How to Capitalize on Micro Consumer Demand Even in Challenging Times

We’re all familiar with that timeless tune, “Macro trends make the world go around,” or was it “money”? Essentially, they mean the same thing.

Market leaders understand the importance of staying abreast of current macro trends. Dedicated departments within every industry are allocated to reading reports, conducting market analyses, and identifying the latest consumer interests in order to outpace competitors.

Thanks to this comprehensive analysis, businesses are fully cognizant of the global cost of living crisis, the significant impact of sustainability on consumer product choices, and the increasing buying power of Generation Z and Alpha, which embrace innovation and new trends with an on-demand mindset.

But in times of economic downturn, the unsung heroes that can appeal to untapped markets are niche trends. Spotting micro-consumer demand and tailoring your product and marketing efforts to that customer base can open up a plethora of opportunities that are less competitive and more profitable.

Consumer trends are well known, but they’re not necessarily well measured, and that’s where many companies fall short.

The limitation of consumer profiling with surveys alone

Historically, businesses have depended on a plethora of survey methodologies to investigate the evolving interests of shoppers, especially in times of change and instability. But more often than is realized, there’s a gap between what consumers say they do and their real-time consumer behavior. This could result from financial constraints, the quick emergence of new trends, or simply a lack of awareness among consumers.

For example, Jackie, aged 42, from San Diego, believes that sustainability and organic produce are important factors she considers when shopping, and she’ll jot that down in a survey. However, when the prices of these items go beyond her budget, she’ll settle for what she can afford, and she won’t necessarily feel comfortable sharing her financial difficulties in said survey.

Kyle, aged 25, from Chicago, might long for those cut-off jeans today, but in a week, a new design by a popular influencer could hit the scene, and he’ll rush to buy it. The survey he completed a week ago will become obsolete, particularly considering the months it takes to compile and release new market insights.

In today’s fast-paced economy, it’s crucial to bridge that say-do gap and find clarity on the real behaviors of consumers with thorough market trend analysis. Moreover, as social commerce propels the rise of new brands, and simultaneously, private labels, dupes, and expanding Chinese players take advantage of consumer price sensitivity, finding niche consumer preferences and micro demand could mean the difference between strategic growth and business decline.

Leveraging real-user digital data for audience profiling

While customer profiles based on surveys alone can be inaccurate, combining these insights with online data based on real-user behavior can result in a more reliable, granular, and comprehensive understanding of who your audience is, what is important to them, where they spend their time online, and how they engage with your brand across digital marketing channels.

Consumer and Market Insights Managers (CMIs) can build shopper profiles to target new and untapped audience segments, which can inform the creation of product lines with a more successful market fit, and marketing teams can create campaigns and content to fit current audience interests.

This approach can reduce the high costs of advertising and increase targeting efficiency to boost revenue, even in challenging economies.

To learn more about utilizing Similarweb Digital Data for market and audience research, click below.

Let’s see how companies can take advantage of this approach by looking at two fast-growing consumer industries: the coffee and beauty industries.

Coffee consumption trends: From the macro to the micro

COVID-19 dramatically impacted global macro trends in almost all industries, and coffee consumption was not immune to these changes. Coffee lovers accustomed to enjoying their morning brew in their local coffee shop or office were locked at home and had to find other means of quenching their caffeine needs.

Online searches for keyword terms related to “single serve caps” surged in the US, as did Amazon sales, driven by consumers who didn’t want to invest in expensive coffee machines or take the time to prepare coffee on their own. In Europe, on the other hand, consumers were more interested in the quality of the coffee, and Amazon sales for “coffee beans” and “coffee grains” surged.

Upon returning to in-office work, the trending keywords shifted back, but the rise of inflation quickly caused a temporary decrease in coffee shop visits. According to Similarweb Digital Data, consumers searched for more affordable alternatives, sparking the popularity of “ground coffee” related searches, which spiked by +11% year-over-year (YoY) in May 2022 – April 2023, as well as “roasted coffee beans” (+21% YoY), and single-serve capsules (+12% YoY).

