Consumer Brand Preferences

Document Sample
Consumer Brand Preferences Powered By Docstoc
					PwC

Advertising payback 2 –
brand values and advertising investment
22 October, 2008

Preliminary results
Contents


1 Objectives for 2008 study
2 Our approach
3 Confirming the approach - new market surveys
4 Changes in the economy since last year
5 Strengthening the analysis of the 7 original markets
6 Results and implications




PricewaterhouseCoopers LLP    2                          8 July 2008
Objectives for 08 study

•Extend the payback analysis into new market categories
•Reconfirm the payback findings of 2007 brand preference value
study
•Strengthen our findings:
   - Look at value changes across time as well as across markets
   - Track consumer brand preferences across time
   - Relate changes to brand investments
   - Refine and develop our technique
• Insight into investing in brand value in an economic downturn


PricewaterhouseCoopers LLP        3                               8 July 2008
PwC




      2. Our approach
Our method: consumer conjoint research = “WTP”

 •Measuring communications investment payback (ROI):

 •Sales can be an imperfect measure: short-term, “noise” and quantity vs.
 quality issues.
 •Attitudes and awareness are important but can disconnect from value

 •Brand value preference: “how much are you willing to pay for the brand
 name alone?” is a good measure – but is a difficult direct question to ask.
 •So we use indirect approach: conjoint research. Strong track record in:
    - Transport and green economics – for “what if prices”
    - Product development and pricing research
 • Our innovation is including weak or “null” brand names to benchmark
   relative brand name value.
 • Our output measure is “willingness to pay” – an economic measure
 PricewaterhouseCoopers LLP             5                                      8 July 2008
Method – how we ask the questions
  •Online respondents are asked to choose between options with several
  dimensions – similar to real purchase choices. Hypothetical screenshot
  below courtesy Holden Pearmain
  •A sequence of choices produces data from which you can deduce the
  value of each component




PricewaterhouseCoopers LLP         6                              8 July 2008
Method – understanding the answers
•The data can be flexed in what-if scenarios. For brand WTP the
question is:
   - “ how much would the price have to be discounted if you switched
     the brand name (and only the brand name) for a much weaker
     one….and still sell the same amount?”
• You cannot ask consumers this question directly – but you can “ask
  the simulator”. Simulator example below courtesy Holden Pearmain




PricewaterhouseCoopers LLP         7                              8 July 2008
PwC




      3.Confirming the
      approach – 3 new
       market surveys
32 inch Flatscreen TV screens
•Strong correlation between WTP for the brand and £ expenditure on
TV– 0.97
•Same pattern as 2007 findings                                            x




PricewaterhouseCoopers LLP        9                             8 July 2008
Flight to New York
•Strong correlation between WTP for the brand and £s spent on TV –
0.80
•Same pattern as 2007 findings
•Potential “halo” effects from short-haul ad campaigns




PricewaterhouseCoopers LLP          10                          8 July 2008
Pre-Pay phones
•Phones A & B in expected pattern
•But Phone C – a grocery brand - has higher brand WTP than Phone A –
a major specialist !
   •Umbrella effect from weight of non-phone brand advertising - £82m
   p.a. (£40m TV)?
   •Or a “downturn” choice?




PricewaterhouseCoopers LLP         11                             8 July 2008
PwC




       4. Changes in the
      economy since last
             year
Consumer Confidence went into accelerated decline in January 08

•2008 research was in field end September




                                       Payback 1      Payback 2



PricewaterhouseCoopers LLP       13                        8 July 2008
Reasons for choosing cereal brands 07-08
       •Importance of price increasing




PricewaterhouseCoopers LLP       14        8 July 2008
Reasons for choosing lower medium car brands 07-08

     •Price sensitivity increasing slightly




PricewaterhouseCoopers LLP         15                8 July 2008
Reasons for choosing motor insurance policies 07-08
    •Price sensitivity reducing !
    •But value extras up – risk reducing options




PricewaterhouseCoopers LLP          16                8 July 2008
PwC




      5. Strengthening the
        analysis of the 7
        original markets
What we could say in 2007
• TV investment has highest correlation (.91) with large brand values
  of all investments in the four non-car categories.
• In the medium car categories TV had the second largest correlation
  after press (upper medium ) and direct mail ( lower medium).

