Chasing the niche consumer

Something’s afoot on our supermarket shelves. Gone are the days when beans would be beans, or cheddar merely cheddar. This, as we know, is the era of product diversity. But not just choice in format (sliced, block or grated cheese) or skimmed, semi-skimmed or whole milk (we now have soya and lactose-free as well); this is the era when brands see real economic potential in tapping into our special dietary needs or in tweaking a product formation to attract a new demographic to the category or the brand. More and more brands are doing it because it makes commercial sense for them to do so. The latest major brand to make the move is Heinz, which is targeting a UK gluten-free market estimated to be worth over £100 million per annum and rising, with new gluten free dried pasta and gluten free sauce ranges. The fact that there are known to be approximately 125,000 people with coeliac disease in the UK, a figure rising on average by around 7000 people each year shows that this new departure makes sound economic sense. In the US, the market for gluten-free products is huge and was estimated to have reached a value of $4.2 billion by the end of 2012 so for products that can play beyond national boundaries the return could be significant. However, as niche as the products may be, the shoppers are no less savvy or demanding purely because they are buying a gluten-free product. They will expect the same quality in taste, value and brand experience from a Heinz gluten-free product than they will from any other product that carries the Heinz name. And for Heinz, read any other brand looking to extend their ranges into new areas. This increases the importance of effective concept testing at pre-launch stage. It not only means finding people specifically appropriate to the proposition, but also presenting them with a concept that meets the particular needs of their condition. Beyond that, of course, it has to be more than just relevant to coeliacs, it has to taste good and not give them the impression that they are having to compromise in order to eat healthily for their condition. And then you need them to be interested enough in buying the product at the price point that you have set. The same rules apply, of course, whether the new demographic is being targeted on health or any other grounds. Douwe Egberts is launching its first flavoured instant coffee in the UK as a way, it is being reported, of driving sales among younger and non-coffee drinkers. They’re also hoping that the new range will encourage existing coffee drinkers to experiment a little more with their tastes. Concept testing will take into account the issues and requirements of the target demographic, prioritising on features within the product that meet those needs. It can help the brand identify potential conflicts product features and proposed price points, in so doing exploring other potential barriers to purchase. And, of course, it will expose what may be blatantly bad ideas. It isn’t foolproof, of course. There are always factors that will be beyond the control of the researcher. Research will not militate against a rival brand bringing out a product of their own that changes the consumer landscape and influences purchase criteria; a disruptive marketing campaign that affects the dynamics of the market or economic changes that influence price viability. But one thing’s for sure, not effectively testing your concept at all is almost a guarantee of failure in the market. Ends.

Brand loyalty - it’s more than just horses for courses

Independent butchers and farm shops have reported a 75% increase in sales in the month following the start of the horsemeat scandal which indicates that, wherever culpability may lie, some brands and retailers are losing the trust of the consumer. At present, that’s likely to be a temporary phenomenon with consumers expected to return to the leading brands for their meat and their ready meals once faith has been restored in the processed meat supply chain. But imagine for a moment that it isn’t temporary and imagine again if that decision to switch suppliers or brands extended beyond processed meat products into other areas. Would this breach of brand loyalty matter? And, if so, why? The brand consumer relationship is like any other. It exists on mutual shared interest and trust. In the same way that it is difficult to pin-point exactly what the attraction is between partners, so the brand consumer relationship is about the totality of the shared experience between the two. It is about the quality of the product, for sure, but it is also about more ephemeral factors, including how the brand makes you feel, what you think it says about you and about the reliability of that brand as a partner. Once you begin to question the reliability or the quality of the brand or its products, relationship breakdown is a real possibility and counselling may be in order to put the relationship back on track. In this instance, researchers can act as the counsellors. We are well equipped through a variety of techniques – from experiential-style focus groups, through structured online surveys carefully designed to elicit both a high quantity and quality of response, and even observational research and in-home interviewing - to help establish not only what the consumer feels about the brand or the product, but also what it expects from the brand or the product in order to consider re-engaging in the relationship. Situations like ‘horsegate’ not only anger, worry and even frighten consumers, they also empower them. Ultimately, these empowered consumers will be the ones to decide when brands have regained their trust. In such situations they often look for and act on the advice of others: family, friends and sometimes strangers; the media will bombard them with information and opinions that will also influence their views. Brands need to consider how consumers engage in social communities, online and offline, to share ideas and views. If brands can listen, learn, adapt and prove they have done so within these changing rules, then they may be able to win the consumer back. And the fact that the brand has taken the first step in seeking that reconciliation with the consumer could be the first step towards a bright new future together.

