Building & Profiting From Consumers' Trust

Published by: Datamonitor

Published: Dec. 21, 2005 - 83 Pages

Table of Contents

CHAPTER 1 EXECUTIVE SUMMARY

Hot topic

The future decoded

Trust is vital in developing relationships with consumers

Consumers are becoming more fearful, skeptical and distrusting

Certain core factors determine consumer confidence in product safety

Concerns over food and drinks break down into three core categories

Where consumers perceive risk or trust is low they develop strategies accordingly

Women are more likely to be influenced by trust based issues

Companies perceived as being socially responsible are deemed more trustworthy

Action points

CHAPTER 2 THE FUTURE DECODED

Introduction

There are different types and dimensions of trust

Three key dimensions shape trust perceptions and expectations

Four different types of trust exist

Trust is vital in developing relationships with consumers

Trust and satisfaction must be understood as different consumer responses

TREND: Consumers are becoming more fearful, skeptical and distrusting

Consumers are concerned by product safety

Product safety has become an important topic in recent years, especially for food and drink

This has had an adverse effect on consumer trust

Product safety is also an issue within the personal care industry

Consumers lack trust in corporations and mainstream media channels

Even governments are suffering from a lack of trust

General trust in corporations is currently low

US companies have a trust deficit in Europe

Mainstream media channels, especially ads, are suffering from a lack of trust

Internet trust is inhibited by security issues

Consumers lack trust in the specifics of product claims

There is a broad level of distrust towards product claims across the sectors

There is distrust surrounding food health claims

There is also distrust surrounding personal care product efficacy claims

INSIGHT: There are four major determinants of consumer confidence in product safety

Consumers are influenced by trust in regulatory institutions and actors in the supply chain

Safety incidents and media coverage of risks heighten consumer skepticism

Specific safety events negatively impact trust both in the manufacturer and the industry as a whole

Product safety is actually taken for granted by consumers until specific incidents occur

INSIGHT: Concerns over food and drinks break down into three categories

Concerns over allergies have become more apparent

Consumers are typically over-sensitive when it comes to allergies

Evidence points to a lack of trust in allergen-free foods

GM foods and pesticides are key food safety concerns

GM food is associated with health risks, thereby undermining trust

Opinion is swaying from outright negativity towards uncertainty

A lot of GM negativity is because of knowledge gaps

Contamination and terror issues have the potential to become more relevant

Pesticide use has negative trust implications

Contamination through terrorism is a lurking issue, but has not yet fully resonated with consumers

INSIGHT: Where consumers perceive risk or trust is low they develop trust-orientated strategies accordingly

Consumers seek word of mouth recommendations for trust reasons

Word of mouth recommendations are generally considered trustworthy

Declining trust in institutions, corporations and the media explains why interpersonal recommendations have more credibility

Consumers are embracing word of mouth more frequently

Consumers perceive higher priced products as being higher quality and therefore more trustworthy

Consumers' quality perceptions can be grouped under 4 main factors

Consumers seek quality assurance from trusted 'experts'

Experts are especially important with regard to health information

The Internet is also an increasingly trusted source

Multiple sources of information are chosen to give consumers confidence

Country of origin information often has a trust-building impact

A product's country of origin is linked to quality thereby increasing trust

A climate of fear means that country of origin/production area is more important

Ethnocentric consumerism: home-country fresh food and drinks are often more trusted

A company's country of origin is also an important factor influencing trust

Organic and natural products are chosen because of trust issues

Consumers use product information as a risk-reducing variable

Consumers are influenced by, and demand more detailed, nutrition labels

Current evidence suggests consumers are being confused by labels...

Labeling initiatives could also affect consumer attitudes to GM foods

Consumers will react positively to transparency in the food supply chain

When consumers perceive risk they show loyalty to brands they trust

Consumers seek out trustworthy brands with proven functional credentials

Purchasing from smaller scale/local sources is sometimes perceived as being more trustworthy

Overall consumer opinion is polarized concerning the mega-brand vs. local brand debate

INSIGHT: Women are more likely to be influenced by trust based issues

Females are more concerned about trust based issues such as product safety

Women are slightly tougher on companies about trust than men

Trust is more important for older consumers

Seniors are cynical about claims concerning product efficacy, especially with regard to health

Income and education also impact the importance of trust

INSIGHT: Companies perceived as being socially responsible are deemed more trustworthy

Ethical consumerism is becoming mainstream

Good corporate citizenship builds trust

For food and drink consumers, good corporate citizenship is associated with animal welfare

Current perceptions of corporate citizenship are not particularly positive

Conclusions

Trust suggests a relationship beyond the functional: it builds brand equity

Building trust is important because there is currently a 'trust void'

Certain product attributes and marketing tactics can increase trustworthiness

CHAPTER 3 ACTION POINTS

Introduction

ACTION: Leverage the product attributes and communication cues that consumers perceive as trustworthy

Communicate the advantage of existing, established brands over new products

Build relationships with the 'expert community'

Ensuring expert opinion may also require more selective distribution...

