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Driving Brand Loyalty in Food and Drinks: Strategies to improve customer retention through consumer engagement

Business Insights
November 25, 2009
117 Pages - SKU: RET2539909

Abstract Table of Contents Search inside this report Related Reports

The retail and brand landscape today is very different from five years ago. The recession has been deeper than any recent experience and there has been a heavy toll in failed retailers and brands.

Consumer behavior and attitudes have changed substantially and there is widespread debate without a firm conclusion as to the extent to which consumers will return to pre-recession spending behavior.

The brands which have succeeded through the recession have been those with an extensive heritage to which consumers has turned to as a trusted brand during difficult times. Brands that are associated with value, either in low prices or as value or money have also thrived. The biggest challenges have been faced by brands which are premium/ luxury where increasingly consumers have been unwilling to pay the premium unless justified by superior ingredients and flavor experience. Even when consumers have been willing to pay the price premium, they have done so less often than they would have done pre-recession.

Key features of this report

Analysis of the critical elements of building and retaining brand loyalty
Evaluation of the changes to brand loyalty during the recession and the types of brand best positioned to thrive in a post recession era
Analysis of food brands that have designed their marketing online to engender a high degree of continued loyalty

Scope of this report

Understand how brands are expanding their marketing effort across a variety of online and offline media to drive brand loyalty
Understand the importance of a cross company effort to ensure that all staff members understand the unique values and proposition of the brand
Evaluate how brand extensions can add brand value and increase loyalty to the core brand
Develop more effective brand loyalty strategies based on the in depth case studies and best practice examples

Key Market Issues

The recession has changed customer loyalty, and post recession is likely to cause further changes to loyalty
As consumers purchasing habits have changed, so private label and deep discount brands have developed a brand loyalty based on satisfactory taste plus lower prices
As consumers become more sophisticated and demanding, brands need to develop marketing strategies that create a dialog with consumers and cause them to become brand advocates

Key findings from this report

Brand loyalty has been severely challenged by the recession.
Private label brands have made significant inroads into market share and are likely to continue doing so as retailer brands are actively promoted and quality and choice continue to increase.
Brands with a long heritage and consumer trust have survived the recession better than middle brands, and have invested to ensure that they come out of the recession strongly placed to continue growth.
Many middle ranking brands have been killed off by the brand owners in order to concentrate resources on the main brands.

Key questions answered

What type of brands have increased brand loyalty during the recession
What are the implications for brand loyalty post recession
What methodologies are brands using to engage with consumers to encourage brand advocacy
How has private label grown
Who are the key purchasers of private label, and are they brand loyal to those private label brands