Never lose sight of the insight

Understandably, those of us active in the research community will bang the drum for the role that effective consumer insights can play in creating solid foundations for brand expansion by informing new product development and strategic marketing decisions. The growth in digital technology has made information on consumer attitudes more accessible than ever, as we have demonstrated through our own use of gamification strategies; though the true value comes in not necessarily gaining the insights, but in understanding them, interpreting them and then knowing how best to deploy them. The question is whether brands are utilising the insights they gain to best effect and whether they use them as widely as possible to provide a benchmark for most developmental and promotional activity. Because of the way that brands are structured, eg. one brand team does not necessarily work with another brand team, much research is undertaken in silos. This means that sometimes research is duplicated and potentially valuable customer insights are not shared. There may be internal reasons for this as some brands may be competing for budget or to secure budget for an NPD idea that would leave another brand to fight its own corner without budget. Brands would benefit considerably from enabling their research agency to to produce consumer snap shots and general insights which can be cascaded through the company. Second, brand teams are increasingly transient which means that brand learning is not maximised because historical knowledge is often not carried forward. Research agencies which have worked with an organisation for some time, in contrast, will have that historical brand knowledge which could be deployed for real benefit by the brand. This is one of the factors that has prompted us to launch ethnobus as a way of enabling clients to gain and share potentially valuable consumer insights but doing so in a way that gives clients access to focused ethnography very cost effectively. Ethnography is one of the most valuable research tools, yielding a depth of insight that cannot be gained by any other means. But it can also create wastage - an enormous amount of data that is not relevant or useful to an individual brand or client – but that could have value for somebody else. By taking an omnibus approach ethnobus, can enable the same piece of research to be shared across non-competitive clients & categories to give shared costs but exclusive insights. In so doing brands can access insights that are not only relevant but embedded in the consumer’s every day real world experience rather than pieces of essentially abstract data. For some brands, taking full advantage of what is truly available may require something of a mind shift away from a production-oriented culture to an insight-led culture. But only by doing so can they be confident that they will be developing products that are based on sound consumer methodology rather than producing products they hope the market will embrace. As we said at the start, the name of the game is to never lose sight of the insight.

As Tesco puts Pampers in its sights, is "product" the battleground of the future?

Tesco's introduction of products from its new "Tesco Loves Baby" brand isn't on the face of it particularly startling news. After all, own brand products have been increasingly favoured by consumers across the board and, even in this particular category, the supermarket has long been active both with its own-brand products and its Tesco Baby Club, now rebranded the Tesco Loves Baby Club. The landscape of nappies is clearly radically changing as the classic choice between Pampers and Huggies is no longer going to be possible. So not only does the addition of the word "loves" mark another stage in Tesco's drive to cosy up to their customers more warmly, but this assertive step into the space left by Huggies could be the start of something bigger. There are suggestions within the media that with this new departure Tesco might be looking to seriously challenge the dominance of P&G's Pampers. However, in this of all categories, Tesco or any other own label may have to find themselves working particularly hard to convince consumers that branded is not (even just a little bit) better. With nappies, consumers may need concrete evidence to switch from a branded product whereas in other categories even within baby – for example, wipes – there may be more willingness to go own label, even if the product were not quite as good, if there is an appreciable cost saving. If this is the case and Tesco were to be successful in turning its own brand nappies into a market leader, will consumers start to seek out own-brand-brands in certain categories, because of their product characteristics and not just their value? With just a hint of poacher turned gamekeeper, own brands will have become the brand. Will this, in turn, mark a shift to consumers focusing more clearly on product intrinsics at the expense of or in spite of brand extrinsics as they "get by" without the expensive surround sound of brand noise. This could just mean that brands need to work harder in the way they communicate and emotionally connect with people (i.e. better extrinsics); but it could also imply that product innovation is more important than ever. If the product is demonstrably superior, then brands will retain their favoured status over "cheaper" own label. At Engage we work extensively in npd and have been using more experiential programmes bringing clients and consumers together to help create highly refined products which will compete assertively with own label competition. If the battleground of the future is product excellence & uniqueness at the premium end and product quality at the value end, the way that products are developed and the co-creative involvement of consumers will be more critical than ever.

