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Uncovering the 4 Critical Needs of Canadian Shoppers
In today’s competitive CPG landscape, understanding what drives consumers’ purchasing decisions is crucial for both product manufacturers and retailers alike. In this series of posts, we’ll explore the attitudes of Canadians shopping for their everyday Food, Beauty and Household products (CPG Shoppers) and compare these attitudes to the shopping behaviour of consumers around the world.
Over the last 10 years, 4 themes have consistently appeared as key drivers of shopper behaviour for consumer packaged goods. 4 critical motivators drive shopping behaviour:
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Not only are these shopper motivators evident in Canada, but our findings from our almost 300,000 person global shopper study also suggest similar trends around the world. In today’s post, we will focus on the ever important question of value for money.
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As a nation, we have fared comparatively well during the global economic downturn of the past few years. By all accounts, North America as a whole is emerging from the greatest period of economic decline since the Great Depression. Yet Canadians are obsessed with saving money on everyday items. Canadian shoppers are most likely to review coupons, promotions and flyers compared to other shoppers from around the world
Canadians are willing to put effort into saving money: 90% report stocking up when their favourite products are on sale, while 81% say that they consult flyers, inserts and other promotions regularly. These figures stand in stark contrast to shopper responses from the USA, China, and Mexico, where less than 65% of respondents report studying promotional materials regularly. If there is one thing that separates Canadian shoppers from the rest, it is this: they really love deals and saving money.
http://www.charleshelleu.com/mqe-12486 Why are Canadians so deal-obsessed?
There are a few reasons that may lead Canadians to focus more on value for money than consumers from other parts of the world. The most obvious one is higher cost of goods: according to research by Bank of Montreal, retail goods are on average 10% more expensive in Canada than in the US with the gap being significantly larger in some categories. Taking higher taxes into account, it is no wonder that Canadian shoppers are looking to lower their expenditure on CPG items.
The rising debt level of Canadian households is also a likely culprit. According to Statistics Canada, the country’s household debt-to-income ratio has hit its record high at 163.4 percent in the second quarter of 2013. For 57% of Canadian shoppers, monthly bills and mortgage payments account for most of their monthly income. Overburdened with debt, Canadians are looking for ways to reduce their spending on non-big ticket items, allowing the deal-seeking mindset to flourish.
It is not just the macroeconomic factors, however, that lead to the proliferation of flyers and other promotions in Canada – retailers and manufacturers contribute significantly towards it as well. The competitiveness of the CPG market created an environment where promotions and price discounting became the go-to methods for driving sales and increasing market share for brand name products. The rise of Walmart and other discount retailers across Canada also exposed Canadians to the expectation of everyday low prices. On top of that, brands faced increasing pressure from private label products that focused heavily on value and lower price (63% of Canadians believe that store brands are better value than brand name products). Faced with the threat of store brand offerings and rising input costs, manufacturers responded by deepening the discounts on their products and investing heavily into promotional activities in store. The end result is the CPG environment we see today: many categories sell on discount more or less all the time, while the gap between regular and promoted prices widens. Manufacturers and retailers have conditioned shoppers to make purchasing decisions based almost solely on price.
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Canadians are obsessed with deals, and with good reason. They are not likely to change their purchasing behaviour as long as retailers and manufacturers continue supporting it with deep discounting and comparatively high regular prices. While price promotion will continue to have a place, it is clear that the battle for CPG dominance cannot be won solely on price.
Manufacturers need to maximize value by introducing products that speak directly to consumers’ evolving needs and prevailing attitudes. Some brands are doing just that by creating lower priced sub-brands that focus on value and can take on private label. For example, P&G’s Bounty has recently been promoting its new Bounty Basic line of products. This lower priced version of the familiar paper towel brand focuses on giving shoppers better value for money while still supporting the overall brand promises. This is a great example of a well-known manufacturer recognizing the needs of its customers and addressing those needs through the power of product adaptation and marketing
Another way for manufacturers to escape from the price discounting pressures is to introduce new products that meet evolving consumer needs. Given the importance of innovation in today’s CPG market, I will explore what drives innovation success in my next post. In following installments, I will also discuss two of the most important needs behind many successful recent CPG innovations – health and convenience.
 Represented by the 2013 BrandSpark Global Shopper Study respondents from USA, Mexico, China, UK, France, Germany, Turkey, Brazil, and Colombia
 As measured in the 2013 BrandSpark Global Shopper Study
 As measured in the 2013 BrandSpark Canadian Shopper Study