Successful new and emerging consumer packaged goods (CPG) manufacturers are always looking for growth opportunities while keeping an eye on their competitors. After all, being prepared and informed are two hallmarks of prosperous businesses.
The CPG industry as a whole remains crowded and competitive—and it’s only getting more so, as new small and mid-sized competitors enter the marketplace. As consumers continue to use their digital devices to find products that meet their needs, it’s becoming easier for up-and-coming brands to be discovered. As a result, many nimbler CPG brands are using this point of entry to their competitive advantage, and fine-tuning their digital strategies to increase the likelihood of consumers discovering their brand via organic search and social media.
With this level of competition all around you, how can you navigate this evolving landscape effectively? And how do outmaneuver your competitors?
Nimble CPG manufacturers like you need to know how to analyze your competitive landscape in order to give your product and business the best chance to succeed. And you need a combination of market sizing, account-level, retail sales, competitive and consumer data to do it.
Here are four steps to conducting the competitive analysis your business needs and the kind of data you’ll need for each.
1. Size Up the CPG Market and Identify Consumer Trends
Where do your opportunities lie, and how can you identify what each opportunity is? Analyzing market sizing data helps you understand the saturation of different markets and identify promising pockets of growth, as well as crowded categories to avoid. Then, incorporating general trend data will ensure you’re best placed to stay ahead well into the future.
Example: You’re a new manufacturer of supplements with a few successful SKUs already on the shelf at Retailer X, but you want to explore opportunities for growth. You use a total U.S. food and drug report to show the size of the prize and identify where gaps are in the market. You see that vitamin B12 sales are growing at a faster rate compared to other supplement types. But the number of B12 products being added to the shelf is also growing, and introducing another similar type of B12 could lead to saturation within the category. Simultaneously, your trend analysis uncovers that plant-based food options are on the rise. B12 is a vitamin not typically found in plant-based diets, signaling that demand will increase in the future. So you show Retailer X your trend analysis and the potential demand it reveals as well as how your new B12 product satisfies that demand—a move that wins your product a prime place on the shelf.
2. Identify Your CPG Competitors
To spot uncharted areas that are primed for growth, CPG manufacturers need to look beyond the products sitting next to theirs on the rack. Competitors can come from unlikely places, perhaps from another aisle or within a completely different retail account. To identify competing products that pose a threat outside your immediate market, it’s important to use retail sales data with competitive insights.
Example: You’re a manufacturer of a new e-cigarette product. You visit your retailer’s store and see another e-cigarette product on the shelf next to yours. So, you identify this brand as a competitor. But, to ensure that you’ve identified all potential competitors, you also access account-level data to see how other traditional tobacco and smokeless products fare across different accounts. In doing so, you notice that a brand of chewable tobacco within a different account is growing rapidly and could pose a threat to your brand. This new information is valuable to your competitive strategy, so you add the chewable tobacco brand to your competitor matrix and continue to track its performance over time, so you can combat the company’s strategies in the future.
3. Identify Detailed Competitor Information
Once you have a view of who your competitors are, you can go deeper into the specifics of your competitors’ products, including their price and package design, product size, flavors and promotional strategy. A core question to help guide your analysis in this step is: how do you promote without cannibalizing your own profits and margins just to win against a competitor? Knowing the specifics of your competitors’ product strategy helps you to be smarter about your own.
Example: The yogurt market is saturated, and you’ve struggled to increase market share despite heavily promoting your product. In search of a solution, you use brand and item rank data to conduct a detailed analysis into your competitors’ pricing and promotion tactics over the last year. You identify their peak promotional periods and uncover a new, optimum pricing and promotion strategy for your product. Backed by the right data, your product is now in the best position to compete more effectively.
4. Package Your Analysis for Buyers
You’ve put in the hard work, and now you need to present your competitive landscape in a way that speaks the same language as your buyers. Many buyers have their own ways of categorizing and analyzing brand and item ranking data. Partnering with an external data provider, especially one preferred by two-thirds of U.S. retailers, is a way to know ahead of time the format and hierarchy your buyer prefers and will help you get the placement your product deserves.
Example: You’re preparing for your annual buyer meeting with Retailer Y with the goal of increasing your % ACV (all-commodity volume) distribution. You typically analyze your two main products—loose leaf green tea bags and a ready-to-drink green tea beverage—separately. But brand and item ranking data from an external partner shows Retailer Y is health-oriented and has an entire aisle dedicated to green tea products. Knowing this, you analyze your products in a way that speaks to the entire green tea category, consulting panel data to see what consumers’ preferences toward green tea products are as a whole. This resonates with Retailer Y, who increases the number of stores your product sells in, increasing your % ACV distribution.
Bringing It All Together
The CPG market is getting more crowded and competitive. While new and emerging manufacturers like you have the opportunity to break in, big traditional manufacturers are diversifying and spreading. In this evolving competitive environment, you don’t want to walk into your retail buyer meetings blind, leaving your success to chance. To succeed, you need to go the extra mile and thoroughly analyze the market using the right data from an external partner. Nielsen helps small and mid-sized CPG manufacturers fully understand their competitive landscape, through affordable, easy-to-use, retailer-preferred measurement data.