American consumers no longer buy products based largely on category or brand, which has big implications for CPG brands as they seek new revenue opportunities. One way forward is for brands to use powerful framework tools to rethink old market-sizing assumptions, according to a new IRI marketing innovation report, ”Realigning for Growth: Win by Innovating across CPG Market Segments.”

IRI’s research reveals that consumers’ actual choices mean that old market positioning ideas no longer apply. Increasingly, shoppers decide what to put in their shopping carts based primarily on immediate or anticipated needs. They are guided by attributes, such as single-serve packaging, minimal calorie counts or gluten-free, for example. They willingly pay more for products that promise benefits, such as improved digestive health or a healthier heart.

For most incumbent brands, the shift looms large as they confront slowing revenue growth and tough market share challenges. “If a CPG brand doesn’t offer a shopper the ‘walking attributes’ he seeks, it’s increasingly likely that he will ‘walk’ — he will switch to a brand that does have them or wait to make his purchase,” said Tom Juetten, executive and leader of the Innovation Practice for IRI Consumer and Shopper Marketing.

The Size of the Prize

Brands that recognize this shift — and act on it — can compete across multiple forms/types, significantly expanding their competitive stance. In the beverage sector, IRI found that one brand was able to identify an incremental market worth an extra $200 million a year by enabling its products to span multiple categories and compete with multiple product types. In another instance, a manufacturer of cold cereal identified a need for a new product enhanced with fruit. Designed to appeal to the whole family, the category-spanning product leveraged the company’s current brand equity to establish a new market space worth an estimated $600 million a year in incremental revenue.

Overcoming the Challenges of Change

However, competing across categories calls for big shifts in pricing, messaging, packaging and more — starting with a major change in mindset. “Traditionally, the CPG industry has viewed its world in terms of categories or types, which are defined by sources of ingredients or by packaging size, for example,” said Rima Nair, principal of IRI Consumer and Shopper Marketing–Innovation. “Legacy operations — ‘the way we’ve always done it’ — present significant obstacles to change.” Another obstacle to change for many brands, large and small: the shortage of skills needed to translate ideas into actionable insights.

Learn more about the report.