The Future of Health & Wellness

Joe Bucherer
Segmentation Analytics, ACNielsen Consumer Segmentation & Targeting

Libbey Paul
Marketing, ACNielsen Consumer Segmentation & Targeting

Laurie Demeritt
Market Research and Consulting, The Hartman Group

When you take the long view, health in the U.S. continues to improve overall, in part because of the significant resources deployed to public health programs, research, health care and health education. And no country has a more bountiful food supply than the United States.

That said, consider a quote from Ralph Waldo Emerson: “The first wealth is health.” Ironically, it is our very wealth and attendant lifestyle that have contributed to a rise in obesity and the chronic diseases of coronary heart disease, cancer, stroke and diabetes. And recognize that these conditions are not equally distributed by income, race or ethnicity.

The health stakes are high

• The obesity rate has tripled since 1960, and two-thirds of the population is overweight.
• An estimated 14% of all deaths have been attributed to poor diets and/or sedentary lifestyles.
• It is estimated that healthier diets might prevent $71 billion per year in medical costs, lost productivity and the value of premature deaths associated with these health conditions. [Source: High Costs of Poor Eating from USDA/ERS].

The marketplace is responding. Overall consumer interest in selecting food and activities geared towards wellness is increasing. Attitudinal and behavioral analyses indicate that consumers are becoming more selective in their product and lifestyle choices. Many manufacturers are creating new, healthier products, and retailers are creating natural and organic sections in their stores to meet this growing demand.

Not all consumers have the same level of engagement in health and wellness, so a one-size-fits-all approach will not work to change consumer behavior. “We clearly must meet consumers on their terms in order to motivate change. An average approach to health and wellness will not appeal to all groups and types of consumers, and will yield average results,” said Libbey Paul, SVP, Marketing with ACNielsen Consumer Segmentation & Targeting.

High-opportunity consumer segments
It's not surprising that consumers vary significantly in their commitment to exercise, dieting habits, product choices and underlying demographic characteristics. Let's face it; an 18-year-old has a far different outlook than a 55-year-old person! These factors must be considered when identifying high-opportunity segments. Understanding and segmenting consumers are only the first two steps, however. It is equally important to activate these segments by connecting them to all drivers of key consumer activity, and then measuring results. Importantly, this active segmentation process can be used beyond just health and wellness across other business issues such as category-specific segmentations. See chart 1.

Understanding market and consumer drivers
As mentioned, consumer interest in health and wellness is growing. The Hartman Group, an expert in health and wellness, provides current consumer trends that affect consumer purchase behavior. Hartman utilizes unique, leading-edge research techniques to uncover consumer attitudes toward health and wellness.

Based on The Hartman Group's work, there are ten significant consumer trends that should be of interest to retailers and manufacturers.

1. Balance will deepen among consumers as a dominant health and wellness ideology.
2. Consumers are exhibiting a declining reliance on external sources of authority.
3. Consumers will seek symbolic and practical expressions of simplicity.
4. Vitality will increase in importance as a measure of over-all health and wellness.
5. Mobility will continue to be demanded by consumers for all eating occasions.
6. Increasingly, consumers will rely on authenticity to gauge value.
7. Self-diagnosis of health conditions and symptoms will grow, and will affect consumption behaviors.
8. Perceptions of freshness will grow as a primary driver of consumer behavior at grocery.
9. Consumers will work to reclaim control of their diets and daily food intake.
10. Consumers are seeking customized food and beverage solutions.

“The power of customization is that each customer feels that they have special requirements,” said Laurie Demeritt, President of The Hartman Group. Consumers are looking for manufacturers who recognize (through marketing and communications materials) that they are “special” and have diverse needs.”

Health and wellness is not a fad—it is a way of life. Most people pursue some form of health and wellness, but the extent of their interest and engagement varies considerably. Physical, emotional, mental and spiritual aspects all contribute, and consumers are willing to partner with brands and companies that help them achieve their wellness goals.