Driving brand loyalty in food and drinks
Executive summary: Renewing the focus on brand loyalty; Building brand loyalty; Case studies; Industry survey; Conclusions
Chapter 1 Renewing the focus on brand loyalty: Summary; Restating the benefits of brand loyalty; Brand loyalty is the crucial factor in today’s tough market; Existing customers cost less and are less price sensitive than new customers; Loyalty can also create space to respond to competitive activity; Loyalty also helps secure shelf space and counter retailer power; Should brand loyalty’s definition be updated?; Defining brand loyalty; Consumers are decreasingly likely to stick with the same brand; Updating the view of “brand loyalty”; How then should the view of “brand loyalty” be updated?; Moving from purchase frequency to “brand engagement”; The key is creating a meaningful post-purchase involvement with the “brand”; A lack of post-purchase engagement with consumers characterizes CPGs; Taking inspiration from mobile telephony: the iPhone and consumer engagement; A new model for developing brand loyalty; Post-purchase engagement is a critical area to address; But other areas are still vital; Post-purchase engagement should be seen as additional to other activity; Benefits and challenges of a new approach; Loyalty and its measurement needs reviewing; The view of loyalty needs changing, and metrics therefore need reinterpreting; Purchase frequency and other customer experience metrics are still relevant; Consumers as brand advocates (and detractors); Examples of online brand advocacy (and detraction) for consumer packaged goods; Online post-purchase engagement means more transparency; Social networking sites provide challenges and opportunities; Further trends affecting loyalty; Private label as a competing brand; Private Label’s growth means a focus on brand differentiation; Heritage and trustworthiness are increasingly attractive
Chapter 2 Building brand loyalty: Summary; Introduction; Strategies and tactics across several areas require updating; Aligning with the key drivers of loyalty; Achieving emotional connections with consumers; High emotional status products tend to have higher loyalty; Securing product trial; Accounting for modern retailing practices; The threat from deep discounts, and deep discounters; Avoiding the “squeezed” middle ground; Brands in the middle ground need to differentiate, quickly; Aligning with consumer trends; Offering “simplicity” to consumers is powerful; Simplicity of message helps to save consumers time; A good example of this is the “traffic light” food labeling system in the UK; Offering simplicity and value for money is even better; The importance of offering “basics” should not be overlooked either; Offering variety is powerful, if done in the right way; “Disruptive” approaches help add variety and create opportunities; Once the mission has been achieved, there is a “window of opportunity” 61; The key is not to take up too much time; Offering nostalgia; Accounting for changing mealtimes (for food and drinks); The importance of a budgeted meal is increasing; A need for new-style convenient meal solutions; Facilitating “on-the-go” consumption; Updating marketing strategies and tactics; Ensuring sufficient investment in brand marketing; For big brands maintaining or increasing budgets is key; For smaller brands, innovative marketing is vital; Ensuring sufficient investment in new product development; Even consumers heavily affected by the recession will be receptive to new products; New technical innovations should avoid making food seem “overprocessed”; Seek out breakthrough innovations; Avoiding playing it “too safe”; Seek to make the most of first-mover advantage and develop emerging areas; New marketing approaches; Mobile technology opens up new opportunities at the point-of-sale; Ambush marketing; Online advertising is undoubtedly a long term growth area; Privacy issues must be handled appropriately however; Mini sites and social networking sites; Buzz marketing - using key opinion leaders to create online “buzz”
Chapter 3 Case studies: Summary; Introduction; Case Study - Kellogg’s Special K; Company overview; Goals and strategy for Special K; Through brand extensions Special K has become a “solution” provider to dieters; Consumer engagement strategy; The Special K challenge has taken the brand beyond being a “just” a food; Overall the site provides strong engagement with interested consumers; Television advertising; Takeouts from Kellogg’s Special K approach; Case study - Whole Foods Market; Company Overview; Goals and strategy for Whole Foods Market; Consumer engagement strategy; Regular updates are a tool for helping achieving lasting marketplace change; Blogs and social media are cornerstones of online activity; Developing a community drives repeat site visits; Takeouts from the Whole Foods Market approach
Chapter 4 Industry survey: Summary; Introduction and methodology; Key findings; Overview; The industry feels that levels of loyalty are set to fall in the future; However, the average figures hide major divisions among respondents; Effects of the recession on brand loyalty; Marketers believe that premium brand loyalty is less affected by the downturn; Demographics of Loyalty; Pre- and post-children families are seen as being more loyal; Loyalty rates vary greatly with different income groups; Younger consumers are more loyal, but this comes under pressure as people age; Methods of driving brand loyalty; Product quality and word-of-mouth are still the most effective, but engagement is close behind; Marketers appear under-estimate the growing importance of new technologies; Levels of customer loyalty by product category; Alcoholic drinks, soft drinks and confectionery have the highest loyalty ratings; Loyalty and Private Labels; Loyalty to private labels is expected to increase; The importance of brand attributes; Heritage is seen as the most important attribute, and low price the least important; Marketers’ attitudes towards brand loyalty; Innovation and attracting new customers are seen as important in driving loyalty; Companies perceived as excelling in developing loyalty; Survey summary
Chapter 5 Conclusions: Summary; The future of brand loyalty; Heritage will continue to be important; Maintaining marketing expenditure is key for global brands; Rising private label quality means that private label will continue to grow; Key strategic recommendations; Align internal values to consumer needs; Meet or exceed consumer expectations; Understand and target consumer need states; Engage the consumer, online and post-purchase; Loyalty in a traditional sense may still fall, but the effort should still be put in
List of Figures: Figure 1.1: Coke Zone website; Figure 1.2: A model for developing brand loyalty and where online communication can be most effective; Figure 1.3: Wispa Facebook campaign; Figure 1.4: Mumsnet website; Figure 1.5: Zeer website; Figure 1.6: Zeer website; Figure 1.7: Heateatreview website; Figure 1.10: Kellogg’s packaging and logos over time; Figure 2.11: Loyalty and peer recommendation; Figure 2.12: The “essential Waitrose” range; Figure 2.13: Simplicity of message; Figure 2.14: Shopping Mission; Figure 2.15: Stella Advertising; Figure 2.16: Sainsbury’s fiver promotion; Figure 2.17: El Paso family meal solutions; Figure 2.18: Bird’s Eye Packaging; Figure 2.19: Hovis product innovation; Figure 2.20: Vio Carbonated Milk; Figure 2.21: Coors Beer; Figure 2.22: Pringles “These are not Tennis Balls”; Figure 3.23: Original Corn Flakes Packaging; Figure 3.24: The Special K range in the US; Figure 3.25: Special K ingredients; Figure 3.26: Special K Challenge meal plan; Figure 3.27: Special K personalized plan; Figure 3.28: Special K forum; Figure 3.29: Whole Foods Market blog; Figure 3.30: Whole Foods Market Twitter page; Figure 3.31: Whole Foods Market iPhone application; Figure 4.32: Level of consumer loyalty towards mainstream food and drink brands now and in the next 5 years; Figure 4.33: Effect of current economic climate on brand loyalty; Figure 4.34: Brand loyalty by demographic; Figure 4.35: The spectrum of consumer engagement tactics by their perceived effectiveness in developing brand loyalty; Figure 4.36: Brand loyalty by product category; Figure 4.37: Brand loyalty by brand type over next 5 years; Figure 4.38: Brand attribute importance; Figure 4.39: Attitudes towards brand loyalty
List of Tables: Table 1.1: Consumer switching to store brands; Table 2.3: Emotional status of various product categories; Table 4.4: Brands that excel at retaining brand loyalty

Driving Brand Loyalty in Food and Drinks: Strategies to improve customer retention through consumer engagement

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