Do brands need to get into bed with promiscuous consumers?

The news this week that product promotions in supermarkets are failing to produce the increase in sales they once did could prompt not only a change in the way brands and retailers approach the issue of deals but also has potential implications for the relationship between brand and consumer.

A study by IRI detailed how the volume of goods sold on promotion fell last year. The report outlined how the total volume of food and non food products sold on promotion here fell 0.8% year on year to the end of March. The UK remains, however, the most heavily 'promoted' market in Europe with 55% of food and 59% of non food products sold on promotion. That is a huge proportion, especially if you look at the most promoted categories, according to IRI: beer & cider, where 68.7% of goods are sold on deal and confectionary, 66.5%.

There is a long term trend behind these figures of which brands would be wise to take note. Promotions are a perfectly legitimate and valuable sales device whilst they retain the power to surprise or even shock. But when they become the norm and consumers take them for granted, returning a product to a normal price structure and margin becomes tough. This is compounded by situations in which brands are required to bear the burden of expensive trade promotions.

There is a need for research to assist brands in gaining a greater understanding of what goes through the shopper’s mind when they encounter promotions in-store. How do they affect shopping plans and habits and but also perceptions of brands? If continual promotion has the effect of decreasing brand equity in the eyes of the consumer, eroding its ability to command full price over time, what conversations do brands need to have with consumers to counter these perceptions.

Most retailers have moved some way in this direction with the launch (and subsequent rebranding) of economy ranges. This may well represent the future as a recent Mintel study revealed a drastic turnaround in the fortunes of economy and premium ranges. Their report showed that, of the 12,500 products launched in 2012, 9% were economy and 7% premium. This compares with five years ago when it was 9% premium and only 2% economy. The Mintel study further showed that of those surveyed, 55% said they would only buy certain brands and products when on promotion.

There are two learnings here: first, the balance of power is shifting in favour of the consumer. The consumer is beginning to dictate - perhaps by economic necessity or perhaps by a new-found canniness borne out of necessity - the way products are produced and made available to them and at what price points. The success of discounters like Aldi and Lidl supports this theory. Second, with multiples taking control over economy ranges with own label products, brands need to use research more heavily than ever to become intimate with the consumer across all the various retail platforms, understand their changing demands and buying promiscuity and use those insights to inform their NPD and marketing strategies moving forward.

All smoke and mirrors - can you really prepare for an e-cig-style revolution?

The announcement that the UK is to regulate electronic cigarettes as non-prescription medicines from 2016 merely underlines their rapid and spectacular success as a less harmful alternative to smoking. Indeed research suggests that that around 1.3 million people currently use e-cigarettes in Britain, up from 700,000 a year ago.

The battery-operated devices, which enable users to inhale a nicotine-laced vapour, are the latest in a line of transformational products that not only engage with consumers but actually change their whole pattern of behaviour. You don’t have to think back too far for other examples: who, prior to the launch of the iPad, would have thought that the combination of a laptop and a mobile phone wouldn’t be sufficient for our needs? Who before Amazon introduced the Kindle really thought we’d be ditching our paperbacks and downloading novels onto an e-reader? And if you had told me 20 years ago that I would be paying to download music onto an MP3 player and not getting a physical product for my money, I would have thought you mad. Such is life in the digital age.

These are the success stories. The salient point, of course, is that for every iPad or Kindle, there are tens of thousands of products that never achieved their inventor’s goals. Planning for the moment when a revolutionary product achieves acceptance is, by the nature of the beast, really difficult because in many of these cases, target consumers will not be able to envisage using the proposed product until they actually do. This makes conventional research approaches less than reliable because you are asking consumers to imagine behaviours for which they have no point of reference. Equally, however, a brand cannot commit expenditure to the launch of a left-field product without some insight on which to base its plans. Perhaps the starting point is not the product but the gap the product is intended to fill. Research about the problems consumers experience with the status quo will give an indication of whether and where there is a gap to be filled. It is then up to the ingenuity of the product designers to come up with something to meet the need. Thereafter, it is about selecting the likely early adopters and giving them the time to test the product properly as part of their everyday life. This is likely to involve smaller scale samples and for a longer than average timescale in order to benefit from the insights secured by consumers living with and using the product for an extended period.

