A New Relationship between Consumers and Brands Exhibited in Long-selling Brands of Fast-Moving Consumer Goods
*This article is a restructuring of the content of a seminar held on February 21st, called “Relationship with Consumers in the Future to Support Sustained Brand Growth: Can Customer Lifetime Value (LTV) and Fan Development be Realized even with Fast-moving Consumer Goods ?”
In the past few years, we have been hearing more and more about issues related to developing customers into fans and improving lifetime value (LTV) by manufacturers of fast-moving consumer goods. I believe this is because, as the number of potential new customers has decreased with the contraction of the Japanese domestic market and as more efficient use of marketing budgets has been sought, it is becoming increasingly necessary to strive to retain customers to the extent possible once they are acquired and to cultivate deep relationships with them so as to be able to say that they are fans, with the result of having them pay more money over longer periods of time.
On the other hand, do fast-moving consumer goods really have fans, let alone durable or service goods? How much do fans contribute to sales? Besides such doubts of effectiveness, there are doubts about feasibility, such as: What can manufacturers do to encourage consumers to become fans of fast-moving consumer goods? I feel that many companies are not making progress in their efforts to develop fans and improve LTV due to such doubts.
Using the SCI (Nationwide Consumer Panel Survey), which provides a chronological view of consumers’ purchasing behavior, Intage clarified whether the presence of customers who can be said to be fans of fast-moving consumer goods actually contributes to sustained brand growth, and analyzed what sort of experiences generate such deep relationships.
Customer Structure Supporting Long-selling Brands that Continue to Experience Sustained Growth
This analysis examined 61 long-selling growth brands extracted from the seven categories in Fig.1.
Fig.1
Let’s start by looking at the structure of sales for long-selling brands. Sales can be broken down into the number of purchasers, which we will call “frontage,” and the amount spent per purchaser, which we will call “depth.” Fig.2 shows a calculation of how much the growth rate of each is correlated with the sales growth rate.
Fig.2
I think manufacturers of fast-moving consumer goods prioritize “frontage,” and in fact, the correlation between frontage growth and sales was high in all categories, and it was rare for a long-selling brand to grow exclusively by “depth” increases. The analysis reveals that, indeed, expanding frontage is essential for sustained growth.
However, what was characteristic of the long-selling growth brands was that they expanded their frontage by increasing the number of continuing and retained customers who bought their products for two or three years in a row, rather than only by acquiring new purchasers (Fig.3).
Fig.3
These brands are not just swapping users, but they are firmly securing their base customers, acquiring new customers, and building those new customers into retained customers.
The next question one might ask is whether it is possible to manage customer retention. Given that one-to-one communication is difficult for mass brands and that fast-moving consumer goods tend to become habitual purchases, this question arises due to the possibility of a fragile bond that can be broken by price and the influence of competing brands, even if wallet share would suggest customer loyalty. *Wallet share: The percentage of the total amount paid in the relevant category by a single customer that goes to the target brand
Therefore, in this analysis, we decided to capture the relationship between fan development and growth by looking at conscious loyalty in addition to wallet share and other aspects of behavioral loyalty. There are thought to be three elements of conscious loyalty: “risk aversion,” which is a desire to avoid the risk of buying another brand that does not work out or the costs associated with selecting a product; “familiarity,” which is a feeling of affinity and trust for the brand; and “support,” which is being a fan of the brand or being exclusive to the brand.
Specifically, we conducted an Internet survey of purchasers of each brand extracted from the SCI, measured loyalty in terms of the three elements using the questions in Fig.4, and analyzed the relationship with long-selling growth brands.
Fig.4
As a result of the analysis, we found that long-selling growth brands that increase sales even in difficult environments are able to cultivate retained customers with particularly high scores in “familiarity” and “support.”
These customers will buy without discounts and will buy new products from the brand, so the amount paid per purchaser will be higher. Also, such customers are highly motivated to recommend the product to people around them, which can result in attracting new purchasers. Young people, in particular, are said to have a strong aversion to product-focused sale pitches and the feeling that their perception is being influenced by public relations management. If the number of generations who hold these values increases in the future, it will likely become more important for consumers to make organic posts online and elsewhere and for brands to casually utilize these to attract new customers.
Based on the above, it can be said that the “familiarity” and “support” customer groups contribute to both frontage and depth, and thereby lead to sustained sales growth.
What Sort of Brand Experiences Foster Deep Relationships with Consumers?
