Quality Promise Program: Empowering Consumers As Your Quality-Control Agents

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Presented at Private Brand Movement 2010. A quality monitoring program that utilizes your retail customer base - product users - as QA agents. An effective way to monitor quality and publicize your corporate commitment to quality.

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  • Quality Promise Program: Empowering Consumers As Your Quality-Control Agents

    1. 1. Decision Analyst Quality Promise Program September 28, 2010 Empowering Consumers As Your Quality-Control Agents
    2. 2. Page 2Copyright© 2010 Decision Analyst In Pursuit Of The Prize Private brands represent great strategic opportunity for retailers: Build sales revenue Boost profit margins Strengthen consumer franchise and build customer loyalty Differentiate from competitive retailers Insulate from competitive attack Compete with major advertised brands worldwide (ultimately)
    3. 3. Page 3Copyright© 2010 Decision Analyst Private Brand Growth Growth of private label products has been explosive over the past several years, even prior to the recession.  Store brands accounted for nearly 1 in 4 products sold in U.S. supermarkets last year.*  “Over the past five years, annual private label sales have increased by 34% to $55.5 billion in supermarkets.” * * Source: PLMA website (data from The Nielsen Company) Our data shows – and agrees with other sources – that consumers are now much more accepting of private brands. Many have “traded down” in recent times and discovered very satisfying products. Some are likely to return to national brands in more prosperous times, but they may be the minority.
    4. 4. Page 4Copyright© 2010 Decision Analyst Trends And Attitudes Over the past three years, the U.S. economy and consumer confidence have really suffered. Base = Approximately 2,800 interviews per month; U.S. adults Source: Decision Analyst’s Economic Index Decision Analyst U.S. Economic Index January 2006 to July 2010 80 85 90 95 100 105 110 115 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10
    5. 5. Page 5Copyright© 2010 Decision Analyst Trends And Attitudes Interest in saving money, at the expense of national brands, has been trending up significantly over the past four years. Base = 15,209 American consumers who shop for groceries Top-2 Box -- Agree completely/somewhat with statements about grocery shopping Source: Health And Nutrition Strategist™ 20% 25% 30% 35% 40% 45% Q1'06 Q2'06 Q3'06 Q4'06 Q1'07 Q2'07 Q3'07 Q4'07 Q1'08 Q2'08 Q3'08 Q4'08 Q1'09 Q2'09 Q3'09 Q4'09 Q1'10 Q2'10 I usually buy the least expensive brand whether it is a brand name or not I’m willing to pay more for nationally advertised brands I almost always buy well-known brand name products Looking for least expensive brand, regardless of name.
    6. 6. Page 6Copyright© 2010 Decision Analyst Trends And Attitudes Confidence in “store brands” has grown during the same time frame. Base = 15,209 American consumers who shop for groceries Top-2 Box -- Agree completely/somewhat with statements about grocery shopping Source: Health And Nutrition Strategist™ 35% 40% 45% 50% 55% 60% 65% 70% Q1'06 Q2'06 Q3'06 Q4'06 Q1'07 Q2'07 Q3'07 Q4'07 Q1'08 Q2'08 Q3'08 Q4'08 Q1'09 Q2'09 Q3'09 Q4'09 Q1'10 Q2'10 Store brands are just as good as national food brands most of the time Brand names don’t matter to me Store brands are just as good as national food brands.
    7. 7. Page 7Copyright© 2010 Decision Analyst Keys To Private Brand Success Q Focus on product quality Reach the right customers Deliver consistently
    8. 8. Page 8Copyright© 2010 Decision Analyst The Big Picture In order to win big, private brands must move from legacy of low-price, “generic” status… …to high-quality, formidable competitors of national brands. Low-Quality Perception Low-Price Positioning Q
    9. 9. Page 9Copyright© 2010 Decision Analyst The Big Picture Generic Preferred Brand Q
    10. 10. Page 10Copyright© 2010 Decision Analyst Are All Shoppers Created Equal? Of course not. In regard to grocery shopping, we’ve identified five shopper types, or market segments. Budget Buyers Brand Loyalists Full-Price Shoppers Power Shoppers Store Brand Fans Source: Health And Nutrition Strategist™ 14% 20% 20% 29% 17% Q
    11. 11. Page 11Copyright© 2010 Decision Analyst Segment Overviews Budget Buyers • Hate grocery shopping • Get in/out quickly • Lowest price shopper • Store brands: - Equal to national - Good value for money • National brands: - Never buy them - Not willing to pay for • Responsible for: - Little food shopping - Little food preparation • Older men • Low income Brand Loyalists • Enjoy grocery shopping • Enjoy browsing aisles • Enjoy seeing new prod. • Organic & natural • National brands: - Always buy them - Willing to pay more for • Responsible for: - Food decisions - Food shopping - Most food preparation • Trusted advisor • Middle-aged women • Children join shopping • Average income Source: Health And Nutrition Strategist™ Full-Price Shoppers • Brand names matter • Not coupon users • Not seeking specials • Do some or little: - Food shopping - Food preparation • Younger men • Often single • Well educated • Higher income Q
