Making Sense of Consumer Complexity

Dave Lundahl is a numbers guy who understands the power of emotions. Lundahl, founder and CEO of behavioral research firm InsightsNow, started his career as a statistician. Over the course of a couple of decades, his focus has broadened. Today, the work InsightsNow does—much of it related to consumers’ engagement with food and beverage brands—reflects Lundahl’s abiding interest in exploring why people behave the way they do and what emotions drive those behaviors. That interest has led to a philosophy that InsightsNow regularly applies to its work.

“This philosophy is that all human behavior is predicated on moments of experience in which consumers engage with brands and products and messaging—where their experiences lead to emotions first and rational thought second—and how emotions form memories that subsequently drive future behaviors,” Lundahl explains. He’s even written a book on the topic, Breakthrough Food Product Innovation Through Emotions Research (Academic Press 2011).

Lundahl, who has a master’s degree in statistics as well as a PhD in food science and technology, is quick to point out that his areas of interest and expertise are interrelated. “Statistics is about a philosophy to know how to design research, analyze, and to create insights,” he observes. “It was a bridge for me to discover my passions rooted in curiosity about people and a lifetime of endeavors to discover why people do what they do.”

Before founding InsightsNow in 2003, Lundahl worked for PepsiCo and Brown-Forman in research capacities. “During those times, I became much more interested in consumers and shoppers and human behavior,” he continues. “And so then I started looking for ways to marry human perception with cognition. What do they think about what they do? And that led to my whole career path in sort of understanding … food products and beverages … and how product experiences really drive human behavior. And that led to questions such as how come so many products fail in the marketplace and what can we do about that?”

Recently, fresh off a visit to Natural Products Expo West, Lundahl spoke with Food Technology about consumer behavior with a particular emphasis on the ways in which consumers’ interest in sustainability issues will drive purchasing decisions and, ultimately, product development.

photo by John Valls

You’ve said that consumers’ emotions play a big role in their behavior. How so?

Emotions are fleeting, fast. Those are things that are hard to quantify. But people have emotions about a lot of things. It’s a nonconscious process. We feel and we act, and then we “post-rationalize” why we acted.

So do we post-rationalize because we have a need for things to make sense?

Yeah, absolutely. Why did I do what I did? You have to make a rationalization for that because our thinking, our cognition, is slower than our emotionally driven reactions to things. So we call that an implicit reaction versus explicit, where you’re actually thinking about things.

So if someone reacts, says a word for an ingredient like, say, sugar or protein or artificial or natural or whatever, somebody sees a word like that in the context of a moment of experience, [and] if they react really fast, positively or negatively, then we know that that’s an implicit reaction. It has an emotional element to it. If people react very slowly to it, then it’s a rational thing. They have to think about it.

If you’re going to try to disrupt someone’s thinking, you can then measure, did this information, did this product disrupt their thinking? Like, wow, that was a great experience! But if it was just exactly what you expected, then people … may not even have an emotional reaction to it at all.

Is that a negative in terms of driving purchase?

Well, it could be really good if you’re a brand fan and you’re buying a food product and you expect it to be exactly the same [as it always is]. Okay, then that’s good to have an implicit reaction; that’s positive. But if you’re a product developer, designer, or a food marketer and you’re trying to change behavior then you need to do something that forces people into an explicit response where they have to think about it—hopefully in a positive way.

Recent Insights

Now research identified some key gaps between what consumers aspire to purchase and what they actually buy when it comes to products with a sustainability positioning. Where are the biggest gaps, and what opportunities does that create for product developers?

Research we conducted in August of 2022 found that 47% of U.S. shoppers aspire to buy more sustainably. However, we found that over 30% of these shoppers are having trouble buying sustainably for four basic reasons: 1) lack of product availability, 2) confusion about what is a more sustainable product, 3) concerns about product performance (taste, convenience), and 4) affordability.

These consumer tensions—this gap between aspirations and actual buying behaviors—means there is a lot of pent-up demand that is not being served by the food industry. There is a lot of opportunity to develop and market products.

You’ve said that food companies need to do more to “tilt product innovation in the direction of sustainability.” What does that mean?

When I say tilting innovation in the direction of sustainability, I mean providing shoppers with a certified alternative that when chosen and consumed leads to a more sustainable future (e.g., reducing greenhouse gas emissions). Now the smaller startups at Natural Products Expo West were naturally tilting their innovations in the direction of sustainability, either as a mission-oriented brand or as a point of differentiation. However, they do not have to produce product at mass scale. They do not have to worry about making product changes that might alienate their existing brand fans [in the way major companies do].

