Study: Small Target Means Big Success For CPG Intros

Cash-register-ACPG marketers looking to introduce a new product or line extension might do well to look beyond reaching the average consumer, and instead target a smaller audience of heavy category or brand users.

A new report from marketing company Catalina suggests that a small number of consumers are largely responsible for a product's success. The report, which followed the purchasing behavior of more than 41 million consumers, showed that on average, only 1.5% of consumers accounted for 80% of volume sales for new product introductions. 

“These are the people who make or break (a product),” Todd Morris, executive vice president of brand development for Catalina, tells Marketing Daily. “They’re generally the people who have been involved in the category and the brand to begin with. And they’re anything but average.” 



The study, which evaluated 25 product launches in the CPG space from 2010, found that existing brand buyers accounted for nearly two-thirds (63%) of a newly introduced line extension. Although almost half of those new line extension sales cannibalized existing brand purchases, the payoff for new introductions was still present, Morris says. While the study showed that 27% of a line extension’s sales cannibalized existing brand sales, 36% of the product’s sales came from either overall category growth or shifted from the competition. 

“The brands that introduced new packages or features were able to grow share of wallet at a much faster rate than what they just cannibalized,” he says. “Ultimately, your prime prospect is someone who has a heavy spend in the category, but not a high level of loyalty to your base brand.” 

Bottom line, the report suggests marketers coming out with new products or line extensions focus on high-volume category buyers (or in the case of line extensions, brand buyers). According to Morris, such buyers, who account for 80% of sales in the category or of the brand, are 3.8 times (category) and 5.8 times (brand) more likely to try a new product than the average shopper. Those buyers were also 28% (brand) and 19% (category) more likely to repeat the purchase of a new product than the average shopper.

“At the end of the day, after all of the mass media, it’s still a micro audience that makes or breaks the brand launch,” Morris says. “As part of your launch plan, find the heaviest category buyers who also like your brand but don’t give all their loyalty to your brand, and that’s going to be your richest ROI.”

2 comments about "Study: Small Target Means Big Success For CPG Intros ".
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  1. Ronnie Perchik from PromoAid, LLC, May 22, 2012 at 11:56 a.m.

    Intuitively this makes a lot of sense. The more active a consumer is in a category, the more variety they will seek. Thus new options (new products) are appealing to them.

    I would be interested however to see the range of the findings by category. My guess is that the more personal the product category is, the least amount of switching that occurs.

  2. Doug Garnett from Protonik, LLC, May 22, 2012 at 8:08 p.m.

    A study of a mere 25 introductions doesn't warrant these broad reaching conclusions. Rosenzweig has written an excellent book ("The Halo Effect") which should make us all pause when reading conclusions like these.

    In my experience (30 years of new product introductions), it's far more complicated than this suggests and depends no only on category, but also where your product fits within the category, how revolutionary it is, and how much communication is required (among many, many factors).

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