Do price promotions put brands on the road to nowhere? It depends on the brand…

In an excellent article entitled “The 13 bad marketing habits to break in 2013”, Marketing magazine includes price promotions at number six. The article quotes Thierry Billot, the managing director of brands at Pernod Ricard, as saying 'If you follow the road of price promotions, you will quickly realise it's a dead end, with no profits'. The article says that price promotion “is not a sustainable marketing strategy” and that brands have sacrificed long-term brand equity at the altar of short-term profits, but is it really as black and white as that? The answer is that some brands, in some categories, have far more leeway than others to hold their price positions and stay out of the price promotion trap. When researching price promotion risk we have found that the most important factor is the degree of substitutability in the category, i.e. how prepared are consumers to switch between brands. This is itself related to the extent to which brands are perceived to be different and to offer different things. An example of a category with very high substitutability is mainstream lager. Consumers are very willing to switch between brands based on the best price deal. We may see differences in brand preference and rating but crucially we see low scores on differentiation and uniqueness. Unsurprisingly, it is a very heavily promoted category. Picking the brand on promotion that week amongst a small number of acceptable brands is the key heuristic shopping behaviour across a lot of categories (shower gel, baby wipes….) On the other hand, brands in categories where the products really offer different things or where the brand has created a stand-out position (whether really different or perceived to different through building brand equity) can avoid promotion or use it more tactically to drive trial short-term. In categories where there is no discernable brand leader or product differentiation, consumers are more likely to simply shop around for the best available offer. Some of the research implications of this are interesting: 1/ One of the reasons that difference / uniqueness is importance for new products is that long-term it enables price points to be maintained which will impact on likely success 2/ When researching in-market pricing strategies (such as via conjoint) it is vital to understand the degree of difference across the choices. This is because in research consumers will claim they are more responsive to price than they actually would be when substitutability is low. On the other hand, in markets that tend towards commodity e.g. mainstream lager, the research response is often very close to observed reality.

True Christmas Spirit Thrives in Recession Battered Brand Britain

Last year we published a qualitative research study that showed how Britons were rejecting traditional consumption and wanted to use Christmas to reconnect with the things and people that mattered most and are closest to them. A year on and the evidence suggests that this remains the case as Britons look more to the simple things that encapsulate the spirit of the season, rather than a more naked, commercial approach to Christmas. It is interesting to see how brands and retailers have been using these insights to inform their product and marketing campaigns. Consumers continue to view this Christmas as a buffer against a painful present, a time to recharge batteries, and to reconnect with matters they view as genuinely important. While they do this, they are perhaps thinking more about practicality, planning and early budgeting than last minute magic and spontaneity, at a time when thrift has become more than merely a lifestyle choice. Such insights are also reflected in Christmas advertising this year as Waitrose presents us with a stripped-back television advertisement, for which Delia Smith and Heston Blumenthal have both waived their appearance fees (instead the cash will be spent on Waitrose’s Community Matters charity scheme). John Lewis’s advert, which follows last year’s epic, features the tag line "Give a little more love this Christmas", features a snowman searching for the perfect present for a mystery recipient whose identity is not revealed until the final scene (whilst the choice of “The Power of Love” for the soundtrack should not be overlooked), and ASDA, which supports the contribution of mothers, with the strapline ‘Christmas doesn’t just happen by magic’. ASDA said that the ad reflected the fact that for mums, despite the pressure, their big reward is looking back at the end of Christmas day, at a happy and smiling family, and thinking ‘I did that’. So the themes of Christmas this year are modesty & homeliness, intimacy & love. In the midst of all this Christmas spirit, consumers are making savvy decisions and feeling good about it. Greater effort will surely be invested this year in finding a bargain or in doubling up vouchers, finding a discount code, collecting and using points across all purchases, really checking deals in order to make hard earned money work harder and go further. Recent research by first direct found that 58% of people are looking to save money on the perfect party outfit over the festive period with women more likely than men to shop for a clothes bargain (60% versus 49%) - and more than three-fifths of them get thrifty when it comes to their party attire compared to half of men. The most common ways of saving money, according to the research, are shopping around more than before (46%), using discount codes or vouchers (31%) and retail reward points (29%). Christmas is still about enjoyment and escape, and a certain degree of excess is traditional but, in keeping with the subdued times, the sense of modesty and restraint reported by our respondents last year remains the order of the season. In spite of the jubilympic summer (or perhaps because of it), Christmas 2012 will be a contained affair in many families and so The conclusions for brands appear to be the same a year on: articulate hope and a positive long term vision as consumers are looking for inspirational light at the end of the tunnel; reflect the way that consumers have, in some ways, temporarily lost faith in materialism and focus on values rather than things; focus on the local, facilitate family, be active in communities and, at very least, continue to overtly support the British economy with products created and built locally. Brands should continue to tap into rituals which offer familiarity, comfort and trust for consumers and create promotions which reward planning and effort, as well as “hard to ignore” deals.

