A Needstate Mindset

A central goal of an account manager is to grow share. This means we have to define what this share growth will be in. One can completely change the narrative if one changes the definition of the category, one operates in. This is where the need states mindset comes in.

What is a Need state

A need state is defined as a group of shoppers who are seeking a specific product benefit for a certain usage occasion. For instance, a low fat, low calories, premium yoghurt is a specific need state. An own label yogurt with ordinary (read inferior) packaging & significantly lower price but equally low fat and calories would be a separate need state. A yoghurt that is better tasting (perhaps flavoured) which the consumer wants to indulge in late in the day would be another need state.

Substitutability

In other words, a need state is that definition of a category which is not substitutable in the shopper’s eyes by any other related category, provided there’s full availability. The availability caveat is there because in the absence of a particular need state from the shelf, say, owing to supply constraints, the shopper will have no option but to substitute the purchase with some adjacent need state, at least temporarily. For instance, within shampoos, there could be a premium, antidandruff shampoo but if that is not available, then shoppers would have no choice but to switch to a different subcategory violating the definition of a need state.

The objective of the account manager needs to be to grow share in each need state. Most big brands operate in multiple need states but our brand lens constantly deludes us into considering the entire area of play of the brand as one. It doesn’t allow us to sub-categorize enough to be able to identify the precise area of play that would require its own strategy which may be very different from the strategies you have for other need states within the same brand. Often, we stop this subcategorization at level 1. For instance, within Pain Management category, there would be Topical analgesics and Oral analgesics. Within topicals, there could be medicated and non-medicated solutions. Within Medicated topicals there could be strong potency and weak potency solutions that the shoppers could be using for different pain occasions. And within the strong potency solution, there could be different active ingredients that shoppers may have a predilection for. And for a specific ingredient, the shopper may have completely different quality and value perceptions for own label product and premium branded products. This last sub categorization is what we would define as a need state. Ideally, & theoretically, it’s in this segment that the Account Manager should track its share in. Unfortunately, EPOS data may be limited for some retailers which may end up determining to what level you can go down to when tracking you share in need states. Moreover, going down to a micro level may complicate things but try to go down at least 2-3 levels.

So don’t get deceived by what you classify as a brand; the shopper’s concept of a brand is different. The shoppers of a certain need state may accord high equity to one brand but the brands equity may be quite low in another need state that it operates in.

Purchase Decision Hierarchy

The best way to map this all out is the customer’s Purchase Decision Hierarchy (PDH). A PDH example from the yoghurt category is given below.

Note that it is entirely behavioural in nature, so there is nothing about the shopper herself (neither demographic nor psychographic). It is the shoppers shopping algorithm.

Above is an example of a Purchase Decision Hierarchy. According to it, a shopper of yoghurt walking up to the shelf would first look for either a Full Fat or a No Fat variant of a yoghurt. Then only after they choose their flavour, would they look for alternatives in the category for the right price, followed by the size (size could represent different usage occasions). When tracking market share, one would want to go down the levels as low as data would allow because that is the category being shopped. You want to see how your share is progressing in Premium, full fat, flavoured yoghurt, for instance.

In the above (hypothetical, I must add) example, the shopper seems to be fairly indifferent to which brand they are buying, because it appears so low in the decision hierarchy. A retailer hell bent upon simplifying the category could use this CDH to just stock one brand because it suggests all the shoppers of one of the brands would simply switch to the other given the high “substitutability”.

Conclusion

Understanding and leveraging need states and the Purchase Decision Hierarchy (PDH) are fundamental for an account manager aiming to grow share effectively. By recognizing that shoppers evaluate products based on specific benefits tied to unique usage occasions, account managers can better align their strategies with shopper behaviour. Breaking down categories into granular need states not only sharpens focus but also reveals opportunities that broader brand-level strategies might miss. Similarly, mapping out and analysing the PDH helps pinpoint the most critical decision-making layers, allowing for targeted interventions and precise share tracking. Ultimately, success lies in stepping out of the brand lens and embracing the shopper’s perspective, enabling a nuanced and data-driven approach to category management.