Report shows switch to private label salad, sugar

by Jeff Gelski
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CHICAGO — More consumers became loyal to private label refrigerated salad/coleslaw, sugar and pastry/donuts from 2008 to 2011, according to a Times & Trends Report released Sept. 8 by Chicago-based SymphonyIRI Group. The number of consumers becoming brand loyal, and not private label loyal, increased in the categories of sports drinks, shelf-stable dinners and dry packaged dinners.

Brand loyalty increased across 45 of the top 100 consumer product categories, according to the report called “Brand Loyalty: How Understanding Brand Equity Impacts Brand Loyalty and Delivers to the Top and Bottom Line.” SymphonyIRI defined brand loyal as consumers purchasing a single brand, not including private label, more than 50% of the time in a specific category.

Refrigerated salad/coleslaw saw the biggest percentage shift to private label among all 100 consumer product categories from 2008 to 2011. Nearly 27% of consumers were private label loyal buyers of refrigerated salad/coleslaw in 2011, which marked a 19-percentage point increase from 2008. For sugar, 64% were private label loyal in 2011, a 7.4-point increase from 2008. For pastry/donuts, nearly 25% were private label loyal in 2011, a 7-point increase from 2008.

Private label gains also came in the food and beverage categories of Mexican foods, 11% after a 2.5-point increase; R.-T.-D. tea/coffee, 5.2% after a 3.8-point increase; and butter, 68% after a 5.2-point increase.

Consumers are less sensitive to price changes as brand loyalty increases, according to the report.

“In sugar and butter, where loyalty is fairly low, substantial price hikes have led to sharp drops in loyalty during the past three years,” the report said.

Turning to brand loyalty, sports drinks experienced the biggest percentage gain from 2008-2011. A 6.5-point increase brought brand loyalty to 88%. Shelf-stable dinners experienced a 3.7-point increase to 67%, and dry packaged dinners experienced a 3.2-point increase to 59%.

For the 2011 information, SymphonyIRI used the 52 weeks ended July 3, 2011.

Manufacturers and retailers seeking to protect and grow brand loyalty should consider three strategies, according to SymphonyIRI. For innovation, they should address specific needs across key and target shopper segments, such as addressing a specific nutritional need, while offering a new/experiential flavor and/or texture. For price and promotion, they should develop an understanding of price elasticity across key categories and brands and use the knowledge as the basis for all pricing strategies.

For the third strategy, manufacturers and retailers should leverage market-level models to understand expected actual impact of pricing changes before implementing changes, monitor actual versus expected, and make real-time course corrections as warranted.

Consumers affected by the economy have become frugal and continue to make purchases deliberately and cautiously, according to SymphonyIRI, but despite the prolonged economic difficulty, brand loyalty is strong and growing across a number of consumer product goods categories.

“While most retailers and manufacturers will instinctively pull the lever to compete on price, it’s important to understand that consistently leading with price has significant negative impacts on brand equity,” said John McIndoe, senior vice-president of marketing for SymphonyIRI. “Rather, C.P.G. leaders must harness the power of value. The battle for the shopper’s loyalty should not be dictated by low price, and winning C.P.G. marketers are clearly getting this message.”

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