I’d like to talk a little more about the affordability factor since products with “value-added” sustainability benefits may be priced higher than mainstream brands.

Startups have an advantage in not having to go to market at scale. They can thrive in a niche at a higher price point, [and they may be] picked up by retailers filling an expanding shelf set of sustainably positioned products. However, [in order for] sales to grow, they need to compete in a crowded space for share of a limited set of shoppers willing to pay more. This means they need to deliver on their promise not only to be sustainable, but to have the right sensory signals and [to deliver on] the product experience that consumers expect—taste and convenience.

So is it difficult for a major food company to introduce a product that’s positioned as sustainable?

This is a real challenge for the larger, more established food companies, especially when it comes from the more established brands. Sustainability often comes with a cost in terms of having to incorporate more expensive ingredients into product designs, having to certify in order to verify sustainability claims, and in changing manufacturing processes. Passing on these added costs to the consumer leads to one of the top four barriers I mentioned earlier—affordability. Further, alienation is a real concern for more established food brands.

Nonetheless, I do believe even the larger food companies with more established brands can be more and more intentional in doing their part to achieve a more sustainable future. … I think there’s still tremendous [opportunity] to tilt innovation in product design and development, to make incremental renovations that are at each step of the way creating more sustainable evolutions of the product.

photo by John Valls

Insights

Now research has explored the kind of product traits that signal to consumers that a product is sustainable. Tell us about that.

Sustainable food product design requires going beyond ingredients and claims in two important ways: First, it requires applying sensory science to build into the product cues that signal sustainability, and secondly, it requires aligning the product with the brand’s architecture. Let me take these two added requirements one at a time.

A big advancement in sensory science this last 20 years has been the discovery that many sensory qualities are perceived implicitly (nonconsciously) as signals that consumption of a product will deliver a benefit. Package designs that have minimalist features signal a product is better for the planet. Complexity in package design features can signal “not better for the planet.” Uniformity in a product can signal highly processed, whereas nonuniformity in a product can signal natural, which is often associated with better for the planet. The same goes for product design and brand architecture. Some brands simply do not have the equity with their fans and the fit needed to support products positioned as more sustainable.

How do consumers prioritize sustainability compared with a better-for-you positioning?

When it comes to health and wellness, we’ve been tracking a group of shoppers called clean label enthusiasts since 2016. This group has had a remarkable impact on the food industry—reshaping how products are designed to be perceived as clean label, to be free from ingredients that shoppers are concerned about.

These same shoppers have evolved to seek out healthier/good-for-you foods that provide functional benefits from what we call hero ingredients. An example of this is mushrooms such as lion’s mane that have some purported functional benefits for the body or mind. We see sustainability claims as the next evolutionary step in food product design. Products can be clean label and they can be better for you through specific functional benefits and they can be better for the planet. It does not have to be either or.

Consumer concerns about greenwashing, which happens when a company exaggerates its products’ environmental benefits, are increasing. What steps do you recommend that companies take to ensure that their sustainability initiatives aren’t perceived in that way?

How can marketers avoid being called out for greenwashing? I think number one is that companies need to be clear on what their goals and objectives are and to provide that [information] to consumers. Secondly, to be honest … and transparent about how well the companies are succeeding in their endeavors to achieve those goals. I think we’re seeing more and more companies doing that. And then third is to have verified claims through a lot of these certifications and marks that are out there. I think that’s also going to give more trust and help avoid the greenwashing perceptions by consumers as well as by the watchdogs that are out there.

With the current economic downturn, venture capital investment has tightened up. What do you foresee for startups, which have been major drivers of food industry innovation?

A lot of food startups had their financial assets in Silicon Valley Bank because a lot of investors are supported through that. So that [the bank’s sudden collapse in March] is going to have a long-lasting ripple effect, I believe, in the food industry for startups. I believe it’s going to make startups have much better business plans and to do their homework in terms of how they plan to go to market.

They need to know what their brand stands for. They need to have products that are really fulfilling consumer demand and know how to position these products in the right way so they will stand out among the competition in whatever categories they’re playing in. They need to have a good go-to-market strategy to know which retailers they’re targeting and which types of shoppers they’re trying to target, and which moments of experience they’re trying to target as well.

I think the business plans will be not as much about just trying to get volume and not worrying about the bottom line but to be able to grow and have a bottom line that generates cash for their business to continue to grow. I think it will slow down a lot of the innovation, but at the same time I think it will make those that survive and that are now coming out with products a lot better. So they’re going to have to do their homework, they’re going to need insights, they’re going to need to understand their markets. If I’m an investor, I want to know that someone’s not going to go out of business and I’m going to have to put more money into the business to keep it afloat.