Choosing these people correctly is critical to success. There is a need to not only find “cool status” people whose desirability is likely to transfer to the product as a tacit endorsement, but it is perhaps just as important to find communities of people who are most likely to become eventual brand advocates. These are the people sufficiently passionate about the product and the problem it solves that they will want to become almost evangelical in their passion for it. These are the people who will have such an emotional attachment to the product that they will do much of your initial marketing for you.

And when that’s all happened and news of your product is spreading virally, that’s the time to sit back, listen to your iPod and have a long draw on an e-cigarette.

When it comes to brands, this time it’s personal

Whether it’s a complimentary engraved chalice from Stella Artois, a personalised bottle of HP Sauce with your Dad’s name on it for Father’s Day or whether you’ve been hunting through supermarket shelves to find a bottle of Coke with your name or your best friend’s name on it, one thing’s for certain, brands are getting personal.

Personalisation, of course, is nothing new. For some time you have been able to personalise your Adidas trainers, buy a bespoke bottle of Famous Grouse whiskey, or design your own Converse shoes, but this is really the first time that personalisation has gone mass market.

As difficult as it is for mass consumption brands, if you get it right, it really works. It taps into our present desire as individuals to both stand out from the crowd whilst also fitting into it, enjoying the thrill that somehow something has been produced just for us or for us to share with someone we love. And, for the brand, to be associated with that feeling is priceless.

Although Starbucks created a stir with their personalised coffee cups, it is Coca-Cola that seems to have made the most obvious breakthrough. Named Coke bottles have stepped out from the supermarket shelves and created active spontaneous and engaging brand conversations. It has become a subject of real world conversations between friends; people are posting pictures of their personalised bottles on their social media sites. It is a rare example of a brand actually meeting people in their real lives rather than merely pushing a marketing message at them.

So, where do we go from here? At the moment personalisation has extended to allowing limited influence over the design of products, within the confines of certain options, or simply having your name (which of course is not unique) on something. Could more targeted personalisation be the next thing where brands offer you the chance to select the composition of products to influence their strength to suit your personal tastes.

Either way, after a campaign as seismic as the Coca-Cola name campaign, anyone looking to merely repeat the exercise risks appearing a little late to the game. The key to leveraging our desire for personal recognition is to know clearly what your customers are going to value, how and why. Research will give you the data and the insights to ensure it is conceived in a way that is right for both the brand and its customers.

Welcome to the age of the bargain-hunting, time-poor consumer

The annual Grocery Retail Structure (GRS), compiled by William Reed Business Media and IGD is always a source of interesting insights, though we can’t be certain if it reflects consumer trends or anticipates them.

This year’s report reveals three key areas that should be of interest to brand marketers.

First, the seemingly unstoppable rise of convenience shopping. Our current fast paced lifestyle suggests that many of us are putting together our weekday meal options on the go, as we leave work, as we get out of the station and rush for those last minute pieces to our Tesco Express or Sainsbury’s Local. Although the GRS reports that the sector grew only slightly, much of this growth is accounted for by the multiples with the number of independent stores falling by 260 in the year. This reinforces the growing hold that the multiples have over our shopping destinations and why brands need to factor this in to their market planning.

Second, as many of the multiples continue to bring previously independent high street “staples” in-house, the number of independent off-licences, butchers, greengrocers and are all down. But, there are some anomalies. The report suggests that the success of the BBC's The Great British Bake Off could be behind a 4.4% increase in the number of bakers, whilst with provenance increasingly important, the number of farm shops has also increased. It should come as no surprise therefore that so many of the multiples are working overtime to promote the provenance of their fresh produce.

Third, many of the discounters have grown by double-digit percentages in the past year. The report cites B&M Bargains, Heron Foods, Aldi and Frozen Value as the biggest movers.

It may not be scientific, but what we get is a picture of a time-poor consumer, keen to keep costs down and shop for a bargain, but frequently without the time to do it. It certainly sounds as if it was written with me in mind. There is a dichotomy, of course, between the way we are embracing convenience, which carries an inevitable premium, and our drive towards discounters. Perhaps we are looking towards the latter for our bigger shops and convenience for the everyday essentials.

