Transcript of "TNS Research: commitment economy - cant always get what you want"
The Commitment EconomyYou can’t always get what you want Share this In Focus
You can’t always get what you wantWe have long known that “I want” doesn’talways translate into “I get” – or even “I buy”.Theories of choice based on a combination ofpsychological preferences and situational factorsmost likely pre-date the ancient philosophers.In modern times this combination plays outin the difference between attitudinal andbehavioural loyalty. Share this In Focus 2
You can’t always get what you want “Attitudinally loyal people will buy the brand to which The Commitment Economy explores brand andthey’re loyal if they can, resulting in behavioural loyalty. category dynamics in different categories acrossYet there is many a potential barrier between attitude Ben Blake 17and behaviour. Sometimes situational market factors Marketing Controller, Nestlé Cereal Partners UKwill nudge people towards an alternative. On otheroccasions these factors act more like a roadblock, “When it comes to brand tracking,flat-out preventing people from buying the brand theywant. And sometimes, when people have no strong one of the real frustrations is markets based on conversations with overfirst choice to begin with, market factors themselves mismatches between what you 39,000get to tip the scales in favour of one brand ratherthan another. hear in brand tracking and then what is actually happening inUnderstanding how these dynamics play out in real-world decision-making is essential for research to market with sales.” peopledeliver meaningful analysis about a brand’s status,to identify opportunities and threats and explore the At TNS we have developed ConversionModel to reflect factors that actually shape decisions. We then appliedlikely impact on consumer behaviour. Traditional brand the combined role of situational factors (power in the the new ConversionModel to exploring decision-makingresearch falls short because it does not reproduce the market) and subjective brand preferences (power in in a global study, The Commitment Economy, coveringcontext that shapes behaviour. Although it can provide the mind) in real-world human decision-making. We 17 markets worldwide. Through 39,000 interviews, weroughly accurate predictions at an aggregate level, it is have refined the approach through a commitment to were able to quantify precisely the material impact thatineffective at predicting what an individual will do – and respondent-level validity (predicting what individual situational factors have on consumer choices – and thewhy. Its contribution to meaningful brand planning is people will actually do) that involves asking a smaller opportunity that exists for brands that can pull theselimited as a result. number of questions that are far more focused on the marketing levers effectively. Share this In Focus 3
You can’t always get what you wantUnderstanding brand attachment – Coca-Cola (Coke) and Pepsi. The brain activity showed The limits of subjective urgesor power in the mind people enjoying Coke significantly more when drinking Subjective preferences may be strongly embedded butA fuller understanding of how subjective brand from a labelled cup than when drinking the same they must operate in the context of far more tangiblepreferences play out in the real world must begin with product anonymously. The study concluded that while influences on purchase decisions. This is where poweran understanding of how these preferences form in the “Coca-Cola and Pepsi are nearly identical in chemical in the market takes a greater role, deciding the extentfirst place. composition... humans routinely display strong to which consumers act on their preferences – and subjective preferences for one or the other”. therefore the share that brands achieve.Products become brands with appeal when they createaffective memories in what’s called the hippocampus. Power in the mind Power in the marketAn affective memory is more than simple emotion;it involves the formation of neural tracks within thebrain that then bias choices in what’s known as thedorsolateral prefrontal cortex. These neural tracks formwhen brands become connected to the things thatpeople care about. To properly understand the strengthof a brand’s subjective appeal, research must movebeyond asking people what they think of that brandand its messaging – and investigate whether suchaffective memories are actually being created.Neurological research shows how deeply embeddedbrand responses can become. In a 2004 study1, McLure Building desire and demand for a brand Creating an enviroment that helps customersand others used fMRI2 imaging to study brain activity to choose your brandwhilst consumers took part in a blind taste test between Share this In Focus 4
