Reportlinker Adds Driving Brand Loyalty in Food and Drinks: Strategies to Improve Customer Retention Through Consumer Engagement

Jan 19, 2010, 08:17 ET from Reportlinker

NEW YORK, Jan. 19 /PRNewswire/ -- announces that a new market research report is available in its catalogue:

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

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

1. Brand loyalty has been severely challenged by the recession.

2. 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.

3. 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.

4. 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

Table of Contents

Driving brand loyalty in food and drinks

Executive summary 12

Renewing the focus on brand loyalty 12

Building brand loyalty 13

Case studies 14

Industry survey 15

Conclusions 16

Chapter 1 Renewing the focus on brand loyalty 20

Summary 20

Restating the benefits of brand loyalty 21

Brand loyalty is the crucial factor in today's tough market 21

Existing customers cost less and are less price sensitive than new customers 21

Loyalty can also create space to respond to competitive activity 22

Loyalty also helps secure shelf space and counter retailer power 22

Should brand loyalty's definition be updated? 23

Defining brand loyalty 23

Consumers are decreasingly likely to stick with the same brand 23

Updating the view of "brand loyalty" 25

How then should the view of "brand loyalty" be updated? 25

Moving from purchase frequency to "brand engagement" 26

The key is creating a meaningful post-purchase involvement with the "brand" 26

A lack of post-purchase engagement with consumers characterizes CPGs 26

Taking inspiration from mobile telephony: the iPhone and consumer engagement 28

A new model for developing brand loyalty 30

Post-purchase engagement is a critical area to address 30

But other areas are still vital 33

Post-purchase engagement should be seen as additional to other activity 33

Benefits and challenges of a new approach 34

Loyalty and its measurement needs reviewing 34

The view of loyalty needs changing, and metrics therefore need reinterpreting 34

Purchase frequency and other customer experience metrics are still relevant 35

Consumers as brand advocates (and detractors) 35

Examples of online brand advocacy (and detraction) for consumer packaged goods 38

Online post-purchase engagement means more transparency 40

Social networking sites provide challenges and opportunities 41

Further trends affecting loyalty 42

Private label as a competing brand 42

Private Label's growth means a focus on brand differentiation 43

Heritage and trustworthiness are increasingly attractive 44

Chapter 2 Building brand loyalty 48

Summary 48

Introduction 49

Strategies and tactics across several areas require updating 49

Aligning with the key drivers of loyalty 50

Achieving emotional connections with consumers 50

High emotional status products tend to have higher loyalty 51

Securing product trial 52

Accounting for modern retailing practices 55

The threat from deep discounts, and deep discounters 55

Avoiding the "squeezed" middle ground 56

Brands in the middle ground need to differentiate, quickly 57

Aligning with consumer trends 57

Offering "simplicity" to consumers is powerful 57

Simplicity of message helps to save consumers time 57

A good example of this is the "traffic light" food labeling system in the UK 58

Offering simplicity and value for money is even better 58

The importance of offering "basics" should not be overlooked either 60

Offering variety is powerful, if done in the right way 60

"Disruptive" approaches help add variety and create opportunities 60

Once the mission has been achieved, there is a "window of opportunity" 61

The key is not to take up too much time 62

Offering nostalgia 62

Accounting for changing mealtimes (for food and drinks) 63

The importance of a budgeted meal is increasing 63

A need for new-style convenient meal solutions 64

Facilitating "on-the-go" consumption 66

Updating marketing strategies and tactics 67

Ensuring sufficient investment in brand marketing 67

For big brands maintaining or increasing budgets is key 67

For smaller brands, innovative marketing is vital 67

Ensuring sufficient investment in new product development 68

Even consumers heavily affected by the recession will be receptive to new products 68

New technical innovations should avoid making food seem "overprocessed" 68

Seek out breakthrough innovations 69

Avoiding playing it "too safe" 71

Seek to make the most of first-mover advantage and develop emerging areas 71

New marketing approaches 71

Mobile technology opens up new opportunities at the point-of-sale 72

Ambush marketing 73

Online advertising is undoubtedly a long term growth area 73

Privacy issues must be handled appropriately however 74

Mini sites and social networking sites 74

Buzz marketing – using key opinion leaders to create online "buzz" 75

Chapter 3 Case studies 78

Summary 78

Introduction 79

Case Study – Kellogg's Special K 79

Company overview 79

Goals and strategy for Special K 80

Through brand extensions Special K has become a "solution" provider to dieters 80

