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

Published by: Business Insights

Published: Nov. 25, 2009 - 117 Pages

Table of Contents

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

Abstract

• 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

• 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

• 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

• 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.

• 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

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