Moving to “active segmentation”
Building off Hartman's research, ACNielsen conducted a multi-dimensional health and wellness segmentation. The basis for the analysis is the Homescan® panel of 125,000 households. A review of consumers' product purchasing history for key health and wellness categories (fruits and vegetables, low carb, organics, low fat, vitamins and supplements), as well as survey information around their eating habits, participation in weight loss programs, exercise habits and health conditions, was conducted. Additionally, because each household is scored for Spectra's BehaviorScape™ Framework, consumers' life circumstance—their family composition, affluence level and the neighborhood where they live and shop—was also captured.

Seven distinct segments [see chart 2] were determined via segmentation modeling provided by ACNielsen Analytical Consulting. Those segments can be classified based on their level of engagement in health and wellness:

• The “Less Engaged”—consumers that don't watch what they eat, do not participate in weight-loss programs and only exercise occasionally, if at all.
• The “Moderately Engaged”—consumers that are concerned about what they eat and exercise regularly, but don't actually purchase many healthy products.
• The “Very Engaged”—consumers that are the most concerned about food ingredients and limiting their intake of certain foods with some also relying on weight loss programs; they also heavily consume key product categories such as fruits and vegetables and organics, as well as vitamins and supplements.

Overall, age and affluence play strong roles in predicting how oriented to health and wellness a consumer will be. According to Joe Bucherer, VP of ACNielsen Segmentation Analytics, “The older consumers (Program Partners) are more concerned about health because they have to be. More affluent consumers (Health Idealists) are more educated about and can afford healthy alternatives.” See chart 2.

(See “A Day in the Life”, below, for the typical day for a “Health Idealist” and “I Am Who I Am” consumer).

Not surprisingly, the highly engaged Health Idealist was more disposed to purchase organic products. This was both indicated in the purchase behavior evaluated, as well as based on responses to a survey that was issued to panelists. Interestingly, consumers in each of the identified segments were split on where they would like to find organic products in stores. Choices offered were:

• A “store-in-a-store” layout where all types of organic products are together.
• A separate “organics” section in the same aisle as the regular/non-organic products.
• Having organic products right next to regular/non-organic products on the shelf.

These mixed results indicate that there is still some confusion around organic placement within the store, and that manufacturers and retailers have the opportunity to educate consumers about organics.

In addition to performing segmentation modeling and evaluating consumer purchase behavior, differences were also found in the approach that consumers used in the selection of product characteristics or attributes (market structure), as well as differences in marketing mix drivers. For example, it was determined that television advertising delivered good ROI for both “very engaged” segments, though our Health Idealists were not as responsive as the Program Partners.

The importance of talking to the consumers on their terms, as demonstrated by significant differences in daypart, program type and other media preferences, should not be minimized. Targeting becomes easier when these differences are understood. See charts 3 and 4.

Ultimately, the true test comes when the consumer needs to select a product from a shelf in a store. It is here that all of the advertising, consumer promotion and trade activity come to bear.

Utilizing Spectra information, a drill-down analysis was conducted for the grocery channel. The list of the top 10 accounts shopped by Health Idealists was sorted by the absolute number of Health Idealists who can be reached by each account. Because of its absolute size, Wal-Mart tops the list. But not surprisingly, its relative concentration of 80 is low. “You've seen the headlines. Wal-Mart is going after the affluent consumer, and is going to democratize organics—you can see why!” says Libbey Paul, of ACNielsen Consumer Segmentation & Targeting. See chart 5.

Understanding that different stores have different clientele, you can drill deeper to understand which individual stores within a chain have the greatest opportunity to reach the intended consumer group.

Getting to measurement
Now for one of the most neglected steps of the process—measurement. If you're not measuring, you don't know when, where or how to change and improve. This calls for creating a scorecard of panel information. Pushing even further, we can “consumerize” the store scanning information by taking Spectra store-level demographics and modeling the volume associated with key consumer segments.

This tracking provides insight to understand why certain brands are winning and others are losing. Is it the selection offered or the placement? Or is it the types of programs run?

Get on the health and wellness bandwagon
Ultimately, manufacturers and retailers have significant opportunity in the health and wellness area. Consumer interest is increasing as their waistlines continue to grow. As discussed, not all consumers have the same level of engagement in the topic, so a one-size-fits-all approach to health and wellness marketing will not work at changing behavior and driving sales.

The key is to activate, in any situation, the segmentation by connecting all of the drivers of consumer activity.