Jessica Malach is the VP of marketing and insights at better-for-you sampling company Social Nature, leading its consumer insights and brand partner programs in both Canada and the U.S. She also just released her book, The Complete Guide to Online-to-Offline (O2O) Marketing for CPG Brands. Strategy reached out to Malach for her insights about reaching a CPG audience and the online-offline (O2O) model that Social Nature pioneered.

How has COVID changed how product launches are done, and what carryovers will we take into a post-COVID world?

I think COVID has accelerated a consumer trend that was starting pre-COVID: online discovery for natural products.

Pre-COVID, consumers were already looking more online for new products, especially natural products, to solve their health problems and support changes in diet and lifestyle. This is because consumers have been demanding more transparency of ingredients from the industry for a while now and this has caused greater search online for products that fit consumers’ needs. Online health experts, product review platforms, online retailers offering more transparency and education have won consumers over in their discovery journey as trusted sources of information for consumers.

The onset of COVID accelerated that on the consumer side, including for online grocery purchases with reduced trips to grocery stores. Retailers increased focus on click and collect models, and consumers were looking for more new products to help them stay healthy in the pandemic and as sources of comfort during lockdowns.

At the same time, almost overnight, many traditional product launch tools like in-store demos, experiential marketing events, live events and even displays were put on hold. With the majority of traditional tactics cancelled or on hold, the idea of using digital to drive online demand and translating this demand to retail impact became very attractive.

I believe the online-offline model will carryover into the future of marketing. It builds and leverages the trend of online discovery to build targeted online consumer demand, and convert this demand into retail foot traffic and sales, then brings consumers back online to collect their reviews, feedback, and build loyalty with purchasers.

This combination elevates business results with better data, better targeting and a better chance to build direct relationships with consumers. Direct relationships are the gateway to community building an intangible asset that supports brands to scale quickly and sustainably.

How important is community generation?

Community generation is a critical asset to drive sustainable growth in CPG, especially for emerging brands fighting for shelf space and competing against larger conglomerates with deeper pockets and with heavy margin pressures from natural and conventional retailers.

A community strategy can rapidly power brand growth through online consumer advocacy and word of mouth. If you think about the “k-factor,” which measures viral user growth for an app, a high k-factor in CPG can be thought of as the number of consumer peer recommendations that convert into new sales. That can result in tremendous growth, but without it, you are just left to relying on in-store traffic and hoping your product gets picked up off the shelf. If you have poor placement, not ideal packaging, or just a small footprint, you simply won’t grow at the same rate you could with a community strategy.

Also, showing strong consumer demand for products can support pitching buyers for new retail listings and building confidence to get listed in the first place. The theme today is no data, no listing.

With people under lockdown, there is an obvious desire for novelty and demand for new products. Will this continue when COVID is in the rearview?

I don’t think the novelty will slow down that much for a couple of reasons.

One, our current consumerist culture is always seeking ways to be entertained and to try new things. But in order to keep consumers entertained, brands will want to invest in more compelling content and storytelling. I think where we’ll continue to see competition is around innovation in content and social platforms.

Two, many consumers discovered and adopted new health, cooking and fitness routines. Since these are still new behaviors, we’ll likely see more experimentation and new brand trial as consumers go deeper into these new routines.

I also expect consumer desire to share their own ideas for new products to remain constant as long as the user experiences created to invite people to share are digital and frictionless.

As consumers are more socially, health and environmentally conscious, they will want to continue to have a voice in product production. Brands that empower this voice will be starting with better validated products, and better consumer engagement.

Why do 85% of new products fail? Is it a validation problem, or more of a marketing problem?

I’d say both!

On validation, many smaller brands simply skip this step pre-launch and build things that their internal team thinks are good, or they don’t validate across new regions and channels. Consumer preferences vary greatly depending on region and retailers shopped at, so it’s important to keep validating.

But on marketing, too many brands underestimate the capital required to properly launch products. They focus on getting more distribution doors, but underestimate what’s needed to drive sell-through. If you get a huge new listing at a major retailer, but then get kicked off the shelf, this can get very expensive and put small companies out of business.

For larger brands, many struggle with innovation. They simply lack the creativity and authenticity of smaller companies and their line extensions are not as well received as they might like. This is why you see a lot of acquisitions happening in CPG instead, they buy innovative companies because their mature brands just don’t have the traction with modern consumers.

Where is the most common point of failure?

The most common point of failure is dying on the shelf: not enough sell through and getting delisted.  This could happen because the product is not good in the first place and repeat sales are low as a result, or because the product didn’t have enough marketing dollars behind it to drive consumer adoption and trial.

With the emphasis on digital strategies to build communities, where does that leave traditional shopper elements, like POS displays?

I believe that in-store POS displays are still very important and what we want to strive for, as best we can, is to have our offline retail merchandising mirror the online content and storytelling we create.

Creating compelling displays and points of interruption across the brick and mortar retail environment can still help grow impulse dollars and serve to remind existing community members of the brand – reinforcing loyalty. The more touch points across the consumer journey, the better.

How important are digital flyers to the customer journey, especially when it comes to new product launches?

Very important!  For example, 43% of Social Nature’s 710,000 shoppers mentioned that digital coupon offers are how they learn about new grocery products. The benefits of these offers are, not only are we derisking the initial purchase, we are taking advantage of an existing digital product search trend with these flyers, so it’s another opportunity to be in front of consumers.

The only caveat would be that if you are a premium luxury brand, then being in a discount environment may not be the right fit. You don’t want to create a discount shopper base, so it’s important to be mindful of which environments you place your brand in.