Another critical factor affecting today’s consumer interests is health. If a savvy company can find trending keywords in the health category related to its products, they’re a surefire way to drive sales.

Overcoming the say-do gap with Similarweb Digital Data

Continuing with the coffee demand example, analyzing loyalty app data from major coffee chains reveals micro-consumer trends and gives us an understanding of purchases occurring at brick-and-mortar establishments. In June 2022, amidst a 9.1% inflation peak, loyalty app usage sharply declined in all coffee shops. Conversely, during the first quarter of 2023, as inflation started to ease, customers began flocking back to coffee shops, resulting in a resurgence of loyalty app usage.

To understand these consumer interests at the micro-level, we integrated Similarweb Digital Data into insights from a survey we conducted on a representative sample of 2,209 US consumers. We crossed their verbal responses regarding their financial status with their Starbucks app usage. Surprisingly, we discovered that the vast majority of struggling people were still drinking their favorite Starbucks drinks regularly.

The app demographics data revealed that 41% of Starbucks’ loyalty app users are aged 18 – 24, an age group that mostly has lower household expenses and more disposable income.

During the studies, however, our research team discovered that families with larger households were still concerned about purchasing coffee at shops and were more inclined to prepare coffee at home, so we delved into the data to discover the micro-trends driving their purchases.

Uncover and successfully capitalize on niche consumer demand

By grouping keywords according to Google searches, onsite searches, and product clicks to understand where people were buying online, we unsurfaced three main micro-trends:

• Superfood searches spiked, immediately addressing the growing need for improved health and driving traffic to mushroom coffee products by RYZE.

• Convenient coffee was in demand, with consumers purchasing coffee concentrate by Javy Coffee and coffee pods from Green Mountain, Peets Dickinson, and Nespresso Stormio.

• At-home barista products entered the market and soared as shoppers searched for iced coffee, whole beans by Death Wish and Bones, and additives such as chai syrup and pumpkin puree.

Utilizing the Similarweb Market Research panel, we analyzed these trends on the Search Trends quadrants to spot product opportunities with a good market fit.

Creating strategies leveraging micro-consumer trends

“Mushroom coffee” is already an established trend but is interestingly still experiencing incredible growth of around 200% YoY. Moreover, when positioned as a health promoter, this coffee becomes a critical item consumers are willing to pay extra for.

“Coffee concentrate” provides an incredible opportunity for the coffee industry with over 1000% growth YoY. Similarweb’s keyword research tools offer insights into branded over non-branded searches to understand the industry penetration difficulty for these products and whether introducing new products or partnering up with existing brands would be more effective.

Understanding micro-consumer demand can propel your product sales and grow your market share in any category, so let’s take a look at the beauty industry.

The Lipstick Effect and the Fragrance category boom

Demand for beauty products started to boom in the middle of 2022 with a +7% YoY traffic growth, which continued to soar into 2023, with Cyber 5 visits seeing +4% YoY growth. Within the beauty industry, the top-growing category is makeup.

Amazon’s revenue in the Makeup category increased by a whopping +44% YoY between June and November 2023. So why was the category growing that much faster on Amazon?

The answer: the “dupe” trend. This hot fad, propelled by TikTok influencers, gained swift popularity among Generation Z and Alpha, offering affordable alternatives to high-end brands. These dupes mimic the appearance and scent of luxury products but come with a distinct name and logo, making them entirely legal to sell.

Similarweb’s fastest-growing website lists in the Beauty category at the time included D2C brands like dossier.com that specialize in fragrance dupes, and this phenomenon has since spread into other categories, even affecting Consumer Electronics brands.