Is government plan really a green light for healthy food?

The government has announced that a ‘consistent’ system of front-of-pack food labelling will be introduced next year. This will be based on a traffic-light system showing consumers a combination of guideline daily amounts, colour coding and "high, medium or low" wording to show how much fat, salt and sugar and how many calories are in each product. The move comes after years of opposition from the multiples to a standardised labelling system. Their argument was that labelling was too simplistic and maybe unfairly critical of some products. However, some, including Asda, Sainsbury's and Waitrose, already had their own versions, which others claimed were causing confusion in the market. The government has said, though, that the new scheme will help people choose healthier food options and make more sensible decisions about what to buy. Their hope is that small changes will help reduce the scourge of obesity and improve the health of the nation. But will it? Traffic light labelling is a small step in a positive direction and there is plenty of data to show that grocery shoppers like this style of labelling and find it helpful. Research published last year by DEFRA showed that 80 per cent of people rated health as the most important factor affecting their buying decisions. Most shoppers – 82% - said they actively sought to buy healthy foods. The figures also indicated, though, that people’s preferences don’t always match what they ultimately buy, with price being a major factor in many people’s buying decisions, especially in the current climate. In practise, though, anecdotally it would seem to be further down our list of priorities. However, too much research focuses on one issue - such as labeling - in isolation, rather than looking at it as a whole. One of my colleagues undertook research some time ago with housewives, where each was asked to compare their last supermarket shop. With all of the produce on the table, they discussed what they had bought and why. They became quite competitive and in their efforts to win their impromptu 'supermum' competition, they became strong advocates for their products and the discussion was highly revealing. Health was rarely part of the argument. Price, offers, quantity, shelf-life, convenience came first. And then even when health is considered, the consumer definition of health is still poorly defined. In recent research we undertook, mum spent far more time than you would think possible trying to decide whether potatoes counted as one of your five a day. Milk - vital for child health - is too often restricted because it is seen as a high fat food (even though full fat milk is still only 4% fat). Most of them end up aiming for a balanced plate and call it a day. It is going to be important to ensure that the consumer is educated to understand the information behind the labelling. A knee-jerk reaction to a product with a red label on it could be counter-productive. The word ‘fat’ on a product could turn off the consumer, even though some fat in a diet is essential. Similarly, most products will contain an element of sugar, but some from natural sources like tomatoes rather than synthetic additives. Brands are going to have to adopt a more holistic approach to health; ingredients may not be enough. Brands and retailers may have to work together to create a well-being experience which may involve the in-store experience - display, promotion, training and product presentation – as well as the brand itself. There is evidence of this in some areas. Many multiples have revamped the way they display fresh produce so that it has a more market-like, natural feel and there has also been a move in the UK to balance the consumer’s desire for prepared meals with "semi ready-to-eat" meals. These products, with fresh ingredients that you can see when you buy them, are ready to take home and cook rather than just warm up. Tesco’s has had success with pre-prepared vegetables and meals in its Finest range as well as its City Kitchen prepared meals. However, Finest, City Kitchen and those like them remain premium brands. So now that we are finally getting a universal and comprehensible labelling system, maybe it's time for brands to look at the wider context of healthy eating and be able to demonstrate to consumers that you can buy and eat healthy products on a budget.