Even without the pressures of a rattled supply chain and skyrocketing prices of goods, small and medium-sized businesses (SMBs) have long been challenged when competing against the biggest names in their category.
Last year, however, the food sector saw double-digit increases within the producer price index (PPI), according to Lorelei Bergin, vice president of analytics, NielsenIQ, and her presentation on battling inflation at Shoptalk 2022. Retailers and brands absorbed a good part of those cost increases for a time, she said, but by the end of 2021, in-store prices were climbing and continuing into 2022.
Despite the rise, there are bright opportunities for SMB food and beverage brands. NielsenIQ data shows a range of shoppers want to buy small, buy independent, and buy brands that do more for their communities around them—all things smaller and medium-sized businesses excel at. There’s also a need to buy what’s available, so shoppers are building baskets with brands they’re not buying regularly.
To navigate this shift, NielsenIQ released a preview of a global study called The Brand Balancing Act. The report will outline four ways SMBs can build a successful brand strategy with global consumer insights as support. Here’s a glimpse at the four bases that your brand can use to build and improve scale.
1. Know what consumers prefer in a brand
For SMBs, the good news is nearly 4 in 10 global consumers surveyed indicated a preference to buy small.
These shoppers fall into two buckets: shoppers who prefer to buy from a smaller brand when it’s convenient, and shoppers who exclusively seek out SMB brands. The study also found that buyers of small brands tend to seek products that are sustainable, clean, and natural.
Shoppers also find smaller brands to be “local” (33%), “independent” (31%), and “unfamiliar” (27%), while large brands are viewed as “very popular, recognizable, or world-renowned” by 46% of those surveyed. These distinctions form a very compelling baseline for brand perception, where small and medium-sized businesses can create demand.
Of course, shoppers also value choice. With a supply chain under duress, shoppers are buying a larger variety of brands within categories they shop, sometimes out of need, as it’s the only brand available. The survey found 5 in 10 shoppers are buying a greater variety of products across categories.
2. Understand how brands are performing globally
The second step in the framework is to benchmark performance to see where small brands are outperforming larger ones. According to NielsenIQ, smaller manufacturers are not leading the pace of growth but still contribute a strong share of sales growth despite their size—an important distinction.
Still, 48% of global respondents say they plan to buy more from smaller brands in the future as they’re better suited to their needs. SMBs that can secure willingness to spend, and alignment to top motivators for purchase, are most likely to benefit from these updated preferences.
Using regional benchmarks to assess brand performance can enable SMBs to set achievable growth targets aligned to their relative size. Understanding how your sales performance ladders to broader industry partners can also tell compelling sales stories that prove your worth to retail and brand partners alike.
3. Identify trends leading to consumption
One trend among food and beverage buyers: they want new stuff. The survey revealed that 36% of consumers said they noticed new brands and wanted to try something different.
Additionally, 56% of consumers in the survey said they prefer to buy locally made products from small businesses in their area, showing a strong awareness to buy small and local. This finding highlights a great opportunity for brands to play up how local a product is to get a shopper’s attention, and to continue innovating and giving shoppers something new.
4. Create a signature style or innovation standpoint
Fittingly, the last base to round in the framework is for brands to show meaningful differentiation on-shelf, and that can be done through innovation.
SMBs are, in many cases, uniquely positioned to innovate and serve new market needs as “barometers of change.” With the overall pace of innovation among small businesses slowing down a great deal in many categories, now is the time for smaller brands to unite passion- and purpose-driven pursuits to become key change agents in the industry.
Throughout the coming weeks, NielsenIQ will be releasing a rolling series of in-depth insights on each of the four bases of The Brand Balancing Act. Check here for updates on the report, or to sign up for a free Byzzer account and access three free reports.