Finding white space opportunities within crowded CPG categories might seem like a tall order but consider the work of Steve Jobs. In several existing, crowded and massive consumer electronics categories, Apple took existing cultural trends (use of personal music devices, cell phones and personal computers) and by working with trends in culture bent culture itself by offering truly compelling innovations in the form of iPods, iPhones and now iPads. Underlying Apple’s success in bending culture is also the company’s mission to provide a very high quality user and design experience—something that consumers innately appreciate, are constantly seeking and was sorely lacking among clunky, cumbersome competing devices.
While with the passing of Mr. Jobs uncertainty remains as to whether or not Apple can continue to innovate at such rates, as a market research and consulting firm specializing in understanding culture and cultural change, we often marvel at how much evidence (and cash register sales) it takes for major food companies to recognize that change within our culture is worth responding to. Then there is the question of the frequent response to trends in food culture, which habitually take the form of brand extensions, as confirmed by SymphonyIRI’s 2011 review of new product “pace setters” in food/nonfood CPG:
“Brand extensions continue to represent the lion’s share of new product launches despite a long-standing history of net new brands bringing substantially larger year-one sales returns.”
Aside from brand extensions, when attempting to respond to cultural change, another common response among major food companies is simply to acquire an emerging brand once it has sustained profit-generating revenues well in excess of $200 million a year. But this is long after these emerging brands have already established a foothold in the mainstream marketplace. For the most part, we see companies reacting to cultural change, not causing it to spread. The difference does matter.
The most powerful brand-building advantage that has ever existed in consumer culture is to be a brand that drives change from the cultural margins to widespread acceptance. Most legacy CPG brands built all their key equities by convincing us to buy things we didn’t really need, but nevertheless became captivated by. For a long time, the critical cultural margin the food industry was able to leverage was a “scientifically enhanced future.” We marveled at the technical wizardry that makes certain iconic brands work: Cheetos and Kraft Singles. And to some extent…some of us still marvel at these feats of R&D.
Driving change from the cultural margins isn’t much different today, except that the source of innovative ideas must now come from existing raw material of consumer culture and broader market forces, not simply the technological wizardry of patented food processing. Brands that have innovated from the margins (i.e., up market) successfully are Kashi, Chipotle and Danone’s Activia. Each began with a niche consumer base disregarded for years by the mainstream food industry as ‘beyond the fold’ and largely irrelevant. Now, these brands are enormous businesses, due in no small measure to their lack of fear in taking the “fringe” into the mainstream, and by working with changes in culture—bending it—as opposed to trying to force it to change.
Activia is perhaps one of the most successful examples of bending culture while also reaping the rewards. Within five years of launch it has grown to $550 million in sales and transformed “probiotics” into a household word when, not so long ago, the notion of yogurt with billions of added bacteria was repulsive and irrelevant to most American consumers. Of specific interest, and as determined through Hartman Group ethnographic research, there were three cultural variables that played in the marketing challenge for Activia:
As we noted earlier, by pushing past stock cultural responses (“I really can’t stand fast food anymore—it’s all fried and sugar”), we can get underneath ‘cover’ stories that mask larger, unacknowledged cultural truths. To repeat: Culture bends the easiest wherever platitudes, euphemisms or colorful metaphors mask a problem or dilemma in everyday life.
Unleashing the power of the cultural margins to make brands active change agents requires the subtle indirection of ethnographic analysis. But the biggest hurdle to being an active cultural change agent is not methodological at all. No, the greatest obstacle is projecting the impatience of the brand manager onto a brand new venture. Driving cultural change by utilizing bends in culture doesn’t always work at the pace of Wall Street, even when, down the line, it yields enormous rewards. If food companies want to find a way to create breakthrough innovation internally, not by checking out at the Mergers & Acquisition cash register, becoming active agents of cultural change is unavoidable.
As leaders in the study of American food culture, The Hartman Group has been tracking how Americans shop for food since the 1990s. From one-stop shopping to multichannel shopping to online markets and click-and-collect, we continue to track consumers’ evolving perceptions, needs, habits and relationships with food retailers. New to the 2017 report is a special section on the expansion of the discount grocery channel, the emerging fresh-format channel and smaller-footprint retail formats.