You can’t always get what you wantThe desire disconnect The situation varies by category. It’s no surprise that However, The Commitment Economy proves that theOne of the most startling revelations to emerge from the disconnect is particularly high in the automotive disconnect between desire and behaviour also exists inThe Commitment Economy study was the extent of sector, where aspirational disappointment is a familiar lower ticket, lower risk categories that consumers buythe mismatch between people’s preferences and their experience for most. While our preference might be for on a very regular basis. Hair care and laundry detergent,actions – what they want to do and what they actually premium models and higher specification vehicles, we rank joint second in the desire disconnect stakes,do. In fact, in 42 percent of cases, people do not buy regularly defer these aspirations due to the practicalities with 43 percent of decisions not reflectingtheir preferred brand of price, size and so on. brand preference. The mismatch between desire and behaviour varies across categories % occasions 42% of cases people do not buy their preferred brandFrom a brand perspective, it’s critical that we understandwhy consumers don’t act on their desires and what thismeans for brands. It’s important to bear in mind thatbrands can both benefit and be hurt by the disconnectbetween desire and fulfilment: they could createdemand but lose out to competitors at the final hurdle– or they could be successfully nudging people towards Auto Laundry Hair care Retail Alcoholic Headache Payment Instant coffee detergents (grocery stores) beverages remedies methodsbuying them despite not being the preferred choice. Share this In Focus 5
You can’t always get what you wantThe desire disconnect varies by country, with the 13biggest gap in India where 50 percent of decisions ortransactions do not align with preferences. But this isn’tjust an emerging market phenomenon: the US and UK The desire disconnect varies by country 50 % occasionsalso score above average when it comes to shopperscompromising on brand choice. 45 45 44 44 43 43 42 South Africa Germany Russia China Spain India USA UK Share this In Focus 6
You can’t always get what you wantPower in the market’s three universal levers availability and shared decision-making. Affordability Worldwide, 15 percent of all purchase decisions involveSome categories have specific issues that force and availability are self-explanatory. Shared decision- a compromise on the basis of affordability; availabilitycompromise on consumers, and account for a making refers to the occasions when the person using influences choice on 6.5 percent of occasions;significant portion of the overall desire disconnect. the brand or making the purchase may not have sole and shared decision-making affects 4.3 percent ofAnd in many cases, brands’ ability to affect these issues responsibility for the decision. They might be buying a purchases. These numbers may appear small, but inis itself constrained. With mobile phone networks and family brand to suit a number of different users or they the context of brands’ intensifying battle over share,cable broadband providers, coverage or lack of it is a may be setting aside personal preference to put others’ a small incremental gain can have a significant effecthugely significant market factor. Choices of airline are needs ahead of their own. on the bottom line.dictated to a large degree by routes and schedules. 15%In other cases, brands invest in creating situationsof exclusivity that ensure no choice takes place: Three universal levers6.5% 4.3%McDonald’s serving only Coca-Cola, for example,or United Airlines serving Starbucks coffee.In general though, there are three universal marketbarriers that consistently influence decisions acrossmarkets, and which brands have the power toadjust. These three market “levers” are affordability, Affordability 15% Availability 6.5% 4.3% Shared decision making Affordability Availability Shared decision-making Share this In Focus 7
You can’t always get what you wantAffordability Marketing levers: the impact of affordabilityUnsurprisingly, affordability is the primary constraint for % occasionscar buyers, accounting for a third of all spend in theauto category going to brands other than a consumer’s 33preferred choice. But affordability impacts categorieslike shampoo and laundry detergent too, affectingjust under a quarter of purchase decisions in the USand UK laundry detergent markets, for example. TheUS brand leader Tide could gain 5.9 percent in share(USD$365.8m) if the brand were more affordable. 17 16 13 12 11 9 8 $365.8m Tide has the potential to gain 5.9% share Auto Laundry Hair care Alcoholic Instant coffee Retail Payment Headache detergents beverages (grocery stores) methods remedies Share this In Focus 8
