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Elanco Director Advises Industry to Fill Consumer Knowledge Gaps to Win in New Normal

Sep 15, 2021 - IHS Markit

Elanco’s Doug Yoder has emphasized the heightened importance of understanding consumer needs in a complex and changing retail environment.

Speaking at the recent Kansas City Animal Health Corridor 2021 Digital Animal Health Summit, the firm’s executive director for shopper and category insights said animal health businesses need to take a deeper dive into the mind of consumers to win in an evolving retail space that has been catalyzed by the COVID-19 pandemic.

He highlighted four key pillars to examine: how the industry has landed where it is at today; what that means in terms of where it is heading in the future; determining where there are still gaps to better meet the needs of consumers; and what success for animal health firms potentially looks like in the future.

Mr Yoder said: “The real driver of where we are today is information – access to information, more information than we’ve ever had before, getting that information faster, and getting it where and when we need it. That’s had an impact all the way across the value chain.

“Fundamentally, that really shifted the balance of power in terms of the manufacturer/retailer/shopper dynamic. Now, within a few clicks on a phone, laptop or [tablet], a consumer can shop multiple products with multiple retailers, online or offline, at multiple locations. They are no longer constricted to where they live or their immediate area, or the hours a particular retailer may be open.”

Mr Yoder said this has demonstrated the desire and need among customers to access more alternatives in consumer channels and products than before.

He commented: “All this has led to a much more complex environment that we as manufacturers or veterinary clinics need to be able to understand and sort out, in terms of what the shopper is doing, how they want to do it and why they’re making the decisions that they are.”

Shift to omni-channel tactics

According to Mr Yoder, another pertinent issue in the last few years is the change from a predominantly multi-channel to omni-channel offering. A multi-channel world, where products are sold in various channels of distribution or online, has “been around for a long time”. Mr Yoder explained the shift to an omni-channel retail space has led consumers to expect a virtually seamless experience, whether they are online or offline.

He remarked: “This has made a dramatic shift in terms of what the consumer’s perception is of the buying experience and has put a burden on all of us [in the industry] to be able to meet that expectation.”

While 2020 was an “anomaly”, Mr Yoder pointed out the COVID-19 pandemic has probably changed trajectories of various channels in the animal health industry and buying behaviours indefinitely. This was especially evident in the e-commerce space of pet health, where there has been an accelerated move to online shopping.

Mr Yoder said: “It’s resulted also in new and modified business models. We’re talking about ways of doing business that prior to 2020 we had never seen – buying online, in-store, curb-side pick-up delivery, touch-free delivery. These are new ways to meet the needs of the shopper that were born out of the changes that happened in 2020 but are likely to have an impact now that the shopper has adapted to them. They will likely be a part of our retail landscape going forward.”

From a manufacturer’s perspective, this has also resulted in a change of resource allocation. Mr Yoder said the way in which consumers shop and the information they want is going to require everyone in the industry to rethink where they spend their advertising dollars.

Gaps remain

Despite current levels of information on how consumers are shopping for animal health products, Mr Yoder believes there are still gaps in knowledge about their behaviour. He said one of the things becoming clear is that content, where it is delivered and how it is delivered, really matters.

He said: “Despite all the alternatives that are available, despite all the options that are available, where a consumer can shop, when they can shop, we still haven’t solved all of their questions for all of their issues. I’ve seen numerous studies that show the number of sources and resources that consumers are looking at when entering into the purchase decision have sky-rocketed.

“Despite that, there are still high levels of dissatisfaction on the part of the shopper with regard to those information resources. That’s the reason why it becomes more and more critical for us to know and understand what the shopper mission is. Is it routine replenishment of a product they already use or are they trying to find an alternative because they’re dissatisfied with a product? Are they looking to fill an acute need for an immediate problem? All of these things weigh in to that consumer shopping mission, both in the choice of the products they’re using and the retail environment in which they choose to buy them.”

Mr Yoder said from Elanco’s perspective, the idea of why a shopper behaves in a certain way has become very important. He believes this a factor that continues to be an area of opportunity. However, he noted while companies focus on how their products are valuable, they may also be by-passing what some of the key issues on the consumer side are. These include oversight of the demand for product safety information, or understanding how owners relate to their pets and the influence this has on their choices.

Going forward, Mr Yoder said putting the consumer front and center – and understanding what their motivations are – will be key to winning in the changing economic environment.

“I think for us in animal health, one of the important components of this, and one of the things that at times we can perhaps lose sight of, is that our shoppers are impacted not only by what they’re buying and the decisions that their making for their pets and animals, but they’re also impacted by and bringing to that purchase occasion things they’re doing in other categories. They’re not just shoppers in pet health, they’re shoppers for apparel, home improvement, food and personal care. The relationships they have with their products in those other categories influence what happens within the pet health category.”

Mr Yoder concluded: “It’s really more than just the facts. I’ve spent the bulk of my career both in human health and animal health, and one of the [noticeable] things is we tend to sell on features and benefits of the product. But what the consumer is looking for is more than that. They’re looking for how it’s going to fit within their lifestyle, how is it going to provide the solution they’re looking for – it goes well beyond just what the specific facts are about the product. We really have to think about what they are looking for, what problem are they trying to solve and how can our products or service offerings meet those needs in a way that’s unique. That in turn continues to build loyalty and continued purchases.”

Last year, animal health consultancy ActiVet Insights claimed the companion animal health sector is undergoing a “fourth phase of disruption” in the veterinary digital technology space. A report by the company highlighted new solutions delivered in the first three waves of evolution included client communication, home delivery services, telemedicine, wearables and home diagnostic tests. Chief executive Sébastien Lafon projected the adoption of new digital technologies would likely to be accelerated by the COVID-19 pandemic.

Meanwhile, US management consultancy firm McKinsey claimed it would be two to three years until the animal health sector emerges from the consequences of the COVID-19 pandemic. McKinsey senior partner Ajay Dhankhar said the recovery would be very uneven and predicted a “massive re-segmentation of the animal health industry”. One example of this has been the shift in sales channels to ensure higher future rates of e-commerce and telemedicine.

Guggenheim Partners believes alternative commerce channels, diagnostics and insurance will all lead growth in the companion animal space during 2021. Analyst David Westenberg said there has been “a huge upswing in online ordering generally over the past year” and as more ordering goes online, there will be continued shifts to different channels, “though it is likely consumers will order both from their vets’ online pharmacies as well as from alternative channels”.

Reprinted with permission of IHS Markit




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