Consumer engagement strategy 82

The Special K challenge has taken the brand beyond being a "just" a food 82

Overall the site provides strong engagement with interested consumers 84

Television advertising 86

Takeouts from Kellogg's Special K approach 86

Case study – Whole Foods Market 87

Company Overview 87

Goals and strategy for Whole Foods Market 88

Consumer engagement strategy 88

Regular updates are a tool for helping achieving lasting marketplace change 89

Blogs and social media are cornerstones of online activity 89

Developing a community drives repeat site visits 91

Takeouts from the Whole Foods Market approach 91

Chapter 4 Industry survey 94

Summary 94

Introduction and methodology 95

Key findings 95

Overview 95

The industry feels that levels of loyalty are set to fall in the future 95

However, the average figures hide major divisions among respondents 96

Effects of the recession on brand loyalty 97

Marketers believe that premium brand loyalty is less affected by the downturn 97

Demographics of Loyalty 98

Pre- and post-children families are seen as being more loyal 98

Loyalty rates vary greatly with different income groups 99

Younger consumers are more loyal, but this comes under pressure as people age 99

Methods of driving brand loyalty 100

Product quality and word-of-mouth are still the most effective, but engagement is close behind 100

Marketers appear under-estimate the growing importance of new technologies 100

Levels of customer loyalty by product category 101

Alcoholic drinks, soft drinks and confectionery have the highest loyalty ratings 101

Loyalty and Private Labels 103

Loyalty to private labels is expected to increase 103

The importance of brand attributes 104

Heritage is seen as the most important attribute, and low price the least important 104

Marketers' attitudes towards brand loyalty 105

Innovation and attracting new customers are seen as important in driving loyalty 105

Companies perceived as excelling in developing loyalty 106

Survey summary 106

Chapter 5 Conclusions 110

Summary 110

The future of brand loyalty 111

Heritage will continue to be important 111

Maintaining marketing expenditure is key for global brands 111

Rising private label quality means that private label will continue to grow 112

Key strategic recommendations 112

Align internal values to consumer needs 112

Meet or exceed consumer expectations 112

Understand and target consumer need states 113

Engage the consumer, online and post-purchase 114

Loyalty in a traditional sense may still fall, but the effort should still be put in 114

List of Figures

Figure 1.1: Coke Zone website 28

Figure 1.2: A model for developing brand loyalty and where online communication can be most effective 33

Figure 1.3: Wispa Facebook campaign 37

Figure 1.4: Mumsnet website 38

Figure 1.5: Zeer website 39

Figure 1.6: Zeer website 39

Figure 1.7: Heateatreview website 40

Figure 1.10: Kellogg's packaging and logos over time 44

Figure 2.11: Loyalty and peer recommendation 53

Figure 2.12: The "essential Waitrose" range 59

Figure 2.13: Simplicity of message 59

Figure 2.14: Shopping Mission 61

Figure 2.15: Stella Advertising 63

Figure 2.16: Sainsbury's fiver promotion 64

Figure 2.17: El Paso family meal solutions 65

Figure 2.18: Bird's Eye Packaging 66

Figure 2.19: Hovis product innovation 68

Figure 2.20: Vio Carbonated Milk 70

Figure 2.21: Coors Beer 70

Figure 2.22: Pringles "These are not Tennis Balls" 73

Figure 3.23: Original Corn Flakes Packaging 80

Figure 3.24: The Special K range in the US 81

Figure 3.25: Special K ingredients 82

Figure 3.26: Special K Challenge meal plan 83

Figure 3.27: Special K personalized plan 83

Figure 3.28: Special K forum 85

Figure 3.29: Whole Foods Market blog 90

Figure 3.30: Whole Foods Market Twitter page 90

Figure 3.31: Whole Foods Market iPhone application 91

Figure 4.32: Level of consumer loyalty towards mainstream food and drink brands now and in the next 5 years 96

Figure 4.33: Effect of current economic climate on brand loyalty 98

Figure 4.34: Brand loyalty by demographic 99

Figure 4.35: The spectrum of consumer engagement tactics by their perceived effectiveness in developing brand loyalty 101

Figure 4.36: Brand loyalty by product category 102

Figure 4.37: Brand loyalty by brand type over next 5 years 103

Figure 4.38: Brand attribute importance 104

Figure 4.39: Attitudes towards brand loyalty 105

List of Tables

Table 1.1: Consumer switching to store brands 43

Table 2.3: Emotional status of various product categories 51

Table 4.4: Brands that excel at retaining brand loyalty 106

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

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