A tough year for all

Throughout 2022, a turbulent economic environment has had a significant impact on all categories – with FMCG one of the most affected. Brands have had to respond accordingly, and have been faced with some tough choices as they look to protect their profit margins amidst rising production costs. In late 2022, a popular hot drinks brand approached us to help them decide how best to respond. Should they, like many others, simply pass on their rising costs to customers through price increases across their portfolio? Or would customers prefer prices to be held at existing levels, but accept that they would get a smaller pack of coffee in return? And, finally, could better leveraging the products’ USPs, and reminding customers of the benefits of buying our client’s brand, help mitigate some of the dissatisfaction either change was likely to cause?

Stated and inferred

To answer this, we knew that we needed to get beyond direction questioning – what customers say and how they actually behave are often very different. An initial, highly robust quantitative approach was the way forwards. Conjoint questioning and analysis was employed to give us a read of this real-world behaviour. Using this, we could model various possible production scenarios and understand how preference for our client’s product changed in each. We could also model what would happen if competitors made a change to their own portfolios, and what would happen if our client went one route and everyone else the other. MaxDiff and TURF analysis then helped us to gauge appeal for the various product benefits our client could promote, and how many they should include on their front of pack before hitting diminishing returns.

A qualitative product test rounded off our approach, and helped us better understand how customers would feel about a potentially smaller pack size. With the change in grammage so hard to detect on shelf, would it actually impact on how customers used the product in their homes, and did the reduction cause added frustration for the heavier coffee users who might go back to the shop a day earlier than they normally would?

A commercially driven recommendation

Our final recommendation represented the best of all worlds. Stated customer preference and perceptions of price increases and ‘shrinkflation’. A sense of how sales would be impacted when making either change, and how this translated into a £-figure. And a clear plan to communicate the change to customers; softening the blow by raising awareness of the product benefits that are most important to them. The research helped settle the debate that was raging internally and, delighted with the findings, our client will look to take action in early 2023.