However, the same consumer wants to know the provenance of the fresh produce they are buying and, given the right vehicle, would be interested in supporting some independent retailers.

Given this steer, brands would be well advised to get closer to and better understand the behaviour of their customers because understanding customer behaviour is the greatest currency available to brands today. This means there is real potential for brands to benefit from an ethnographic approach to their research. Observing and discussing the ordinary activities of people in their naturally occurring settings can uncover more insightful information about what people do, rather than what they say they actually do; this might not sound much but the impact can be significant. It allows for a more personal and in-depth view of the participants, their behaviour and choices in order to provide valuable insights about how, why and when customers might choose brands or new products and the role that these will play within the consumer’s life.

Ronald McDonald had a farm and he used it for brand advantage

At first glance, the decision by McDonald’s to open up some of the British and Irish farms that supply beef and eggs to its UK restaurants to selected consumers appears to be a clever, carefully crafted PR exercise to take advantage of the horsemeat debacle.

Except, of course, it’s not the first time McDonald’s has taken this step; it did so in 2010 as part of a PR campaign in the run up to the London Olympic Games. For this reason, it is too easy to merely dismiss the move as a PR stunt. As a brand McDonald’s has worked consistently to promote health and the provenance of its ingredients. If it is a PR stunt at least it appears to be one with substance; an effort by McDonald’s to walk the walk as well as talk the talk.

But there are some interesting elements to the move. For a company that is renowned for exercising close control over the way its brand is managed and perceived, allowing consumers to roam around farms suggests an apparent surrender of control even though the initiative is almost certainly being managed in a very controlled manner. But perhaps the balance is that it may contribute significantly to McDonald’s ability to modify perceptions of what fast food is all about. In this sense, by focusing on provenance McDonald’s has put itself in a space you might more likely expect to be occupied by a Waitrose or a Morrison’s.

It is not unreasonable, though, to believe that McDonald’s would only have taken this step if it felt it was commercially the right thing to do. Could it be that the ethical thing has now also become the commercially best thing to do? If that’s the case, this could represent something of a sea change for brands. Will it make us feel better about McDonald’s if we are users, or reappraise McDonald’s if we are not? And how do you measure that?

Understanding the impact on the target audience from this kind of campaign is important. If you don’t get insights from it that can be fed back into the business, you have to question whether the bulk of the value is being missed. Experiential marketing like this can, and should, go hand in glove with experiential research. By using the farms, McDonald’s is giving its consumers an experience of its business they wouldn’t otherwise have gained. They will be immersed in the brand and encouraged to re-evaluate the way they think about it, offering unique and fertile ground for researchers to till. Indeed, conducted effectively, research at this stage will enhance consumer engagement still further and produce a better level of insight than would otherwise be obtained from more classic research techniques. This adds depth to an initiative that might otherwise be dismissed as a stunt. It creates a “co-creative” attitude amongst all stakeholders – tell consumers what the issues are so that they can help address them. By using the farms, they have an unusual venue that will help create more theatre and experience. They could optimise the events by enabling direct interaction between client teams and consumers, which is great for client teams because they get to ask questions immediately, observe people up close and personal and also answer questions to move the process along; great for consumers because they feel valued and included and their curiosity about who is behind their favourite products is satisfied.

The company's confidence in its proposition is such that McDonald’s is going even further and giving its consumers a broader experience to secure more detailed insights. Why stop at the farm? It's quality scouts initiative is now leading it from field to box with a group of consumers observing the chain from the farm through production all the way to the restaurant

Engage with consumers, don’t market to them

There’s a Holy Grail for brands and retailers: to embed themselves so much with the families that make up their core demographic that their place in the family shopping basket is secure. Some try this through sporadic, tactical promotions which tap into interests and trends – collect tokens for a free tennis lesson, for example – whilst others try to create initiatives that lead to deeper, longer term engagement.

So it seems with Waitrose, which has unveiled a national ‘Grow and Sell’ initiative aimed at encouraging 7 to 11 year olds across the UK to grow their own produce and sell it to Waitrose customers, and Heinz with a Grow Your Own campaign to encourages families across the UK to grow their own tomatoes. Heinz is giving away free seeds via Facebook.

