Wait patiently for payback

In the fast-moving world of packaged goods, DM is not an obvious choice for marketers, but brands have been adopting its techniques to develop long-term loyalty. By David Reed

When you buy a drink in a bar, do you ask for a beer or whisky or order a brand by name? In the supermarket, will you automatically try a line extension from a brand you already buy? When asked to recommend a brand to a friend, are you willing – even eager – to do so?

All of these questions are central to the issue of how to build loyalty in fast moving product categories, but failing to take into account specific issues relating to packaged goods can be fatal.

Crazy Horse Brand Warriors client services director Belinda Neal says: “Loyalty building techniques can work with packaged goods, but you can’t apply standard direct marketing strategies.”

Finding an approach that works has to take into account the economics of this sector. DM strategies are designed for long-term payback: for most fast-moving brands, results must be immediate.

Customer advocates

The nature of involvement with brands also has to be taken into consideration, says Cutty Sark International marketing director David King. “There are two basic types of market. Brand call markets are where you go to a bar and ask for Cutty Sark by name, and non-brand call markets are where you order a whisky and soda,” he says.

As most brands have discovered, using loyal customers as advocates can rapidly build wider adoption. Cutty Sark’s single malt brand, Glenrothes, runs a member-get-member programme which sends a sample bottle to somebody nominated by the customer.

Another whisky brand, Glenfiddich, runs a direct mail programme by Presky Maves aimed at overcoming the perception among whisky drinkers that it is a beginners’ brand. “Over the past three years, this has achieved phenomenal results with response rates of 35% to 47%. People reappraise the brand and increase their consumption,” says Presky Maves planning director Peter Worster.

Upscale products like malt whisky carry sufficient margin to support this type of DM activity. Most packaged goods do not. Instead, brands have to look across their portfolio to justify the expenditure. Colgate took this approach when promoting its oral care range.

“It was about transferring the brand and trust across the portfolio. If you are only buying toothpaste, you can call that loyalty, but it is very passive,” says Neal. When launching a new mouthwash, Colgate was still able to leverage this first-stage loyalty. A mailshot invited consumers to send away for free disclosing tablets which demonstrated the effectiveness of the product. “The response rate was astonishing,” says Neal. “Usually you get 2% to 6% – we got in excess of 50% in some cells.”

Stella Artois has established a share of mind for its beer through its sponsorship of film. “Trying to keep in contact with young males who aren’t committed to the drink is a challenge for Inbev,” says Draft London joint head of planning Brian Dargan. The agency is currently working on a way of transfering existing associations into the home consumption market.

Short-term goals

High frequency purchases with a lengthy consumption cycle, like beer, can afford to invest in long-term marketing programmes that do not have an immediate impact on sales. If there is one barrier to the broader adoption of DM within this sector, it is the economic cycle it operates under.

Short-term goals mean that results are often looked for within one or two months, because this is what sales promotions can achieve. Even the definition of loyalty can be compressed.

“In packaged goods, it can mean repeat purchase within a few weeks. Clients think if you can pull five purchases where they were expecting four, that is loyalty,” says 141 Worldwide London planning director Andrew Aylett. But bought loyalty is only the first step in building a long-term relationship, however. He adds: “If you can’t deliver emotional benefits over time, don’t do it.”

Where a brand is trying to communicate complex benefits, it has to take a long-term view of DM. Benecol recognised this when introducing its cholestorol-reducing spread. Consumers had to be encouraged to think about chlorestorol levels and then adopt a product regime that delivers benefits through consistent consumption.

“The first stage was to use advertising to build awareness. The second stage was to give consumers balanced information which didn’t talk about the brand,” says Aylett.

Insights into the way in which consumers want to interact with a brand have to support the marketing techniques used. Kraft Dairylea Active’s core target group is mothers who buy the product for their children’s lunchbox. The brand has mailed them a small format lifestyle magazine. Just as products have a functional dimension to their appeal, DM can build rational investment in a brand by providing more information and engagement over time.

The problem for many packaged goods brands is that there is not enough to be said about them to sustain this kind of programme.

Heritage is a great advantage, as is a broad product range. Anything that allows the customer to talk confidently about the product, feel they have made the right choice, or get a buzz from using the brand can be applied. Package it in the right format and channel, and your brand may find itself on call.

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