Category Frame of Reference Comes First: Convenience Store Innovation Strategy Matrix Example
When it’s time to define a long-term innovation strategy matrix, start with the foundational questions, “What’s our frame of reference? Which category should we focus on?”
Selecting an overly narrow frame of reference that examines exclusively current customers and current products and services will lead to missed opportunities. For instance, if the Velveeta brand were to define its frame of reference as the cheese loaf category, their dominant share makes growth challenging. By comparison, defining the category frame of reference as cooking cheese presents a broader opportunity.
Of course, going too far afield will not be helpful either. If Velveeta chooses to explore leaving the food category and move into beverages or cookware, this will likely not be actionable.
3 Innovation Strategy Case Examples of Category Frame of Reference Choices
- This year, we’ve been working with a brand that has historically focused on the transportation market. Another category under discussion has been home care. A relevant question guiding the innovation strategy matrix decision is how much upside remains in the base business before moving into the expansion markets. While the conversation is still underway, the brand team is leaning towards initially focusing on the transportation market before moving on to home care.
- A few years ago, we were asked to explore expansion into a wide range of food service markets, including supermarket deli, and colleges and universities for a brand that had seen great success in prepared foods for convenience stores. After considering the options, the brand decided that considerable upside remained in convenience stores and that an innovation strategy matrix for convenience stores would be more actionable than a cross channel study.
- For Clorox, we explored the appropriate category frame of reference that would bridge cleaning the kitchen, the floor, the bathroom and potentially laundry. We carefully designed the insights work to allow for the possibility of separate frames of reference and innovation matrices for each level, i.e., kitchen, bathroom, floor, laundry or “laundry and home cleaning.” In this case, the work allowed an integration of kitchen, bathroom and floor into home cleaning.
Each of these cases required careful exploration before deciding on the best approach, and the approach was selected before we began customer insights work.
Building the Innovation Strategy Matrix
For the prepared foods brand that decided to focus on convenience stores, the next step required was to understand the consumer segments who purchase hot prepared foods from convenience stores. Foodservice at convenience stores hit an estimated $148 billion in sales in 2019, and prepared foods drove 69% of those sales, estimated at $102 million.
The goal was to go much deeper than the traditional category definition of “Bubba,” with richer profiles among relevant consumers. In this case, most of the purchasing is for individual, immediate consumption. Contrast this with grocery store purchasing, which is often for household consumption at a later time (though of course there are exceptions). As a result, the traditional research “primary grocery shopper” (PGS) was not a good definition to use.
Working with the client, we conducted qualitative interviews and then a larger quantitative study among a sample of more than 1500 consumers. From this, three segments emerged as the most relevant to focus on, and they form the columns of the innovation strategy matrix.
The next step was to identify the relevant occasions or “need states” for prepared food purchasing and consumption. From a broader set, three need states emerged that were most relevant. These situations made up the rows of the innovation strategy matrix.
Each of the nine (three segments times three need states) opportunity areas was defined, in terms of the requirements and needs met, competitive set, current size and growth. From this matrix, six strategic growth opportunity areas (SGOAs) were prioritized by the team. Each represented large opportunity, ranging from $290 million for the smallest to $1.3 billion for the largest.
B2B Perspective on the Innovation Strategy Matrix
The team informed the consumer perspective with a proprietary study of over 500 field operators of convenience stores, including
- RaceTrac
- 7-Eleven
- Circle K
- Kangaroo Express
- KWIK Trip
- Sheetz
- Quik Trip
- Cumberland Farms
- Maverick
- Tadeschi Food Shops,
- Valero
- Stripes
- AMPM
- Speedway
- Wawa
- Kroger’s: KWIK Shop
- Tom Thumb
- Loaf’n Jug
- Turkey Hill Mini Market
We also conducted an executive summit with innovation strategy leaders at convenience store chains who validated the six opportunity areas and the new view of the consumers.
One finding was that the enclosed hot case was preferred by both operators and consumers for hot prepared foods (rather than the roller grill, and open hot case, etc.).
With the demand for prepackaged driven by COVID concerns, this need is even greater. A 2020 recent interview of 125 store operator Nouria in Maine, New Hampshire, Massachusetts, Rhode Island and Connecticut, described a move to prepackaging,
“Pizza slices and, in some locations, hot dogs on buns are prepackaged in bags. At some stores, roller grills were moved to the back for service by associates.”
Getting Started on Your Company’s Innovation Strategy
To learn more, you can find case examples and resources on brand strategy at the Insight to Action innovation strategy resource page. When you’re ready to push your thinking about the category frame of reference, and relevant innovation strategy matrix, contact us to schedule a focused conversation.
