How Brands Can Positively Respond to the Cost-of-Living Crisis
Times are tough for branded food and drink manufacturers. With rising energy bills and inflated raw material costs, reformulation, shrinkflation, and price increases are back on the agenda for many.These strategies all carry risks, especially considering the impact of the cost-of-living crisis on consumer loyalty for branded products. New research reveals that 73% of Britons would switch brands to save money (Attest), and own-label goods now account for a record 63% of grocery volume (Kantar). Additionally, 80% of consumers believe brands are profiting from ‘greedflation' (Attest).So, in this post, we'll discuss five ways branded food and drink manufacturers can navigate challenging strategies such as reformulation, shrinkflation, and price-hikes, without eroding consumer loyalty.
1. Adopt a holistic approach to reformulation
Reformulating products can be a smart way to save money on raw materials, but the last thing you want to do when reformulating one of your consumers’ favourite foods is to modify its the core flavour, texture, and mouthfeel. As soon as they take a bite, they’ll recognise a difference, and it’s typically not a positive one. To keep consumers happy, it's important to make sure any changes are as close as possible to the original. The best way to achieve this is through consumer testing, so you can benchmark new formulations against your current product and make sure they're like-for-like.However, it's not just about maintaining the status quo. Brands should use reformulation as an opportunity to create even better versions of their products. This could mean using healthier or more sustainable ingredients, or addressing allergens to make their products more accessible to more people. Take Nestle, for example - when reformulating their KitKat bars to reduce sugar levels, they also added more milk and cocoa for a richer flavour. This not only pleased consumers but also allowed the company to promote their product as containing "extra milk and cocoa".By taking a holistic approach to reformulation, brands can create products that stand out and meet the evolving needs of their consumers.
2. Ask your shoppers for their preferred solution
Consumers want to feel heard and valued, especially when it comes to changes to the products they buy. Whether you're changing the recipe, adjusting the size, or increasing the price, involving your customers in the decision-making process using methods such as surveys, focus groups and interviews and immersive workshops can help you make changes that align with their preferences. By actively seeking feedback, you can build a stronger relationship with your customers and can even identify areas for improvement in your product.
3. Re-design, refresh, and make the product more relevant
If making changes to your product is your chosen path, can you find a way to efficiently offset the negative implications of such a strategy by turning it into an opportunity to revamp and modernise? Whether it's new packaging, updated graphics, or a new claim, these clever measures can help divert people's attention away from the product change, while boosting your product's perceived value and appeal.
4. Introduce a new feature
Similarly to the above, when re-developing your product, consider introducing a new feature that will capture your customers' attention. Whether it's making your product squeezable, able to stand up, or portionable, focus on a feature that will benefit your customers and highlight how it improves their experience. This helps shift attention away from the product changes while enhancing your product's value and appeal to customers.
5. Promote the benefit
When modifying a product, it's crucial to showcase the advantages of the change to the consumer. Emphasising how the change can benefit the consumer will alleviate any negative sentiments towards it. For example, reducing product size could be seen as beneficial - decreasing packaging waste or making it easier to store in the fridge.
Need help making product changes without affecting consumer loyalty?
Food and drink brands face a tough challenge when modifying their products as a result of the cost-of-living crisis. Common strategies like reformulation, shrinking package sizes and raising prices may seem like quick fixes, but they can harm customer loyalty - especially during times of financial strain when consumer loyalty for branded products is already dwindling.That said, brands must be mindful and seek holistic strategies to product changes to ensure their customer base remains engaged and maintained. And the five points we provided can put your business in good stead for ensuring loyal customers remain a priority. From engaging with customers to ascertain their preferences through to adopting a holistic approach to reformulation; if done correctly - suggestions like these provide every chance of driving success with minimal risk of upsetting customer loyalty.Need help making product changes without affecting consumer loyalty? We can help - get in touch to hear about our innovation and consumer research services today.