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

Date: November 22, 2009
Pages: 117
US$ 2,875.00
Publisher: Business Insights
Report type: Strategic Report
Delivery: E-mail Delivery (PDF)
ID: D55328AAD35EN

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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
Driving brand loyalty in food and drinks
Executive summary
Renewing the focus on brand loyalty
Building brand loyalty
Case studies
Industry survey


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


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”
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”


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


Introduction and methodology
Key findings
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


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


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


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
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