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“Proof of Demand” is a Powerful Tool for Your Challenger Brand Strategy

“Proof of Demand” is a Powerful Tool for Your Challenger Brand Strategy

Challenger brands looking to disrupt their industry need to change the game, and that requires a solid strategy. Being top of mind and generating loyalty with shoppers requires a purposeful approach to standing out from industry leaders. A critical part of this process is generating “proof of demand,” which taps into the consumer psyche to develop a new approach to products and communication.

Shopper Trends

Shopper behavior is rapidly evolving as technology fuels a shift toward self-education and seeking information on-the-go. The results are being felt by both manufacturers and retailers.

Less Brand Loyalty

The digital era has made information abundant and enabled hyper-personalization. This has led shoppers to do more research into products and choose those that best match their individual needs. In fact, according to a recent study from MasterCard, 33% of shoppers use technology more often than two years ago for this express purpose. A facet of this is brand transparency, especially with regard to ingredients and materials — according to an ROI study by Label Insight, 39% of shoppers will switch away from their favorite brand in order to purchase from brands providing complete product transparency. Now, this isn’t to say that brand loyalty no longer exists; rather, it’s more difficult to maintain because brands have higher personal expectations to meet from individual shoppers.

Time-Starved Lifestyles

Americans are increasingly focused on productivity and achieving success, and this mindset cuts deeply into personal time that once might have been used to research and consider purchases. For instance, women now thrive in the workplace; for women with children, it has to be balanced against caring for their family (e.g., picking kids up from practice, helping with homework) and what remains of their social life. However, being young and single doesn’t necessarily indicate free time for browsing store shelves. A Gallup poll shows that 47% of all American workers have access to work email and will check that email occasionally or frequently beyond the defined hours of their work day. Despite the fact that most of these workers consider that a positive for their employment, Gallup notes it also means they experience the most stress. Already managing such busy lifestyles, shopping for packaged goods is an added task for an already full schedule. They want it to be easy and fast to understand why a particular brand actually meets their needs.

Socially Conscious Attitudes

More information also leads to greater awareness about how each person impacts the world on social and environmental levels. For instance, the Label Insight study revealed that 40% of consumers saw how sharing products are produced as a key factor in transparency for food manufacturers, and another 35% considered how products are sourced to be a key factor. Furthermore, according to Gov2020 and Deloitte, more than 36% of shoppers worldwide believe they “have a responsibility to purchase products that are good for the environment and society.” It’s no surprise, then, that Forbes felt the need to elucidate why shoppers in general and Millennials in particular prefer brands that practice corporate social responsibility.

Tech-Savviness

According to Nielsen, 60% of shoppers will use online grocery ordering for small orders of 10 items or less, and another 19% will use it for large restock orders of 40 items or more. The former is higher among Millennials (65%) while the latter is higher among older generations (25% of Silents — those born between 1925 and 1942 — and 22% of Boomers). This has amplified opportunities for FMCG (fast-moving consumer goods) and other categories to develop direct-to-consumer models. Additionally, MasterCard’s study pointed out that the number of shoppers who enjoy using technology during their in-store shopping trip has continued to grow and currently sits at 78%. Shoppers across generations don’t differentiate between online and offline shopping experiences, and their individual needs will determine where and how they make their purchase.

Smart Shopping Habits

Each of our points so far leads to one conclusion: shoppers are using more than marketing to make decisions about which brands to choose. They’re no longer bound to a linear shopping process defined by brands, so they educate themselves about what they and their loved ones need, what brands provide and how they provide it, and what positive impacts their purchases will have on the world. In short, shoppers use everything at their disposal to make smarter shopping decisions, and that leaves plenty of room for challenger brands to assert themselves as the smart choice.

Why Proof of Demand?

Proof of demand is the same as proving market demand: the process of establishing the need for a product among the shoppers whom the brand wants to acquire as customers. For many challenger brands, their very existence is due to an unmet need; however, if shoppers don’t realize the need isn’t being met, they don’t have a reason to be interested in a product. However, psychologically, people are wired to think that a product that’s hard to obtain must be better or more valuable; this is amplified when they believe it’s hard to obtain because so many other shoppers have already purchased it. The higher they perceive the demand to be, the more they themselves want it.

Real World Application

Challenger brands have been able to see booming growth by leveraging proof of demand — such as an emerging brand in the ice cream category offering pints of protein-heavy, low-calorie ice cream. This brand accomplished such growth with creative packaging: containers feature the number of calories in a particular flavor front and center on the label, along with the amount of protein. By running ads primarily on Facebook and Instagram that featured images of the containers, the brand could directly impact shopper awareness about calories in their favorite treats while also appealing to the growing desire for healthful food options. In just one year, the brand’s sales grew by 2,500% — while more established brands were left scrambling to catch up.

Other challenger brands have positioned themselves to take on both manufacturing and retail differentiation simultaneously. For example, one brand identified the desire for healthful foods as well, especially products that are organic and non-GMO. However, it also realized that for many shoppers, the entry price for these products was far too expensive and obfuscated by hidden manufacturing costs. Its goal of transparently democratizing access to these healthful foods also became its greatest selling point: every product costs a mere $3. But the brand didn’t stop there; it puts social responsibility in the forefront and donates one meal to Feeding America per purchase. Most legacy retailers and manufacturers cannot make that claim.

Key Takeaways

  • Shopper needs regularly and rapidly evolve, but mainstay brands have a hard time keeping up. This gives challenger brands clear opportunities to capture intent and loyalty.
  • Shoppers are concerned with their unique needs first, and they’ll respond to the brands that meet those needs best, even when it isn’t the brand they’ve been loyal to for a long time.
  • Time-starved shoppers don’t want the hassle of digging through brand information and sales pitches to glean what they need to know. Challenger brands that keep things clear and simple have a leg up.
  • Technology is a fundamental part of the shopping process, but it cannot be divided from the offline experience. Challenger brands have the opportunity to engage shoppers when traditional brands fall short.
  • Corporate social responsibility and transparency are major drivers for purchase decisions. While legacy brands have to work hard to establish transparency little by little, challenger brands can offer transparency at the start.
  • Proof of demand is a powerful motivator when it’s utilized. It positions brands as offering something that the dominant brands aren’t.

For challenger brands to make a marked impact on their industry, they need to leverage proof of demand to create a clear differentiation from and preference over dominant brands. It allows them to address unique pain points and align with or appeal to shopper trends in ways that legacy brands haven’t yet thought of or attempted.