You can’t always get what you wantOf course, price may be an easy variable of the in revenue by increasing the perception of affordability,marketing mix to manipulate in theory, but price but it would constitute a risk to the brand to do this Nurofen has the potential to gainand price setting are complex issues in practice. Price by cutting prices.promotions and couponing can deliver short-term sales 2.4%lifts, but they are not enough to prevent consumers An alternative framing strategy that puts the price perreturning to pre-promotion buying behaviour, once tablet in the context of the price of a headache andaffordability constraints return. And it’s important to its potential impact on personal performance couldremember that a brand’s price also impacts on power help to create a sense of urgency and at the same timein the mind, priming expectations of its quality and heighten doubts about the efficacy of rivals. share, which could generatepotentially altering consumers’ experiences of it. Outside of FMCG categories, brands are able to employ 23.1mThe position of Nurofen in the UK’s headache remedy a range of strategies to make a product’s cost lesscategory shows how shifting perceptions of price painful. These include things like delaying paymentscan be more appropriate – and more effective – than – a well-established tactic for high-ticket items, but ashifting price itself. Nurofen is relatively stronger than strategy that works brilliantly with human psychologyparacetamol on key performance attributes such as and loss aversion. Even a small delay in payment softens in revenue by increasing perception of affordability“fast-acting”, and “long-lasting”. Communications the immediate sting of parting with your cash, therebyfocused on speed have played a role in reinforcing these removing a barrier to purchase.perceptions of functional superiority, as has Nurofen’sposition as a premium brand with a price that primesexpectations of a more effective remedy. Nurofencould unlock 2.4 percent growth and $23.1 million Share this In Focus 9
You can’t always get what you wantAvailability Marketing levers: the impact of availabilityAlthough availability affects fewer purchase decisions % occasionsthan affordability overall, it can still have a significantimpact, in particular for retailers. The location of stores 9has an obvious impact on shoppers’ behaviour and 8there are different strategies available to address this. 7 7 6 6In Brazil, the global retailer, Carrefour, uses Carrefour 5Express shops, smaller outlets closer to the consumerthat seek to give it a foothold amid neighbourhood 4stores. Carrefour is also experimenting with creativesolutions such as reimbursing shoppers for bus or taxifares to persuade people to make longer trips totheir stores.In Indonesia, where Nescafé competes with theestablished brands Kapal Api, Torabika and ABC in theinstant coffee market, the brand could take combined Retail Auto Hair care Laundry Instant coffee Payment Alcoholic Headache (grocery stores) detergents methods beverages remediesmarket share of 3.3 percent from its three rivals byaddressing issues of affordability, availability and theright product mix. Of this potential gain, 2 percent As with pricing, availability can be a complex issue – and shelf position and visibility of the pack on shelf. Effectivecomes through addressing issues of availability alone: there are many factors beyond simple distribution that solutions often require pinpointing the precise stagemaking available the types of coffee that consumers can affect shopper behaviour in-store, including the of the path to purchase where availability becomesprefer and making Nescafé’s existing products easier location of the product and category within the store, an issue.to find where people shop. Share this In Focus 10
You can’t always get what you wantShared decision-making Marketing levers: the impact of shared decision-making % occasionsThe final (and often the least-understood) universallever is shared decision-making, by which consumersbalance others’ needs and preferences againsttheir own. 9 4 4 4 3 3 3 Auto Hair care Laundry Alcoholic Headache Retail Instant coffee detergents beverages remedies (grocery stores) Share this In Focus 11
