Prepared by: Danielle Pinnington / March 2005 www.shoppercentric.com Page 1 of 5

“In spite of recent noise about price cuts from other retailers, independent surveys prove time and time again that there’s only one place to come for
Britain’s best value weekly shop.” said Angela Spindler, ASDA’s Trading and
Marketing Director, “Today’s cuts are the deepest and broadest we have ever made and show that, when it comes to value, there are those that talk and those that deliver.” Source: Asda.co.uk
As the choices available to shoppers become ever greater, the role of price as a means of differentiating a store or product from its competitors increases. The current price war between the UK grocery retailers is a case in point, as reflected in the quote from Asda.
The interesting point for us as a specialist shopper research agency is that there is a big question mark over whether the deep price cutting now evident within the retail industry is actually necessary.
At the Retail Week Conference 2005, PWC presented results from a pricing study which clearly showed prices on the UK high street have almost halved in the last 10 years, and yet shoppers continue to believe prices are on the increase.
Within our research we are regularly asked to gauge value for money perceptions among our samples, and such perceptions are pivotal within the NPD testing processes of most manufacturers. Yet a definition of ‘good value’ is hard to find.
In 2004 IGD produced a report on Value Retailing which highlighted the importance of product quality and a number of store environment factors when shoppers judge the value of an offer, and this gives a very good view of value retailing as a whole.
Yet it did not tackle the definition of ‘good value’ when a shopper applies it to a product they are considering.
As a result we decided to put ‘good value’ to the test within our programme of short reports, interviewing 1000 adults as part of the process. Our findings are detailed in the remainder of this document. www.shoppercentric.com Page 2 of 5

In order to get an overall understanding of ‘good value’ we asked respondents to choose the phrase or phrases which described what ‘good value’ meant to them from a number of phrases developed via qualitative interviews.
The results are shown on the chart below:
Total
A well known brand at a low price
The price you feel comfortable paying
Extra product for the same price you’d normally pay
The best selling brand at a reasonable price
A promotion with the same size for less money
The lowest price for that type of product
Average No of mentions: 1.8
12
26
22
40
38
37
1
Base Q1: Total=1003
Despite this being a relatively simplistic question, the take outs are quite varied:
1.
Perhaps not surprisingly there is no one definition of good value, with the top three phrases being chosen by a similar proportion of respondents, and on average respondents choosing 2 definitions in response.
2.
This is further supported by the fact that over a third of respondents felt
‘good value’ is quite a personal judgement – ‘the price you feel comfortable paying’.
3.
Yet, good value is most definitely not as simple as having the lowest price, with only 12% of our sample choosing this definition.
4.
Equally, value is not just about paying less, as extra product free promotions are felt to be a better definition of good value than a price reduction.
5.
Another important point to note is that quality again has a role to play, even at this quite focused expression of value, with ‘a well known brand at a low price’ achieving the highest response. www.shoppercentric.com Page 3 of 5

Our experience of shopper research has shown us how diverse the reactions to different promotional mechanics can be when compared across categories – one single mechanic will not be appropriate to all categories. As such we were aware that the definition of ‘good value’ could also differ according to the category in which you are shopping.
As a result we asked our respondents to also give their definition of ‘good value’
(again using the phrases developed from qualitative research) when buying in a particular category. Men were asked to respond in relation to beer, shaving products and soft drinks, whilst women were asked to focus on washing powder, skin care and soft drinks.
The responses are compared by category on the chart below:
A well known brand at a low price
Beer
(Men)
35
Shaving
(Men)
37
Washing
Powder
(Women)
34
Skincare
(Women)
39
Soft Drinks
(All)
34
The price you feel comfortable paying 14
Extra product for the same price you’d normally pay 22
17
16
15
20
17
14
13
21
The best selling brand at a reasonable price 16 19 19 21 16
A promotion with the same size for less money 4
The lowest price for that type of product 8
1
10
7
5
4
4
5
12
3
Base Q2: Total=1003; Men = 451, Women = 552
When asked in the context of an individual category, the respondents were more clear about the definition of ‘good value’ with each respondent choosing just one definition. This single answer pattern of response means that ‘a well known brand at a low price’ takes a more dominant position in the definition hierarchy, yet still only achieves around 1/3 of the response. www.shoppercentric.com Page 4 of 5

A number of other key findings are highlighted:
• Men are more likely to see extra product free as ‘good value’ when buying beer than when buying shaving products. A similar pattern is seen among women when buying washing powder versus skincare. This limited interest in extra product free in the toiletries sector mirrors results in work we have conducted in the area of promotions in the healthcare category. Looking at the differences here we could conclude that there is limited benefit to promoting with extra product in categories which are part of a strict routine.
• Product quality comes to the fore in the ‘good value’ definition within skincare, more consistently than in any of the other categories we considered, highlighting the importance of product confidence in this category.
• Although still a low figure, the response to ‘lowest priced product’ is highest in relation to soft drinks than any other category, suggesting a relative level of commoditization.
The retail focus on ‘value’ as defined by low pricing is potentially mis-interpreting the shopper definition of ‘good value’. Price give-aways make for good headlines, and can re-enforce a retail positioning. But this research suggests that retailers should look beyond price as the main tool for differentiating, particularly as the retail market in the UK toughens.
There are also clear implications for the manufacturing sector. Suppliers should ensure that the brand positioning is not undermined by long term price cutting.
Instead well known brands should place more emphasis on value added benefits if promotions are felt to be a necessary part of the marketing plan. This is something we are seeing time and again in our client based research.
In summary, shoppers are demanding, but they also have complex needs that won’t be addressed purely by price cutting. Good value within the purchase decision is not simply about price point.
This report is part of a series of research pieces aimed at giving us a point of view on the key retail issues of the moment from the shopper’s perspective.
If you would like details of these reports, or news of reports due out later this year, please contact us at: info@shoppercentric.com or take a look at our report listings on our website at www.shoppercentric.com. www.shoppercentric.com Page 5 of 5