Innovative value analysis metrics for brand and product redesign
Published in Eureka Esomar Project, Co-written with Michel Rogeaux Danone Sensory & behavior
Seeking solutions to market challenges: renovating “brand experience”
When brand growth is at a standstill or declining, when markets are in turmoil and a price war puts pressure on profitability, every function is required to find solutions (marketing, R&D, operations…). But not all potential solutions are compatible: regaining competitiveness and making cost-savings often appear to be contradictory objectives. To revitalize a mix while maintaining loyalty in a competitive environment requires in-depth consumer understanding to determine what drives value for current users and what is flawed. This is essential to avoid touching essential features that may accelerate decline. To this end, Danone and PRS IN VIVO (a BVA company) co-designed a unique methodology to measure the value contribution of each functional dimension to the overall “brand experience” across the whole consumer journey.
The crucial role of value analysis
Value analysis provides the facts to secure the business model diagnostic: it analyses the gaps between the cost split across product functional blocks (recipe, pot, pack, brand investments…) and the value contribution split from a consumer perspective, for which the research was commissioned. The fundamental question is: does the business (as a whole) spend appropriately, based on what really builds value for consumers?
Gap analysis helps reveal company priorities above functional or political interests, and challenges the status quo in current business-model structure: it serves as an input to multifunctional working sessions to solve business challenges, exploring:
– how to suppress or substitute useless but costly product characteristics, mitigating risks while making savings
– how to enrich existing value drivers or create new ones to deliver better value via re-investing savings or simply changing some product features.
The value metrics challenge:
The challenge of value measurement is that it is not an observable variable and that internal functional experts are often strongly biased in assigning correct estimates of value for each element of the mix (frequently their own work is cited…or other functions are overlooked). The translation of functional dimensions (the manufacturer’s point of view) into measurable consumer perceptions (drawn from shoppers’ or users’ experiences) is not an intuitive matter and cannot simply be derived from the voice of the consumer. Many implicit elements build value without there being conscious awareness of them, but altering them may create dissatisfaction.
Moving away from the traditional approach of value metrics based on the “rational consumer” model (using trade-off utilities, declared purchase intent…), Danone Sensory & Behavior Science and PRS IN VIVO (BVA group) teams explored the actual dimensions of value, inspired by latest behavioral economics learning, using live experiments, with real products in store or at home (instead of concept-boards). As stated by Kahneman, expected value and experienced value are different constructs to measure and must be approached in context to understand what drives “resulting value” in consumers’ memories.
This research consisted of four key steps, each separated by workshop sessions involving the brand team and all other Danone functional experts associated with the project (R&D, procurement, operations… including strategy & insights, led by Danone Sensory & Behavior Science experts and the research agency team. Joint step-by-step creation of the research design helped ensure the necessary alignment on expectations, revealed internal assumptions, and established ownership of results validity. Accordingly, every function was able to take action based on research insights.
1 – Desk and academic review:
In this phase the agency presented to the team relevant variables to define value (from academic literature and internal knowledge of customer experience measurement), with suggestions of how these could be approached through a set of behavioral and attitudinal metrics.
This phase helped distinguish the “value” construct we created from traditional research KPIs such as monetary price, satisfaction, or purchase intent. Behavioral economics shows that memorized value is not equivalent to price: “willingness to pay” is the counterpart of perceived value that includes many other non-rational elements. And “Value for money” remains a ratio and not a metric to measure value in absolute terms . Unlike satisfaction research, no direct question to consumers can summarize the “overall value” attached to the branded experience (eg : can you value this yoghurt from 1 to 10?). But indirect questions about four implicit dimensions can indicate the degree of resulting value for brand users :
– non-substitutability: because what is unique and difficult to replace is valuable
– transactional effort: because what is worth some pain (finding, buying…) is valuable
– quality reputation: because what is known to be a reference in the market is valuable
– personal relevance: because what you already adopted as a regular purchase is valuable
A composite indicator designed by the research agency from these four dimensions summarized information into one dependent variable (overall value score), and was already used for different brands over various categories to create benchmarks.
For each functional block, Danone experts listed all the descriptive dimensions they would like to explore from their functional perspective (e.g. product texture, taste, appearance etc… pot aesthetic, usability, recyclability… brand trust, proximity, advocacy…). The objective of the next phase was to translate these into measurable, consumer-friendly items.
2- Qualitative exploration:
In this phase we explored all value dimensions of mix (functional and emotional attributes) to see how they could be measured from simple observations (visibility, purchase, usage…), or questions (items formulated in micro-benefits that are easy to understand from a consumer point of view). Value is a relative construct, just like preference as described by Behavioral Economics. It is framed by environment and an individual’s mindset: e.g. expectations, competitors, but also functional, sensorial or social influences. Hence behaviors and diagnostic dimensions were collected in situ (store or home) always referring – explicitly or implicitly – to the individual’s context and set of alternatives.
