Passikoff analyzed the results of the recent 2010 Brand Keys Customer Loyalty Engagement Index and found that a real brand can provide meaningful differentiation and act as a surrogate for value, but that value is being carefully examined, category-by-category, and purchase-by-purchase. In terms of retail trends and consumer spending, the leverage of brand has reached its highest level of consequence since the 1960s.
Top Five Consumer Brand Trends for 2010
1. Show me the meaning. Excessive spending, even on sale items, will continue to be replaced by having a reason to buy at all. This is trouble for brands with no authentic meaning, whether high-end or low. From a spending perspective, consumers are unwilling to broadly open their wallets. Continuing unemployment fears and the still-weak economy suggest that a return to more generous spending is at least 18 to 24 months away. Nearly 20% of consumers indicate that they intend to spend less in 2010.
Tactics that may ease seized spending will be a concentration on more functional items. This means smaller items and sizes with fewer features that will keep prices low, as well as items that are better designed and longer lasting and, therefore, of real value to the consumer.
2. Careful chic. What makes goods and services valuable and worth spending for will increasingly be wrapped up in the brand and what it stands for. For example, specialty apparel retailer J. Crew stands for a new era in careful chic, being smart and stylish. The Obama family wearing J. Crew apparel also helped the brand, but style and value needs some real point of real differentiation.
Shoppers have become “wise” shoppers – coupon redemption, for example, is up nearly 25%, and thus consumers will continue to focus on prices. While this can be a real threat to retail margins, consumers will not stop paying more for real value.
3. Brand differentiation is the new in-the-black. The special meaning of a brand will continue to increase in importance as generic products continue to increase in popularity. Differentiation will be critical for success, meaning sales, increased spending in certain sectors and, ultimately, profitability. But this will only happen where brand values are established as a brand identity, and believably exists in the mind of the consumer.
The consumer will decide what brand values and identities are believable, making it more important than ever for a brand to have measures of authenticity and innovation, and make an investment in engaging advertising, if consumers are going to be convinced there is
worthwhile value for dollar. Consumers will continue to buy store brands, not just because of price, but because manufacturers have imbued these products with value.
4. Luxury, meet meaning. Consumers desire the latest technologies and innovations, but are not currently willing to overspend for them, having learned from the deep discounts of the recent past.
Smarter marketers will identify and capitalize on unmet expectations. Those brands that understand where the strongest expectations exist will be the brands that survive and prosper.
Consumers will spend money on brands that can meet or exceed their expectations. How consumers define luxury will continue to morph during the next 12 months, with meaning and luxury coming together. Instant gratification hasn’t disappeared, products and services that resonate with value will still be purchased, even if regarded as an indulgence.
5. Quit the buzz on buzz. Conversation and community is all: Nearly 30% of consumers say they will use their credit cards less, but they can’t buy online without them and if consumers trust the community, they will extend their trust to the brand, and that trust will result in sales.
It’s not just word of mouth, but the right word of mouth within the community. This means the coming of a new era of customer care and customer outreach. That comes down to one word: engagement.
Buzz is easy to get. Engagement takes authenticity, and as consumers continue to make buying decisions based on real experience and not just marketing lingo, it’s not going away.
Restraint, Value Top Consumer Priorities for 2010
Recent research from Nielsen on top CPG trends for 2010 support the 2010 Customer Loyalty Engagement Index’s finding that consumers are seeking value for the dollar and brand differentiation. Consumer constraint will become the “new normal,” with US consumers having unemployment and other economic concerns at the top of their mind, according to Nielsen. Concurrently with this tendency toward restraint, consumers will also focus on value, with widespread discounting forcing brands to differentiate themselves beyond simple low price.
About the Survey: The current Brand Keys Customer Loyalty Engagement Index examines customers’ relationships with 518 brands in 71 categories. For the survey, 33,500 consumers ages 18-65, drawn from the nine US Census Regions, self-selected the categories in which they are consumers, and the brands for which they are customers. They were interviewed by phone, face-to-face and online.