Well then, what can brands do to get customers to enter the “familiarity” and “support” groups? Let’s interpret the answer from the results of the responses about the brand experience heard along with the three elements. Fig.5 summarizes the brand experiences that were strongly associated with the three groups.
Fig.5
We found that the “risk aversion” group were those who felt “this product is a sure thing” based on their experience of actually using the product and strongly feeling its good functionality. On the other hand, the “familiarity” group feels closer to the brand not only because of its functional value, but also because of experiences that evoke emotions and the experience of being sympathetic to the brand and the company’s attitude. Furthermore, in the “support” group, people have discovered for themselves what the brand means to them in terms of semantic value, and through this experience they feel a deep relationship with the brand that it is the brand for them.
See the examples of brand experiences listed in the “support” column of Fig.5 to see what it specifically means to find and experience semantic value. I think the first example indicates that it was “fun” to be able to share the time with friends to try this and that, rather than trying a variety of ingredient combinations being “delicious.” In the second example, rather than simply looking good in a photo, I think the consumer felt that the experience of eating cup noodles at the summit was the ideal way to express his or her sense of fulfillment and pride that he or she had climbed all the way to the top of Mt. Fuji. The person probably showed that picture to people around them, and may have posted it on social media. Another characteristic of “support” is that it involves communicating and sharing the value that the consumer feels.
Functional value is the brand-focused value of what the brand brings; in contrast, emotional value and semantic value are consumer-focused values based on what the consumer feels, and semantic value is characterized by the customer’s own participation in the creation of the brand value.
The relationship between a brand and someone in the “support” group who finds semantic value in the brand can be called a relationship in which consumers and brands create value in both directions. In other words, by working with consumers to create consumer-focused value, the relationship between the brand and consumers will deepen, and consumers who can be said to be fans will appear.
Toward Marketing to “Develop Brands in Concert with Consumers”
Define functional and emotional values, formulate and implement product development and marketing measures to realize these values, and then approach consumers. I think this is what has been practiced in marketing thus far.
In order to build deeper relationships with consumers in the future than ever before, it will be important to have consumers tell brands what semantic value they discover, to cast that value back onto consumers, and to develop brands while interacting with consumers. Brands will need to think about what they can do to provide other consumers with experiences similar to those experienced by people in the “support” group, as mentioned above, such as the fun of trying a variety of ingredient combinations with friends and the pride that expresses the sense of fulfillment of having climbed all the way to the top of Mt. Fuji. They will then need to try such measures out, get feedback from consumers, and polish them up.
Companies may be concerned that they cannot gain new awareness even if they query consumers, or that they cannot formulate actions geared toward many consumers based on having understood n=1 customer. Here’s a more familiar example. The following photo shows the dining table of a purchaser of a non-alcoholic product. It was uploaded by the consumer using CODE, an app that collects shopping history.
The rice looks like brown rice, and it’s a meal with nutritional balance in mind, but the fried food catches my eye. This consumer stated, “I chose a non-alcoholic drink because today is a non-drinking day for me, but I prepared fried food so that it would feel like I’m drinking.”
If the two seemingly incongruous facts of “nutritionally balanced meal” and “fried food” reveal an awareness of the consumer’s desire to “feel more like they’re drinking,” it will lead us to understand how many consumers are drinking non-alcoholic products with a similar sentiment, and to think about what we can do to have them experience the feeling that they can have fun on their non-drinking days just like when they are drinking.
In this way, at Intage we take the approach of gathering more facts from the consumers, and from that we gain awareness that goes beyond mere hypothesis. Such facts include not only purchases, but also how products are stored, used, and disposed of in different situations, and what consumers think at such times.
Rather than focusing on “purchasing” as the goal, we should focus beyond that, on what experiences consumers have and what value they feel. By providing experiences that are more than simply goods, we can deepen relationships with consumers and develop brands in concert with them. Brands that can achieve this will be supported by consumers, which in turn will lead to sales and sustained growth even in an era of declining population.
Manager, Business Design Department , INTAGE Inc.
2006: Joined INTAGE Inc.
She is in charge of research and sales for major companies in the durable goods and service industries, and is engaged in business promotion in the ad and promotion areas of major manufacturers. Since 2020, she has been working to develop marketing support programs that start with consumers.
Manager, Business Design Department , INTAGE Inc.
2006: Joined INTAGE Inc.
She is in charge of research and sales for major companies in the durable goods and service industries, and is engaged in business promotion in the ad and promotion areas of major manufacturers. Since 2020, she has been working to develop marketing support programs that start with consumers.
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