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

Decision Analyst
Quality Promise
Program
September 28, 2010
Empowering Consumers As
Your Quality-Control Agents

Copyright© 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)

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.

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

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.

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
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.

Keys To Private Brand Success
Q
Focus on
product quality
Reach the
right
customers
Deliver
consistently

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

The Big Picture
Generic Preferred Brand
Q

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
14%
20%
20%
29%
17%
Q

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
- Always buy them
- Willing to pay more for
- Food decisions
- Food shopping
- Most food preparation
• Trusted advisor
• Middle-aged women
• Children join shopping
• Average income
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

Segment Overviews (Continued)
Power Shoppers
• Detailed shopping list
• Seek out specials
• Bargain hunters
• Active coupon users
- 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
- Never buy them
- Not willing to pay for
- Food shopping
- Most food preparation
• Often married
• Younger women
• Children join shopping
• Lower income & edu.
Source: Health And Nutrition Strategist™ Q

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

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

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

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

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

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

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

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

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.

Ultimate Benefits
The prize is in hand

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

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

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