                                 Correlation between brand value and TV share of voice
                                                                         0.98       0.96
                    1                                         0.94
                          0.83
                                                                                              0.77
                  0.8                  0.72

                  0.6
    Correlation




                  0.4

                  0.2

                    0
                          Lower       Upper      Premium     Cereal    Haircare     Juice     Motor
                  -0.2   medium      medium     large cars                                  insurance
                           cars        cars
                  -0.4
PricewaterhouseCoopers LLP                                   18                                         8 July 2008
Now - 2 years of data gives us a dynamic picture
Measured brand WTP shifts in response to changes in ad investment
then:
   - We have a useful measure of potential economic value of brand
     investments – managerially useful
   - We have evidence of TV continuing to be an effective driver of brand
     values in 08
   - We move from correlation to causality
Using simple econometric models we were able to find statistically
significant drivers of WTP change across 12 month period in 5 out of 7
markets




PricewaterhouseCoopers LLP           19                                  8 July 2008
Summary of Brand WTP shift analysis
•For the 22 brands in our sample who either raised or reduced their TV
budget the outcome was:

                             Lost WTP       Gained WTP         Total
    Raised TV budget             5%              32%            37%

    Reduced TV budget           50%              14%            64%

    Total                       55%              46%

• In our sample:
    - Reducing TV budget has 78% chance of reducing WTP
    - Raising TV budget has a 86% chance of raising WTP
PricewaterhouseCoopers LLP         20                             8 July 2008
Case study 1 - Juices raw WTP
  •Reducing and narrowing range of Willingness-To-Pay for brand names
  – an economic downturn effect ?




PricewaterhouseCoopers LLP          21                          8 July 2008
Case study 1 - Juices media
•Juices A, B & D have spent significantly on TV in last 2 years




PricewaterhouseCoopers LLP         22                             8 July 2008
Case study 1 - Juices brand WTP relative to average
  • Re-calculating brand WTP relative to sample average shows Juices A
  & D have improved competitive position – using more TV




PricewaterhouseCoopers LLP        23                            8 July 2008
Case study 1 – Juice brand WTP /media correlations
  •Brand WTP is strongly correlated with media investment – primarily TV
  investment




PricewaterhouseCoopers LLP         24                             8 July 2008
Case study 1 – Juice WTP shift
• Regression model reveals significant “shift” relationship

• Finding: Reduce SOV and lose brand WTP




PricewaterhouseCoopers LLP          25                        8 July 2008
Case study 2 - UM cars WTP
  • Narrowing brand WTP preferences – Car C biggest loser with low
  investment




PricewaterhouseCoopers LLP        26                             8 July 2008
Case study 2 - UM cars media
• Cars B, E & especially D have spent significantly on TV in last 2 years




PricewaterhouseCoopers LLP         27                              8 July 2008
Case study 2 - UM cars WTP relative to average
• Car D gains competitive advantage – relatively strong use of TV. B
holds advantage – E loses marginally




PricewaterhouseCoopers LLP          28                                 8 July 2008
Case study 2 - UM cars WTP shift
• Finding: reduce TV £s and lose brand WTP




PricewaterhouseCoopers LLP       29          8 July 2008
Haircare WTP shift
• Finding; reduce TV as percentage of comms. mix and and lose
competitive brand WTP position




PricewaterhouseCoopers LLP       30                             8 July 2008
Prestige car WTP shift
• Finding: overall, reduce TV £s and lose relative brand WTP
• Brand WTP leader grew 9% to 148% of category average – only
brand to use TV




PricewaterhouseCoopers LLP        31                            8 July 2008
Motor Insurance WTP shift
• Finding: overall, reduce TV as percentage of comms. mix and lose
brand WTP




PricewaterhouseCoopers LLP        32                             8 July 2008
PwC




      Summary and
       discussion
Summary of Results
• Price sensitivity has increased – especially for Grocery products
• WTPs reduced in absolute terms but not necessarily in relative
terms.
• High correlations between WTP and share of voice last year –
supports long-term effects observed before
• In majority of categories high TV % of mix is a better predictor of
  WTP than total expenditure
• Luxury markets can be driven by TV
• In our sample:
      • Reducing TV budget has 78% chance of reducing WTP
      • Raising TV budget has a 86% chance of raising WTP
      • Raising investment – particularly TV – usually shows a brand
        WTP shift within 12 months.
PricewaterhouseCoopers LLP         34                              8 July 2008
Some observations
• Clear trend to value for money – not just lower price
• A trend to brand leaders and value leaders – problems for other
  positionings?
• A few very strong brand leaders can survive relative budget cuts
  for at least 12 months – most cannot
• Superior brand investment - including TV - does not guarantee
  success. Creative and strategic mistakes can overwhelm weight of
  investment.
• WTP is a useful tool for measuring and modelling brand ROI
• TV continues to “work” in 2007 - 2008


PricewaterhouseCoopers LLP        35                            8 July 2008

				
DOCUMENT INFO
Description: Consumer Brand Preferences document sample