How do categories grow? A lot of packaged-goods giants are adopting a customer (retailer) centricity and as we all have seen – retailers don’t relish one company stealing share from another and are only (selfishly) interested in seeing categories grow. Can we quantify some levers of overall category growth and also identify if a certain brand can contribute to those levers, by doing/avoiding a few key things (if at all)? We believe the number of active brands in the category has a significant impact. But given this is beyond the control of a brand – what are the things that it can do?
This is a big item agenda at the Institute. We recently presented the webinar “Are big brands dying?” and released a report (click here to see more). There is more work coming in this area.
Category growth is harder to achieve than brand growth because categories (sub categories) aren’t as substitutable as brands are. And people have limits on category consumption, we could easily buy more Gallo wine or Yoplait yoghurt but probably not more wine or Yoghurt. Well, a bit but not much; not in the long run. Generally, for well-known, established categories that we are familiar with and already buying, our buying rate is at, or about, the level at which we are comfortable buying. Changes in category consumption occur but are usually quite long-term. It is often linked to slow demographic changes, such as the decline in beer consumption in Australia is partly due to the younger male demographic simply having different tastes to their parents.
So, if you are charged with growing a category, think of the category as a very big brand, competing against other very big brands. It may sound trite but compare the physical and mental availability of your category versus the ones it substitutes for. How many consumption occasions is yours linked to, versus the others? And are there occasions it could be better linked to?
We know that people who don’t buy brand X tend not to reject it, they just don’t notice it enough or think about it in potential purchase situations. But that might not be the same for categories. So a useful metric for planning category growth is the % of population who reject it. If penetration of the category is quite low, but the % of rejectors is really low, it suggests that the problem is not that people don’t want to consume that category, they just don’t get around to it, or think about it.
R.K.
10 January 2018