Don’t mourn for lost brands – understand why they’re dying in the first place

It’s not been a spectacularly good year for some of our leading High Street brands. Well known names like Dreams, the bed retailer; Axminster Carpets, and fashion chain Republic have all followed other leading names like HMV, Jessops and Blockbuster in calling in administrators.

However, for some of these brands, there may be a new lease of life. Republic has been snapped up by Sports Direct whilst news broke last week that ASDA was in negotiation to buy HMV with a view to reviving the brand. Tesco’s decision to buy the Giraffe restaurant chain is clearly a statement of intent to not only ramp up destination shopping and appeal to families, but also to balance the expected growth in click and collect and online shopping with a channel to drive consumers in-store.

Some leading names, of course, have already hedged by upping their online game enabling them to successfully integrate both their bricks and their clicks. This recognises the balance to be struck between consumers buying online, dependent on the product, but only when they have seen the product in store.

When questioned, many consumers will express sadness at the loss of some of their High Street staples – there’s still a Facebook group called “I Miss Woolworth’s” with 4000 members – but often many won’t be surprised either. But if these brands inspired such warmth and loyalty, why did they end up in so much trouble…and are there steps that others can take now to militate against nasty surprises further down the line?

The first point to make, of course, is that customer loyalty alone is never enough. Businesses fail because of a myriad of other factors, from management structure, to size of property portfolios, to product mix to pricing strategy. But there is a clear indication of cognitive dissonance when it comes to customer perception of brands like this.

Some years ago we were involved in exploring the effect of recession on the high street. What was apparent was that whilst people had genuine affection and nostalgia for brands like Woolworths, few people could remember either the last time that had visited the store or when it had been their first choice, rather than fall-back destination, for whatever it was they were looking to buy.

There’s a similar feel this time around, with many HMV and Blockbuster customers, for example, acknowledging they had visited the stores to browse new releases which they then either bought more cheaply online or simply downloaded. So why wait for the post-mortem? Why aren’t brands, who feel that the path they are treading is not completely risk or problem-free, using such research now to help navigate their way through? Identifying customer loyalty and satisfaction is one thing, but using research to pinpoint why people are coming in store, what they are (or are not buying) when they are there will deliver a gap analysis between attendance at the brand and actual purchasing behaviour. Insights gained from such work can inform all aspects of the company’s strategy and allow changes, some radical, to be made before it’s too late.

Who knows it may just save a few “much loved” brands and hundreds of jobs and even contribute to renewed vibrancy on our High Streets. Surely that has to be something to work towards?

Getting up close & personal to the consumer

So, picture the scene. I was sitting back at my desk, mug of coffee on my right, cheeky hobnob on my left and I began to read some new research from The Village Bakery that claimed that eating unhealthy snacks at your desk could cause you to put on almost half a stone a year. Apparently, the average woman puts on 6lb 3oz – the equivalent of a whole dress size – while men see their weight increase by 5lb 2oz. Needless to say, I put the hobnob back in the pack.
Biscuits, apparently, are our most common vice, closely followed by chocolate, crisps and cakes. A third of us tuck in as a way of coping with stress and nearly a quarter look for a sugar rush to get us through the afternoon.
Now this contrasts (or perhaps partly explains) the explosion in the specialist diet product market in the UK. More of us than ever, it seems, are turning to specialist slimming foods to lose weight as sales of diet shake mixes, food bars and meal replacements have risen by up to a third in the past two years. Brands such as Weight Watchers, Complan and Slim Fast have gone from being niche to mainstream in relatively rapid time. Indeed, it has been reported that Slim Fast products have seen sales increase by 32 per cent across the leading supermarkets over the last two years with sales of these products likely to continue to grow as adults see them as an easier option to help them lose weight.
The possibility here, therefore, is that niche becomes the mainstream and begins to seriously impact on the brands which presently mostly make up our weekly shopping basket. However, from developments over the last couple of years, it seems apparent that brands are recognising not only our need to eat more healthily but also that there are potentially rich commercial pickings available for them by doing so. You need only look at products like McVities Digestives Light biscuits (30% reduced fat), Baxters' Healthy range of tinned soups and reduced sugar/reduced salt baked beans to see the direction the market is taking. Couple this with the drive by the multiples to offer healthier own brand products as well as vast amounts of online information and recipes on healthy cooking and eating and it’s clear to see where the battleground for the consumer is moving.
Fundamental to this, however, is an understanding of what is going through the consumer’s mind, motivating them in how they eat and drink and, it would seem, how they assuage any feelings of guilt from having indulged a little more than they strictly would have wanted to.
Research here is fundamental. Detailed work with a panel of consumers can really help brands drill down and fully understand what motivates, what concerns and ultimately what influences their purchasing decisions, in this case, as it pertains to healthy eating. We ask consumers to keep a weekly diary before we meet them to illustrate their thoughts and feelings towards food and drink; we look at their shopping receipts to see what they actually buy, when and where and why; we look at their purchases in the context of their lifestyle and their priorities, and we even look through their cupboards to explore their relationship with their chosen brands. The level of insight that this kind of ethnographic research can deliver to a brand can be critical in creating understanding of consumer motivations and can make a profound contribution to both product development and marketing strategies.
And, in case you were wondering, I put the hobnob back and had an apple.
www.engage-research.com

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.