On TikTok, #dupe was viewed 5.4 billion times, and this spike is also visible in consumer demand, with over 1.52 million Google searches in the US in the last 12 months (as of August 2023, based on the top 1,700 keywords in the category). Even celebrity perfumes like Cloud by Ariana Grande can’t evade the dupe phenomena, with magazines like Glamour publishing articles highlighting the affordability of dupes and validating the trend.

This trend threatened to undercut established brands and brought about many strategic questions in board meetings across the globe:

• Does this trend undermine our brand-building via mass advertising and influencer marketing?
• How should we change the product design or distribution strategy to meet consumer demand?
• How can we react faster to new digital marketing trends and adjust marketing strategies to attract our target audience?

That’s where timely, real-user digital data can protect your brand and enable quick, informed strategic moves that help your company thrive.

Demand Science: Behavioral data to stay alert

Leveraging digital intelligence, many early adopters have already integrated behavioral data into their analytics processes to enrich the insights gathered from first-party data. With access to website traffic insights into keyword searches, on-site searches, and even granular signals that monitor traffic to custom categories, brands and retailers can generate data-based interpretations that grasp the nuances of the marketplace.

Real-user digital data enables businesses to understand what consumers are looking for in real-time and enhance their first-party data immediately, rather than wait months for survey results to be gathered. Early adopters of these digital insights can inform distribution, product, and marketing teams and quickly shift strategies to capture consumer demand almost immediately.

The companies that are most successful at leveraging Demand Science don’t just spot trends ahead of their competitors — they monitor unmet demand in their industries and create the products to meet said demand, thus disrupting the market altogether.

To discover more of the macro and micro trends that will fuel your 2024 strategies, download our exclusive State of Ecommerce flagship report.

Industry disruptors: Tracking and satisfying unmet demand

The Inkey List is a prime example of a brand that utilizes timely digital intelligence to track unmet demand and create niche product lines that satisfy it.

This successful disruptor has become an established DTC brand, receiving over 175K monthly visits in the last 3 months as of November 2023. The brand also distributes its products at leading retailers such as Boots, Amazon, Cult Beauty, Selfridges, and Lookfantastic to attract new audiences.

Inkey List supplements its first-party data with Similarweb’s timely digital data into keyword searches and the competitive landscape to comprehensively view the demand outside its customer base and find opportunities for new product lines.

When the analytics team discovers a significant growth in searches for a specific skin need, such as “hyperpigmentation treatment,” this indicates a niche consumer demand. The skincare company then creates products to meet that need for a successful product-market fit.

Digital Intelligence to Spot Growing Demand for Hyperpigmentation Treatments 

Inkey was able to understand near-real-time consumer demand by comparing the monthly search volume for specific skin concerns on Google to its website’s traffic share in specific segments and comparing this share to its competitors.

The additional benefit of monetizing niche consumer demand is that the products are less likely to face competition from the dupe industry, as dupes tend to target mass markets.

Tap into niche trends faster than your competitors

There are ample opportunities to launch new products, boost existing product lines, and expand into new markets, even in challenging times, as long as you can access timely and granular real-user consumer data. With these insights, you can:

• Combine first-party data, survey data, and digital intelligence to understand not only what consumers are looking for but also why they are looking for it.
• Redefine your understanding of the addressable market based on the notion that people buy products and services to get a “job” done, like the Mushroom coffee being a superfood.
• Re-strategize your brand-building investments in the age of the #DUPES and prioritize D2C channels where customers are not exposed to dupes and competitors.
• Embed micro-demand tracking into your business model to launch new product lines that meet consumer demand before your competitors.

In today’s economy, and in a world where audience interests are vast and varied, tapping into niche trends and under-the-radar markets is crucial for businesses that want to grow their market share and keep their competitive edge. Combining Similarweb’s timely market research capabilities with traditional first-party data and survey sources allows you to make bold, data-informed strategic decisions without the guesswork.

To discover how your company can monitor unmet demand utilizing Simialrweb’s real-user digital data, click below.