Customer Segmentation Research: Supermarket Fresh Prepared Foods

Supermarket fresh prepared foods were the fastest growing sector in foodservice with a CAGR of 5.1% from 2018-2020 (through August), according to NPD.  And supermarket fresh prepared foods are expected to continue to be the fastest growing. From August 21 to August 23, it grew at 6.2%.  Customer segmentation research can help brands appeal to growing niches in this sector.

While self-service salad bar and hot prepared food options were stopped by COVID, supermarket retailers have pivoted to offer meals to go and individually packaged options. The supermarket foodservice segment is evolving quickly and addressing customer’s needs for convenience and value. 

This case study examines customer segmentation research for fresh prepared foods that Insight to Action performed with ConAgra. ConAgra had a broad range of brand assets and product capabilities to meet consumers’ needs for fresh prepared foods and meals in the supermarket.  The organization was focused on “Taking Foodservice to the Deli” and sought to double the size of its business.

Customer Segmentation Research to Drive Growth

The overall objective was to build a robust consumer factbase from customer segmentation research for ConAgra to use in prioritizing its brand portfolio and growing its business in supermarket fresh prepared foods and meals.

There were a number of top priority questions to address to support this objective, including:

  • Which consumers are the best target for ConAgra’s prepared meal expansion efforts, e.g., frequent grocery store shopper, frequent deli purchasers, frequent prepared meal purchaser, men vs. women, etc.?
  • Which ConAgra brands can be leveraged to deliver against customer needs in the “grab and go” and service deli?
  • How are consumers shopping in the supermarket “grab and go” and service deli areas, with the focus on lunch and dinner occasions and meal solutions?
  • Which prepared meal products do consumers of leading retail accounts desire? How well do the current offerings meet their needs?

Recognizing Retail Variability in Customer Segmentation Research

Since supermarket retailer delivery of fresh prepared foods is highly variable, this work needed to avoid the typical consumer packaged goods (CPG) assumption that the “product” is the same or similar when sold by different retailers. Understanding the retail environment impact on consumer perception was more important for fresh prepared foods than for typical packaged foods categories.

The study examined the retailer brand and store where the consumer was shopping in order to understand the retail environment impact.

A Category with Room to Grow: Supermarket Fresh Prepared Foods

The customer segmentation research found that supermarket fresh prepared foods were popular: purchased by more than three quarters of consumers in the past three months. For the dinner occasion, for example, they met specific needs, with considerable room to grow.

  1. Fresh prepared was frequently chosen when consumers didn’t feel like making dinner
  2. Supermarket dinner price points were low relative to competition such as fast food
  3. Supermarket fresh prepared dinner was considered similarly satisfying as a quick casual restaurant and more satisfying than fast food
  4. The most popular dinner occasions were balanced dinner at home and too tired to cook, both of which are opportunities for supermarket fresh prepared mains and side dishes
Customer Segmentation Research: Supermarket Fresh Prepared Foods

Customer Segmentation Research Found Attractive Consumer Segments

The research investigated multiple approaches to customer segmentation, including different shopper groups, demographic groups and motivational segments. At the time, there were three consumer segments that presented opportunities for growth, as well as a number of non-target segments:

1. “Meal Enhancing Enthusiasts”

  • They are highly involved with meals and take pride in providing well rounded meals for their families
  • This segment was a huge spender in fresh prepared foods, loves variety, and looks for new things in the prepared foods they buy. They consider supermarket fresh prepared foods to be a great value

2. “Committed Outsourcers”

  • They actively avoid meal preparation and cooking and are more inexperienced cooks.  They select supermarket fresh prepared foods as an option for quick and easy meals
  • They are not planners and tend to “wing it” when it comes to meals and wait to the last minute to decide
  • They include a lot of single households who are buying single serve portions
  • They are a big spender in supermarket fresh prepared foods, and also fast food

3. “Obligated Occasionalists”

  • Preparing meals is their responsibility, but not a source of enjoyment. They are looking for family-size portions and tried-and-true favorites, rather than something new and different
  • Supermarket fresh prepared foods are a way to speed up meal preparation
  • Budget constraints limit them from purchasing more often, and they search for the best values

Fresh Prepared Foods Customer Segmentation Research Application

ConAgra focused on the three most promising segments and used this work in customer presentations with major retailers such as WalMart, Kroger, Stop & Shop, Safeway and Publix.  At the time, these retailers were very differently perceived by consumers on fresh prepared foods.

For example, WalMart was recognized for good price/value and deli service, but could strengthen its performance on freshness, quality and attractiveness. Publix and Whole Foods were recognized for freshness, high quality, attractive selection and excellent deli service.

Subsequent to this work, ConAgra exited deli parts of the business to focus on other areas. 

Customer Segmentation Research: Supermarket Fresh Prepared Foods

This case study illustrates how customer segmentation research can provide value for your brand’s customers. More resources on customer segmentation are available on the Insight to Action resources page. Or, contact us to discuss customer segmentation for your business.

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