enables brands to size and minimise threats while amplifying opportunities. The rule of thumb is you always want your brand to attract as many buyers as possible. Start understanding where and how your core target audience shops to save unnecessary marketing costs.

Penetration refers to the percentage of the population buying a specific brand over a period. It is a crucial measure that key industry players use to evaluate the size of their existing customer base (vs competitors) and gauge the opportunity for expansion. In the Worldpanel division, we consistently track this on a 4-weekly basis to produce penetration numbers so you can see a trended performance at both category and brand levels.