Embrace viral and word of mouth marketing

Be wary of the negative effects of celebrity endorsements

Make product quality a key brand value

Ensure that quality is reflected by core product attributes

Provide a clear understanding of the product benefits

Communicate business ethics, but make it the secondary part of any message

Embrace the notion of 'customer-made' marketing

Become an information resource for healthy living

Become a healthy lifestyle information provider, especially for health sensitive groups

Demonstrate your broader commitment to healthy eating and drinking

Case-study: Sunkist and Dannon demonstrating commitment to healthy lifestyles

ACTION: Ensure that product claims are transparent, honest, and trustworthy

Be extra vigilant about misleading product information and claims

Develop recognizable and trustworthy labels

Avoid confusing consumers with a proliferation of labels: the French example

Make verifiable claims about natural products

There is no legal definition of what constitutes a natural product

ACTION: Be pro-actively open about the communication of a wide range of trust issues

Embrace the Internet as a trusted source of information

Make more information available via company websites

Use the Internet to develop new 'online communities'

Improve information with regard to product traceability

Respond quickly and honestly in times of crisis

Gently and carefully educate consumers, especially in times of safety fears

Provide more detailed product information on packaging

Make certain demographics the primary target recipients

ACTION: Turn existing trusted brands into champion/master brands

Extend brands with already established health credentials

Extend these trusted brands into new categories

Adopt a segmented approach

CHAPTER 4 APPENDIX

Definitions

Research methodology

References

How to contact experts in your industry

List of Tables

Table 1: The percentage of European and US consumers who trust a company or organization to do what is right, 2005

Table 2: Percentage of Europeans who 'do not trust' the press, radio, television, political parties, big companies and religious institutions, 2003

Table 3: The level of trust consumers have in various claims made by packaged goods manufacturers, by country, 2004

Table 4: Consumer survey: "What is your opinion of manufacturers' claims regarding their cosmeceutical products in the following product markets?"

Table 5: Naturals % share of overall personal care market, 1999-2009

Table 6: European and US ethical personal care market value, 2004-2009

Table 7: European and US consumer and industry opinion concerning the influence of various factors on (re)gaining consumer trust

Table 8: Definitions used in this report

List of Figures

Figure 1: There are 4 reasons why trust and ethos based branding are of increasing importance

Figure 2: Building trust will help to develop personal connections with consumers leading to long-term relationships

Figure 3: The majority of European and US consumers are indifferent in their perceived trustworthiness regarding the general business practices of packaged goods companies

Figure 4: Many European and US consumers do not trust nutritional and health boosting claims made by food and drink players and claims made by personal care manufacturers

Figure 5: Three-quarters of consumers have misgivings about the benefits of cosmeceuticals

Figure 6: There are 4 core determinants of consumer trust in food safety

Figure 7: Both industry and consumer opinion illustrates that product recall incidents have broader implications beyond the specific brand/manufacturer affected

Figure 8: Consumers often pursue the following strategies to reduce risk

Figure 9: Consumers perceive that the recommendations of others are important and are more likely to rely on such communication when choosing products and services

Figure 10: Consumers' quality perceptions can be grouped under four main factors, each of which has an influence on trust

Figure 11: Health advice from doctors and professional bodies is the most trusted source of health information

Figure 12: Trust is a factor that particularly influences older consumers, new parents and females generally

Figure 13: Consumers aged 50-64 are the most untrusting of product claims made by food, drink and personal care players

Figure 14: More than half of US and European consumers believe that it is important to purchase ethical or socially responsible products

Figure 15: Both consumer and industry opinion perceive that prior experience and endorsement from professional bodies are the most influential factors in (re)gaining consumer trust

Figure 16: Two phases characterize successful viral and word of mouth campaigns

Figure 17: The following actions will help to create perceptions of quality thereby increasing trust and confidence in the product

Figure 18: Providing opportunities for 'collaborative' customization may be a useful way for consumers to feel more closely connected to brands and hence drive trust

Figure 19: Many re-assurance steps can be made via simple on-pack communications

Figure 20: There are a number of examples of manufacturers improving the traceability information of their products

Abstract

• Insightful consumer and industry survey data conveying the key trust-orientated issues for consumers
• Detailed analysis of consumer attitudes regarding key trust issues across the packaged goods sectors and the influence of these of buying behavior
• Exhaustive review of NPD and marketing campaigns utilizing best-practice principles of trust building branding
• Detailed Action Points pinpointing how to devise effective marketing concepts that will help to (re)build trust

• Win new customers through radically more effective marketing that is based on building trust, and reducing perceived risk
• Overcome the growing threat of discounters and private label by leveraging key characteristics of established brands
• Obtain a comprehensive understanding of the key trust issues impacting your business in the next 5 years

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