There are sound commercial as well as social reasons for these initiatives. The growth of online shopping and Click & Collect will lead to fewer people coming in store. With less pester power going on in the aisles, brands need to find new ways of engaging with parents and their children, whilst over the longer term consumers are going to be expecting brands and retailers to be engaging with them more at this deeper, more genuine level. Note the difference between “engaging” with them and “marketing” to them.

Both Waitrose and Heinz seem to have found something with authentic consumer appeal. The initiatives not only tap into families but, by virtue of their educational content, to teachers and businesses as well. They warm up the parents, remain close to each company’s particular brand values, fit with current trends and interests whilst being undeniably child friendly and educational.

Unlike the more sporadic promotions, where there seems to have been little contextual research undertaken into what parents really value and what would have a legacy beyond the immediate life of the promotion, here research appears to have helped create something distinctive but which has genuine appeal. Using a more experiential approach to qualitative research, promotions teams can create that engagement with mums as part of the ideation process for these initiatives. Quantitative research can also be designed to better engage with respondents – getting them involved with the issues, enabling and empowering them to feed back.

There’s a lesson here for all of us. Creating authentic engagement requires brands to work harder, think longer and research their promotions better. It needs them to research again once the initiative has happened to undertake a proper evaluation and explore how it can be developed further. Above all, it’s about showing not telling and demonstrating a willingness to have an authentic two-way relationship.

Putting everything into promotions risks unbalancing the marketing mix

New research from the British Promotional Merchandise Association says that half of the British public have taken action after receiving a promotional product, compared with only 19% after seeing TV advertising, 11% for online advertisement, 10% for print and 9% for direct mail. Promotional products are also considered the least annoying by consumers.

But what does this actually tell us and are there lessons that brands can draw as a result? First, the top line shouldn’t really come as a surprise to most of us. It merely underlines the fact that people love free stuff and that in a world of virtual complexity and interactive communication, the brute simplicity of a classic marketing approach can still cut through.

The other caveat we would add is that consumers, generally, ALWAYS ask for free samples. It shouldn’t be a surprise they claim this to be the most effective form of promotion, because it is tangible and they are aware of the link between getting a sample and then making a decision to purchase. You don't necessarily rush off to the shops the moment you see an ad on TV but it will subconsciously warm you up to that brand next time you're in the supermarket. And a promotion might lead to a very short term response whereas advertising is more likely to build brand perceptions over the long term.

Given we know that other forms of marketing work, often at a more subconscious level, we would caution that research used to identify (a) what sorts of promotional strategies brands should adopt and (b) what has been effective, need to take account of the unconscious effects of different comms strategies. This will range from observational qualitative approaches which explore the effect that a range of communications, media etc, have on people's behaviour, perhaps over time, to quantitative work which uses behavioural economics frameworks to cut through what people claim, to identify what they are likely to actually do.

We should also be careful in research not to equate likeability with effectiveness - e.g. before the now familiar approach to Cillit Bang advertising became all post-modern and iconic, consumers just found it plain annoying - but it worked!

Promotions are also rarely used in isolation and are usually part of a wider marketing mix. If I've seen an ad for Cereal X and I get given a sample at the same time - it's more likely a combination of the two that leads me down the brand bonding route. This makes it problematic to genuinely measure the effectiveness of a promotion quantitatively or try and disentangle it from a wider campaign mainly because few people ever claim to have seen/experienced the promotion and if they had it was mixed up with a multitude of other brand touchpoints.

Brands, for example, which use digital and social platforms most effectively, are those who do so to engage with their target market and reward users for their time. Promotions may deliver short term spikes, but persistence is the key to sustainable relationship-based marketing. This means combining engagement with measuring RoI as far as possible and then repeating if successful.

That's not to say promotions aren't effective. As well as getting a product into people's hands they can also work to build good feeling towards a brand - consumers are getting something for free. And that is probably the real message here - marketing these days is much more of a dialogue with consumers - consumers don’t want to just be told to buy something, more and more they expect something in return.