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Friday, June 22, 2012

HBC Marketers Ramp Up for the New Majority

African-American? Hispanic? Asian? Other minority or multi race/ethnicity?  Today in the U.S., a “yes” to one of these is becoming more and more likely.  According to U.S. Census Bureau projections, the number of non-white U.S. residents reached 113 million in 2010, and these collective minorities are expected to eclipse  white non-Hispanics as early as 2042.  When this occurs, the minority population will collectively become a new majority.  The market  for "ethnic" health and beauty care has therefore never been more appealing, both in terms of product options for consumers and of marketers looking for sales spikes in tandem with the demographic tides.  (Albeit an outdated and offputting term,  "ethnic" remains the HBC industry descriptor for specialty products targeting white non-Hispanics).

Although the U.S. market for ethnic health and beauty care (EHBC) is already valued at close to $3 billion, significant growth potential remains.  As reported in Packaged Facts’ Ethnic Hair, Beauty and Cosmetics Products in the U.S. (July 2012), racial/ethnic minorities still use general-market products far more often than ethnic-specific ones—at a rate greater than ten-to-one.  At the same time, EHBC is expanding much faster than general HBC as minority consumers increasingly demand products specifically formulated to meet their needs.

Prompting the growth in demand for these products is the  burgeoning number of minority consumers in the U.S., a sharp and steady increase in their buying power, and a rapidly expanding array of product options.  In the past, minority consumers seeking specialized personal care products had little to choose from, and the distribution of products that were available was partially limited to alternative channels including barbers and beauty supply stores. Now, mass retailers such as Target and CVS are coming on strong in EHBC, stocking brands that just ten years ago they would not have considered carrying, and devoting entire shelving sections to EHBC.

Of particular interest are makeup products that identify and address the specific skin concerns of the different minority communities.  Another up and coming segment is grooming products for minority men beyond shaving lotions and dandruff shampoos, as it becomes socially acceptable and even a social imperative for men to adopt grooming habits and products previously viewed as somehow too attentive and less than masculine.  Regardless of gender, many minority consumers want products that work for them rather than having to make do with what is available.

A handful of highly successful EHBC marketers have already figured this out.  And while many mainstream HBC products are activly positioned on a cross-multicultural basis, marketers committing to targeted products that meet the skin, hair and cosmetic needs of African-Americans, Hispanics, Asians, and other racial/ethnic groups appear set to attract growing communities of Americans looking for brands and products that speak directly to them.

Tuesday, June 19, 2012

Tweaking the Score, if not Changing the Game: The Consumer Take on Food and Beverage Packaging

From purchase off the shelf through consumption, packaging for food and beverages evolves to intersect with consumer needs and desires.  Food and beverage categories and brands benefit significantly when manufacturers and retailers manage to fuse packaging innovation with emerging consumer trends.
To take advantage of the dynamic environment, as argued in our recent report on Food and Beverage Packaging Trends in the U.S., manufacturers and retailers must understand what matters most to consumers, and which packaging innovations deliver benefits that actually impact behavior. 
This understanding is critical because new product success is exceedingly tricky to achieve, even among the most veteran, category-dominant, and deep-pocketed manufacturers and marketers.  According to SymphonyIRI, just 3% of new products achieve blockbuster status, sales of more than $50 million in the first year.  The vast majority of new products don’t even reach $7.5 million first year out.  Yet innovation is essential.   Experian Simmons data show that even during difficult economic times—and corresponding during a boom time for comfort food—half of U.S. consumers like to try out new food products, with 32% agreeing “a little” that they like to do so, and 18% agreeing “a lot.”
What do consumers generally think about food and beverage packaging?  Overall, they are satisfied with packaging available to them.  Respondents to our Packaged Facts March-April 2012 Survey showed hardly any dissatisfaction with packaging across major food and beverage categories, findings that suggest that packaging is not likely to be a primary driver of purchase for most products.  Nonetheless, innovative packaging is a value-add that can determine product format or brand choice—especially given that consumer aren’t totally happy with packaging choices, either.  In fact, they don’t necessarily think very highly of manufacturers’ overall packaging efforts.  Packaged Facts survey data show that about 60% of consumers strongly or somewhat agree that manufacturers often make insignificant packaging changes.   And 45% think lighter weight or less bulky packaging is important.
More specifically, survey respondents have some common complaints across major food and beverage categories.  Most cluster around consumer frustrations with easy opening and closing, resealing, maintaining freshness, and food safety issues.    

Friday, June 8, 2012

Cash or debit?

While the winds of change have whipped through consumer banking industry, Packaged Facts sees role of debit cards being repositioned, not significantly reduced.
First, despite the hype surrounding debit interchange regulations, profit motivate is alive and well. The hype tends to obscure a very important fact: debit cards continue to generate huge sums for the banking industry. Our recent report on Debit Cards in the U.S. projects that debit interchange will bring in $14 billion in 2012. While this represents a 30% drop from 2011, it’s clearly not small change.  And over time, the industry will recoup revenue lost to debit interchange regulation, thanks to long-term electronic payments share growth.
Let’s not forget that debit cards remain far more profitable for their bank issuers than paper-based transactions. And with paper-based payments enjoying a recession-driven renaissance, debit remains the primary means of continuing to convert paper-based payments. And the silver lining of lower interchange rates is that debit may become a more palatable payment option for industries previously resistant to it.
But most importantly, consumers have not only grown accustomed to using debit, but they also see value and utility in using the cards. In banks’ continued quest to translate paper and check payments to electronic payments, the debit card remains their strongest ally: According to proprietary survey results contained in our report, almost two in three engaged debit card users (those who use their cards at least once a month) use their debit card so that they can avoid carrying cash, half use their debit cards so they can avoid paying with cash, and almost 6 in 10 use a debit card because it is more convenient than cash.
The downside? We expect credit cards to siphon away a small share of transactions made by affluent, credit-worthy debit card users, and we expect emerging prepaid card programs to siphon off a significant portion of major banks’ least profitable checking account holders. But given longer term electronic payment trends, this will only serve to moderate debit card payment volume and transaction growth—not kill it.