    12. 12. Page 12Copyright© 2010 Decision Analyst Segment Overviews (Continued) Power Shoppers • Detailed shopping list • Seek out specials • Bargain hunters • Active coupon users • Responsible for: - Food decisions - Food shopping - Food preparation • Often married • Spouse joins shopping • Lower income Store Brand Fans • Enjoy browsing aisles • Enjoy seeing new prod. • Lowest price shopper • Store brands: - Equal to national - Good value for money • National brands: - Never buy them - Not willing to pay for • Responsible for: - Food shopping - Most food preparation • Often married • Younger women • Children join shopping • Lower income & edu. Source: Health And Nutrition Strategist™ Q
    13. 13. Page 13Copyright© 2010 Decision Analyst Private Brand Quality The PLMA discusses private brands on its website, saying: So how can retailers ensure their quality standards are met?  With the proper tools and systems in place, retailers can monitor and dramatically improve the quality of their private brands.  And, it can be done in a highly visible way to make a statement about commitment to quality. “Store brands are made of the same or comparable ingredients as the national brands and because the store's name or symbol is on the package, the consumer is assured that the product is manufactured to the store's quality standards and specifications.” Q
    14. 14. Page 14Copyright© 2010 Decision Analyst A “Quality Promise” Program Focus on private brands is important, given strategic potential Develop a program to rigorously test products on a regular schedule  Determine if each product is optimal or not  Provide diagnostic feedback  Guide product improvement Customer feedback = Primary mechanism for monitoring quality Key is volunteer network of your shoppers Q
    15. 15. Page 15Copyright© 2010 Decision Analyst Create A Dedicated Community Large online community or panel of regular customers Volunteers agree to test products in their homes  Drawings for free groceries to encourage participation Design the program so volunteers:  Buy the products on their regular visits  Use during a specified window of time  Provide ratings online If hundreds of products involved, control roll-out across products  Start with those lagging in sales (greatest impact on revenue)  Low-performing products trigger additional testing Q
    16. 16. Page 16Copyright© 2010 Decision Analyst Fully Integrated System Ideal to centralize management of all tasks  Dedicated panel website  Large database to compile and manage panelist registration information  Master product-testing questionnaire  Survey/Product test execution and management  Standardized and centralized reporting/online library  Normative database of test results by product category Q
    17. 17. Page 17Copyright© 2010 Decision Analyst Recruitment Retailer conducts recruitment efforts:  Search engine optimization  “Quality Promise” labeling on products  Recruitment button on website  In-store promotions  Point-of-sale (POS) invitation  Employee advocates  Social networking sites  Traditional media advertising Thank you for purchasing XYZ products. Please join our volunteer panel. www.XXXQualityPromise.com Q Number of members depends on number of products and size of customer base
    18. 18. Page 18Copyright© 2010 Decision Analyst Panel Registration Registration screener should capture some shopping and purchase behavior, as well as household demographics This allows you to:  Identify incidence for key product categories  Eliminate the need to repeatedly ask demographic questions This massive database of customer data can also be utilized for marketing planning purposes.  Profile category shoppers geographically, demographically  Profile product rejectors  Analyze cross-usage patterns for cross-promotional opportunities Q
    19. 19. Page 19Copyright© 2010 Decision Analyst Survey Logistics Master survey to cover all product categories  Some tailoring for each product For each test:  Identify panelists based on registration data  Prepare product-specific screener  Set up questionnaire (customized attribute ratings)  Use digital images to ensure correct product match  Customize/Send email invitations  Remind nonresponders during testing period Want to capture ~ 150 to 200 evaluations per product test Q
    20. 20. Page 20Copyright© 2010 Decision Analyst Results Look for key metrics dashboard Utilize diagnostic ratings…  To understand consumer preferences  To improve underperforming products  To optimize all products Q Too Sweet Not Sweet Enough Too Dark Too Light Too Soft Too Firm Too Much Salt Not Enough Salt Too Crunchy Not Crunchy Enough
    21. 21. Page 21Copyright© 2010 Decision Analyst Ultimate Benefits Improved quality of private brand products Quality accountability system Increased market share as improved quality drives repeat purchase Enhanced retailer brand image as product quality improves and visibility of the Quality Promise program grows Added pricing leverage  Hold prices constant, or perhaps increase them, as product quality and/or quality perceptions improve Formation of a massive database of your private-label product consumers  This Marketing Planning Database could be used to help profile your brand or product users by key demographics, media habits, psychographics, etc.
    22. 22. Page 22Copyright© 2010 Decision Analyst Ultimate Benefits The prize is in hand
    23. 23. Page 23Copyright© 2010 Decision Analyst Keys To Private Brand Success Q Focus on product quality Reach the right customers Deliver consistently
    24. 24. Page 24Copyright© 2010 Decision Analyst Decision Analyst Contact Information Felicia L. Rogers Executive Vice President frogers@decisionanalyst.com Diane Brewton Senior Vice President Market Intelligence Group dbrewto@decisionanalyst.com 604 Avenue H East Arlington, TX 76011 817-640-6166 www.decisionanalyst.com

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