CPG Marketers adapt to serve the ‘New Norm’ in Shopping Behavior.

The current economic downturn has spawned dramatic changes in how shoppers are spending their consumer packaged goods (CPG) dollars. These newly evolving shopping rituals are quickly becoming the “new normal,” because consumers will continue to remain frugal long after the current recession ends. So, how have these new shopper attitudes and behaviors impacted the CPG world? The latest IRI Times & Trends Report, “Price Promotion & Merchandising: The Reinvention of CPG Marketing,” explores key changes in consumer shopping rituals brought about by difficult economic conditions and provides actionable implications which will enable CPG marketers to create marketing strategies reflective of rapidly changing consumer preferences and behaviors.

“There is no question—consumers are looking for value,” says IRI Consulting & Innovation President Thom Blischok. “But, consumer perception of value is morphing. Our report shows that the three key factors shoppers use in selecting a product is overall quality, price and trust—this is now the affordability equation in the minds of shoppers. While brand name is still a consideration factor, it’s only important to about one-quarter of shoppers. CPG marketers cannot assume their brand name is enough to ensure shopper loyalty. CPG marketing strategies must continually evolve and address shifts in shopper behaviors and tout clear, persuasive messages based on the shopper’s changing definition of value.”

One of the areas where IRI sees these strategies playing out is merchandising. After falling for several years, merchandising activity is rebounding in the downturn economy across all channels and is playing an increasingly critical role in providing value to shoppers. Targeted programs based on sound consumer knowledge are a recipe for volume growth and for building loyalty with the shopper.

The most effective merchandising tactics will be those that address the fact that consumers are increasingly making shopping decisions at home, so IRI expects to see an increase in feature ads in the near term, likely supported by in-store merchandising initiatives. Price-based promotional activity will increase as well, providing consumers with sought-after price relief.

IRI recommends that retailers and manufacturers take the following action steps to effectively serve consumers’ “new normal” shopping behaviors:

* Monitor price point, price sensitivities and price gaps on a frequent basis to ensure that pricing strategies remain in line with corporate and partner goals, as well as with the needs of key consumer segments.
* Leverage a granular understanding of consumer attitudes and behaviors to develop highly-targeted, store-specific merchandising strategies against high-potential categories and segments.
* Re-evaluate marketing and merchandising strategies through a lens of home-centric living and pre-planned shopping strategies.
* Drive purchase behavior with solutions-based merchandising programs prominently featuring new, innovative CPG solutions; aggressively test pre-launch and track consumer response to enable mid-program modifications and builds.

“Consumer attitudes and behaviors are changing quickly,” adds Blischok. “We are now entering the fourth stage of this economic sea change where shoppers are adapting to their trade offs, such as choosing private label over national brands and shopping in different stores where they believe they get more value for their dollars. CPG marketers must adapt to these new rituals and remain alert and ready for action. The ability to anticipate changing consumer attitudes and behaviors and react with innovative marketing campaigns is essential.”

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