Friday, May 15, 2009

Do you plan to increase or decrease your spending on single serve beverages in the year 2011?

I think one of the most potentially misleading questions that we can ask in a survey is “do you plan to increase/decrease your spending on [blank]” for household items and packaged goods. I honestly think that the responses given to these kinds of questions have a very tenuous relationship with actual behaviour.

One of the reasons for this is because these questions do not take into account the mental accounting that people use to budget. People do not think of their spending by individual items – unless it is cars or holidays or large ticket items. They group things together. Within these groups they subsititute. And the groups themselves are dynamic. For example – people are unlikely to plan their future expenditure on ice cream. They are likely to consider “groceries” and there are a myriad of ways in which they could calculate their spending on that – by month, by trip etc. Research we conducted on alcohol found that young adults simply exclude beer from mental budgeting! Of course when prompted they may give a response that they plan to cut back but the fact is they hadn’t really considered it until we asked the question.

So when a research asks “do you plan to increase/decrease your spending” on an individual item this may be the first and only time they really think about it. The fact is they have no “plans” regarding this item. This is especially true if we are asking about their plans for the future. I do not believe that a consumer can accurately tell us what he or she plans to do about spending on alcohol or ice cream or paper towels “after the recession”. And even if they do I do not think their response reflects what might happen – which can depend on their ‘mental accounting’ and where that category fits into their budget as well as a myriad of other changes – channel preference, occasions etc.

The right way to do this is to understand their mental accounting process, the heuristics they use for budgeting and which bucket the category falls into. And of course you need to also understand circumstances such as changes in channel choice and occasions. He problem is of course this requires a lot more questioning that “do you plan to …”. But hey, if you want to get it right

Tuesday, May 12, 2009

Americans and Private Label

I am getting a little bored with the coverage of the success of private label in the US. No offence to them. I am sure it is big news there.

But the rest of the Western world has been through it. Private label penetration in Europe is almost double that of the US. Retail brands are trusted. Often they are not value options but in the case of Tesco's Finest or Marks and Spencer considered better quality. Partly because retailers have been far more consolidated in those markets and were able to build their brands.

I read today that dollar stores is the one channel in the US that brands are not facing private label competition. Cold comfort really. I recall in the early 1990's before I left the UK you could go slumming and buy national brands at discount grocery stores or you could get quality private label at the national retail chains. Not a great position for brands to be in.

American brands need to face up to a new reality. This will not go away with economic recovery. Why should it? They need to start thinking about their value.

Sunday, May 3, 2009

The Problem with Researching Green Consumerism

There is probably more rubbish market research data available on green consumerism than any other topic.

Each year, on Earth day Joel Makower rounds it all up, questions its validity and wonders what the heck it all means. See his 2009 summary here.

He quite rightly questions the enormous overclaim in the responses to these surveys. Stuff like 36% of Americans "always or regularly buy green products" from Mintel.

What does that mean?

It is certainly not reflected in the market shares of green products in the US which represent a fraction of total products bought. I suspect it is a combination of consumers wanting to buy green stuff, not really knowing what it is and occasionally buying something greenish. Easy them to say you "buy green".

The problem with research on green consumerism is in some respects the problem with the concept itself. The elephant in the room is that consumerism (as an ideology) and sustainability pull in opposite directions.

Environics social values research identifies about a quarter of Canadians as being "green" - in terms of agreement with willingness to pay more and discriminate green products. A large number of this group are established baby boomers concerned with their legacy, who use consumerism as a means to affect change. But they do not really know how to do it. This group tend to be very enthusiastic consumers. When we look at their attitudes to shopping, they enjoy it very much. They are more enthusiastic than the general population. The other largest group are younger liberal progressives. They are not enthusiastic consumers and they actively dislike shopping. We did a recent survey for Bullfrog Power (where people pay a premium on their electricity bill for renewable energy). This is pure "green purchase" with no benefit of status or joy of consumption. Their customers (real "green consumers") were overwhelmingly liberal progressive.

The current problem with research on green consumerism is that these groups are not differentiated. The established boomers will buy some organic granola and Method brand hand soap and happily check the box that says they "usually" buy green products. This does not reflect reality.

This is one area where asking about attitudes, intention and general reported behaviour is worthless and even potentially very misleading. A record of actual behaviour or very specific questionning on actual behaviour is the only way to understand the topic.