You can’t always get what you wantThis pattern is most prevalent in emerging markets, However, shared decision-making is not simply Family brands regularly use the lever of sharedwhere it is partly a function of limited disposable affordability in another form: there are deeper decision-making to override individual aspiration.income for families – and the inability to purchase underlying issues, which require a profound In the context of developed markets, these brandsdifferent products for different people. understanding of the cultural factors and perceptions are often perceived as cheap and heavily promoted that drive behaviour. alternatives in categories where people value propositions targeted at the individual. Conventional Shared decision-making is more prevalent in emerging markets % occasions brand research in these markets tells us that, in personal care, a family brand undermines a woman’s sexual identity; in home care, it undermines her ego. Nigeria 9 Yet family brands still play a dominant role in these developed markets, and are growing and thriving in emerging economies, particularly in Asia. Russia 8 In fact, in family brands, we see an intriguing interplay between power in the mind and power in the market. Indonesia 8 On the one hand, it is practical to meet everyone’s needs through one brand. On the other, being a careful mother and wife is itself an aspiration – and shared India 8 decision-making can tap into the genuine satisfaction that people achieve by performing this role. In India, China Santoor has succeeded in combining femininity and 6 family seamlessly and credibly in this way – and shows how a deeper understanding is essential for addressing the needs of shared brand users. Share this In Focus 12
You can’t always get what you wantDeveloping an informed framework for growth This is an essential foundation for brand research if itLeveraging the holistic approach of the new is to offer precise strategies to unlock growth. And theConversionModel has enabled The Commitment 42 percent of purchase decisions that currently involveEconomy study to quantify the disconnect between a brand compromise represent considerable growthconsumer desire and consumer action like never before. potential. ReferencesBy taking into account the context in which peoplemake decisions, the other brands available to themand the non-psychological factors that influence theirchoices, we are able to explain and predict consumerbehaviour with far greater accuracy. 1. McClure, S.M., J. Li, D. Tomlin, K.S. Cypert, L.M. Montague, R. Montague (2004), “Neural Correlates of Behavioural Preference for Culturally Familiar Drinks,” Neuron, 44. 2. Functional magnetic resonance imaging, or functional MRI (fMRI), uses MRI in order to measure brain activity through the detection of associated changes in blood flow (primarily done using blood- oxygen-level-dependent (BOLD) contrast). The technique allows for neural activity to be mapped in the brain or spinal cord of humans or animals by imaging the change in blood flow (haemodynamic response) related to energy use by brain cells. Share this In Focus 13
About The Commitment EconomyThe Commitment Economy is a global study conducted by TNS using ConversionModel to explore brand andcategory dynamics in different categories across 17 markets, based on conversations with over 39,000 people.It provides deep insights into emotional engagement, brand commitment and the real drivers of brand choice,identifying where the biggest growth opportunities lie for brands and how to exploit them. About the authorAbout In Focus Rosie Hawkins is Global Head of Brand & CommunicationIn Focus is part of a regular series of articles that takes an in-depth look at a particular subject, region or at TNS, based in London.demographic in more detail. All articles are written by TNS consultants and based on their expertise gathered Throughout her twenty year career Rosie has specialisedthrough working on client assignments in over 80 markets globally, with additional insights gained through in brand and communication research in both clientTNS proprietary studies such as Digital Life, Mobile Life and The Commitment Economy. and agency roles. Rosie joined TNS in Australia in 2000 to lead the Brand & Communication research division.About TNS After a regional role covering Asia Pacific, Latin AmericaTNS advises clients on specific growth strategies around new market entry, innovation, brand switching and and the Middle East, Rosie was appointed as TNS’s Global Head of Brand & Communication in 2008.stakeholder management, based on long-established expertise and market-leading solutions. With a presencein over 80 countries, TNS has more conversations with the world’s consumers than anyone else and understands Rosie is responsible for driving and developing Brand & Communication expertise, new thinking and bestindividual human behaviours and attitudes across every cultural, economic and political region of the world. practice across the TNS network and advising clientsTNS is part of Kantar, one of the world’s largest insight, information and consultancy groups. how to manage and grow their brands.Please visit www.tnsglobal.com for more information.Get in touchIf you would like to talk to us about anything you have read in this report, please get in touchvia firstname.lastname@example.org or via Twitter @tns_global Share this In Focus 14
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