Gregory Stephens, RD09.01.10
In today’s economy consumers are expecting greater value from every product they buy. This value is often defined as personal ROI (return on investment), meaning we are beginning to focus on making the most of everything we have; not just products, this includes our investment of time, experience and money. These value requirements transcend product cost and function to include “a value differential” that prompts consumers to look longer and harder at the products they buy in order to evaluate the “real” value of the products as opposed to just the “perceived” value—this is the differential that is now driving the new consumer demand. Increased food functionality, fairtrade ingredients and a sustainable supply chain are all examples of value differentials that are beginning to play bigger roles in consumers’ purchase decisions.
Data from several recent Natural Marketing Institute (NMI) consumer research studies provide insights into how consumers are reevaluating products in the market based on this emerging set of values.
Adjustments in Consumer Purchase Behaviors
As the economy dipped to recessionary levels and personal wealth declined dramatically, consumers have been forced to make major adjustments in their purchase behaviors. Forty percent of American consumers indicate that during the past year they have become savers as opposed to spenders. Interestingly, more than half report they enjoy a more satisfying life by having less material possessions.
Given the continued economic uncertainty and less discretionary income, consumers are reevaluating not only their spending, but also the true value of their purchases. For instance, the value of store brands continues to gain in the consumer’s eyes with almost 70% of the population agreeing that store brands are often as good or better than national brands, an 11% increase since 2007. Beyond this, consumers overall are becoming more experimental across brands and less brand loyal.
This new value-conscious consumer behavior is also reflected in how consumers view advertising as well as the shopping experience. They are increasingly skeptical of companies telling them “what they need,” and instead seek more control over decisions for themselves and their families. Today more than half of Americans indicate they would rather find out about new products and services on their own compared to traditional advertising.
The shopping experience has become another level of personal ROI, with 70% of consumers agreeing that when they go shopping the overall experience with the store is just as important as what they are purchasing. Keep in mind that this desire for an “experience” manifests itself in many aspects of consumer purchase behavior.
Consumers Expect More from Companies
The values supporting fairtrade, resource management and the efficacy and effectiveness of corporate social responsibility (CSR) programs are increasingly part of the emotional and social value equation yielding a growing dimension to personal ROI.
CSR is gradually gaining momentum on how consumers view a company and its products. Based on trended research, it appears CSR will continue to grow in consumers’ minds as a value differential and will increasingly impact purchase decisions.
Increased corporate responsibility measures are not only viewed by consumers as the “right thing to do,” they are also impacting consumers’ willingness to pay for that added value. Twenty percent of consumers indicate they are willing to pay 20% more for products that are made in an environmentally friendly and sustainable way.
New Values Are Impacting Food Choices
Food is no longer a single dimensional means to provide sustenance. It, too, has value differentials ranging, for example, from performance to disease prevention to anti-aging and quality of life issues. In fact, the majority of consumers report believing that eating healthy helps them feel in control of their lives, and healthy foods and beverages can be used to improve the quality of their lives. Up to one-half of U.S. adults indicate they would be more likely to purchase a food or beverage product if it provided a health benefit (e.g., heart health, boosted their immunity, lowered cholesterol, helped prevent cancer and boosted their energy levels).
With a commanding two-thirds of consumers preferring to get their daily nutritional requirements in the foods they eat rather than having to take supplements, consumers are increasingly looking for functional and fortified foods—foods with nutrients they feel are difficult to get in their current diet. For example, one-half want their store to carry foods enriched with omega 3s and one-third expect retail stores to stock foods enriched with probiotics. Use of fortified foods has grown 34% since 2000; functional food use has literally doubled.
Consumers are also using value differentiation to help make better food choices—to avoid negatives like preservatives and pesticides, which many believe have caused an increase in food allergies. Interestingly, 80% of users of organic foods and beverages indicate that they began using organic products to avoid pesticides, toxins, hormones and GMOs. This reflects how organic consumers use the value differential of “less is more” to enhance their personal ROI.
Today’s consumers are rethinking value based on new measures and beliefs. While monetary cost will always be a factor, consumers are increasingly evaluating the real value of products as they expect more return on their personal investment. Corporate social responsibility, sustainability, functionality and fortification are just some of the differentiating factors that may boost the consumer’s perceived value. Understanding how these value differentials affect consumer purchase decisions is increasingly important in today’s uncertain economy.