We used a combination of qualitative exploration techniques to gain the full picture of consumers’ experiences at each moment of truth, from a wide range of user types:
– creative prework: with a “life-book” to complete as storytelling (my life with Brand X…): this explores memorized value components and social and symbolic values (family, reputation…)
– mobile-blog self-ethnography: to explore the dynamic of the consumer journey (store/home), and gauge the implicit value dimension of each element within each context
– lab. experiments (card-sorting, product-tasting, and group discussion) to reveal as many dimensions as possible (implicit or explicit) behind every functional block: pot, carton design, base recipe, key benefit, brand content…
Initial results helped our team recognize gaps between their perceptions and how consumers express what they value in the product in everyday life. They also helped generate new assumptions and ideas to monitor in quant.
During a subsequent workshop involving all Danone experts and the agency team, together we turned micro-benefits into questions expressed in consumer-friendly language: e.g. easy to open, to store, delicious, creamy, appealing, makes me feel light, easy to digest, easy to recycle… culminating in a quant questionnaire, where every function could check that no dimension was omitted.
3- Quantitative measure:
In this phase, after a pilot, the agency designed a collection method in a lifelike context across touchpoints with the brand at critical moments of truth. Each tested brand had a 300–400 people sample of users observed and questioned (with quotas on heavy/medium/light).
Consumers were recruited on the street (screened through a list of numerous categories and brand purchases), and invited to participate in a shopping experiment in a shopper lab. PRS INVIVO shopper labs. replicate a natural store environment (of more than 250 m²) and shoppers were provided with a list of five categories (one tested and four for camouflage) and given instructions to shop normally for products in these categories. Shoppers were observed via IP cameras to enable coding of their behavior: because they did not know what was being evaluated and needed to shop across categories within a realistic time, their natural shopping behavior was activated. Reviewing this sequence with them immediately after a shopping trip helped bring to the surface key motivations and barriers to purchase that would be difficult to articulate otherwise. Behavioral and spontaneous indicators (such as purchase rates, visibility, conversion rates…) were collected first.
The research sequence was followed by a more classical questionnaire in booth in which consumers could evaluate brand value elements. All brand users were then given a product to use at home as they would normally do. A recall was organized after a week of use to collect product use experience dimensions.
4- Modeling and analysis phase:
To identify the contribution of each block to overall value an explicative model was designed, calculating individual value on one side (variable to explain), and each block value on the other (latent variable). The correlation of each block value to overall value provided the value split contributions (from weighting of each block) that could then be compared with cost-split elements.
Block weights in value were then used in workshop discussions to challenge their functional weight in cost split, keeping in mind the following:
– where percentage costs outweigh value: a priority is to challenge this block cost structure, or to find a better way to “claim” value for consumers, using diagnostic by block
– however, if the value percentage outweighs costs: a detailed assessment is required to ascertain:
whether costs are allocated to the correct value drivers within the block
whether any optimization levers could be activated to increase overall value
whether cost with low value could be challenged
Key results obtained (2 local brands audited, n=400 x 2 ) before being Rolled-out to other Blockbusters.
– The first leading brand audited proved to build value experienced around one specific product characteristic: distinctively pleasurable texture. Unexpectedly, the health dimensions formerly claimed as important for consumer’s appeared to build low value (perceived as generic). This intrinsic sensorial asset (texture) was on the contrary critical to current heavy users. The team proposed then to reinforce it both in product formulation (made thicker and creamier) and in marketing communication (pack, copy). Implementation resulted in a +10% volume growth yoy.
– Value analysis revealed that this brand also shared very close value drivers with a sister-brand (also audited), offering the opportunity to simplify the formulation portfolio. Aligning products on one single yoghourt formula base, later differentiated via fruit preparation for the sister brand, generated recurring cost savings for both brands.
– Part of these savings could be re-invested to regain uniqueness vs. private label via structural packaging change (New pot design with better “spoonability”) sharpening positioning though recognized distinctiveness (and not simply a marketing claim). This second change, supported with advertising generated a new period of double-digit growth for the first brand.
– Research momentum generated such an echo that the team was offered the opportunity to roll out the methodology on global brands in various countries. Indeed, for an investment similar to a traditional U&A, actions based on research results had a direct impact on P&L.
The step-by-step research proved beneficial to alignment in an international organization, helping solve not just a day-to-day question, but a broader business issue. It also helped answer some local as well as global queries, serving not only research clients but also the whole organization. In addition, the structural insights from a 360° brand approach appeared longer term and helped feed brand knowledge with unexpected views. They particularly helped challenge a historical metrics focus (e.g. brand health tracking) to include some new consumer realities. The holistic vision of the strategic value of “consumer experience” helped change the classical perspective of R&D creating good products and marketing feeding brand content to “justify” price, while procurement and operation look for cost savings…. As a team, all functions rediscovered the importance of the consumer experience to drive business model top-line, and made coordinated changes accordingly.