Supermarket Price Wars
....(and why money can’t buy you love…)
Times are tough and we all need to make the money in our pockets go further and work harder. As one of our nation’s favorite supermarkets says, “every little helps” - and it certainly does. However a recent BBC Panorama program entitled ‘The Truth About Supermarket Price Wars’ raised the question of whether these ‘not to be missed’ deals are all they really seem
The recent publication of half yearly results shows some growth for most of the major supermarkets despite the recent economic hardship, and if you read their plans for 2012 they focus primarily on continued price slashing to attract our custom. And it’s not just the Big 4 - even some of the high end grocers have joined the price match culture. Some commentators are even describing the recent explosion of promotions as “the end of full price retailing”.
So, with a more or less equal playing field on brand choice and price, what is left to seduce us consumers with? The competition to attract us on price is now (i) expected and (ii) offers little differentiation. Everyone is “Brand Matching” or “Price Guaranteeing” or something very similar, so why would we choose one over the over? They are basically all the same selling the same and pricing the same…. Why would we love any one more than the other? The answer lies in making deeper connections.
In marketing-speak, we as members of the public tend to be described as “consumers” but this a misconception of what’s actually important to most of us. More worryingly, this narrow focus on humans as “consumption-led beings” leads to the other dimensions of our lives – as family members, workers, citizens, members of a community - being largely ignored by brands, when in truth these dimensions offer excellent opportunities to connect at a deeper level. As individuals, we are not just (or even primarily) consumers – rather, we are people/folk/fellow humans with other values and passions in our life that are far more important to us. Try this: ask people what defines them (hint: it won’t be their weekly shop). Instead they will say their friends and families, what they do in our spare time, their work, what charitable causes they support etc… Food is part of our daily life, but the important things to us as people are bigger than what supermarket we frequent - UNLESS that supermarket happens to tap into some of our deeper personal values. Which, with their relentless focus on price, few are doing right now.
There is an important point that is being missed here by much of the marketing community. If you want to form a real relationship or loyalty with someone, a “consumer”, then you have to genuinely connect with them. It’s not just about products and services, it’s about values and aligning yours with theirs. Life is about connections and if you form a strong enough one then you have loyalty for life. We all know that marriages built solely on money tend to fail. And marriages built on a two-way relationship, good communication and a shared common interest tend to succeed. Unsurprisingly, it’s the same with brands and their “consumers”. But how many supermarkets have genuine long lasting relationships with consumers? Most seem to prefer flirty affairs based upon monetary transactions.
By contrast, there is an increasing number of us “consumers” who are actively seeking such deeper relationships with our preferred brands. The GoodBrand Social Equity Index (GBSEI) consumer survey suggests that there are more and more people whose love cannot be bought by money: people with strong ethical values, beliefs and ideals. And this is not a niche group - high/moderately high ethicals now account for more than 50% of the UK adult population…. In short, they give a damn! And they want to know that brands and companies they seek allegiance with give a damn too - about them, their future, their children’s future and what’s really important in their lives.
Ethical consumerism is increasing in the UK. Highly and moderately ethicals now account for over 50% of the adult population
Our survey also shows that, after NGO’s, supermarkets have the highest perceived Social Equity amongst all the other categories we look at. But the performance of the individual brands is very mixed, with some of the biggest supermarkets performing well below the category average. So if, for 50% of the population, citizenship is an area that interests them and is an important driver of brand preference, why do the biggest brands focus so heavily on price to attract our custom and not on their appeal to our wider citizenship values?
Supermarkets have the highest scores for Social Equity behind that we would expect from NGOs
Social Equity Scores All Categegories (All Countries in survey)
Attracting consumers to your brand through better communication and demonstration of what you do for “the greater good” – for example, how you invest their money and loyalty to make a difference in their local community or wider society – has the potential to be a powerful long-term marketing tool. It’s the difference between buying brand love and properly earning it.
One example of a European Supermarket who has earned real Brand Love is Migros, from Switzerland. Migros have a higher Social Equity score (according to our GoodBrand Social Equity Survey) than any other company in Switzerland, and also - uniquely - outperform all of the NGOs. Migros is one of the best examples we know of a company that genuinely wants to be a force for positive change in society.
It is possible for a company to be more of a Nelson Mandela than any NGO
Social Equity Scores All Categegories (All Countries in survey)
And the prize that goes with earned Brand Love is a big one. Brand Lovers buy more from you, and buy more often, they show little interest in your competition and they recommend you. Relationships built on Brand Love will add profitability to your business. But to earn Brand Love you have to connect with your consumers and talk to them in a language that excites and engages them. But be warned: it’s not enough to talk the talk, you really do have to walk the walk….. our survey can highlight those companies that have been found out! And if you lose trust….you may face your consumers in the divorce courts. But it is also a path with great rewards – seeing your company play a positive role in the wider world and – oh yes – great commercial rewards too.
Gillian Woodward Harris
Senior Consultant, Goodbrand
5th December 2011
Notes to editors:
GoodBrand is an international sustainability and social responsibility consultancy with 14 years’ experience of developing strategies and creating programmes to build value for our client partners.
GoodBrand Social Equity Index (GBSEI) is Goodbrand’s proprietary customer insight tool and is an online all-adults survey, with over 20,000 respondents, covering over 1000 companies and brands across 10 European countries, first run in UK in 2005. GBSEI measures perception of company and brand social equity, brand energy and their relationship with preference. Designed to complement traditional brand tracking research, GBSEI enables clients to compare their performance with a range of competitive benchmarks, including immediate competitors within their category and country, a broader competitive set beyond the category, and the best-in-class performers across Europe.