CONSUMER
GOODS
SECTOR
To Be The Best,
You’ve Got to Beat The Best
Consumers seldom, if ever, make a monadic purchase decision. Explicitly or
intuitively, nearly every product is compared to something else. With remarkable
speed, individuals contrast the new offering to the products they consider the most
relevant competition. Even “New to the World” products, not withstanding their
pithy title, typically have some informal reference point for the consumer – at least
in terms of satisfying a need or solving a problem. To paraphrase Einstein “Everything
is relative.”
Of course most marketing professionals are acutely aware of this phenomenon. In fact,
Michael Porter in his seminal book Competitive Advantage1 defined success as simply
“outperforming the competition on dimensions that add value to the consumer.”
Porter clearly emphasizes the importance, however difficult, of breaking through the
clutter of the marketplace and gaining relative preference versus the competition on
some salient dimension.
Steve Perry
Marketplace Clutter – One Problem, Many Solutions
Senior Vice President,
Client Service
Ipsos Marketing
The art, of course, is understanding the competition from the perspective of the consumer.
To what is your product being compared – what is their competitive context?
steve.perry@ipsos.com
The answer can be intricate. The choices facing today’s consumer are numerous and
varied. Advertising and promotion fight for share of voice, merchandisers and retailers
strive to build a ubiquitous sense of presence, and manufacturers continue to
proliferate sku’s targeted at every conceivable niche, creating a complex competitive
framework for today’s brands.
Competitive context is further confounded by the sometimes “fuzzy” boundaries
that actually constitute the relevant set of alternatives available to satisfy a particular
need. Traditional category definitions are constantly blurred and expanded by both
the consumer and the manufacturer.
Within this dynamic environment, each individual may have his/her own unique set
of considered products (crossing several categories) they use to satisfy a particular
need or solve a problem. Capturing these individual considered sets, however subtle,
is critical to understanding the “real” competition and creating competitive advantage. What is the consumer’s current behavior? What products do they presently
buy or use to satisfy a need? What are the relative strengths and weaknesses of the
competition? The answers clearly serve as underpinnings for predicting the success
of new products.
October 2010
© 2010, Ipsos
For more Ipsos Marketing POVs, visit www.ipsos.com/marketing/knowledge
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To B e T h e B e s t , Yo u ’ v e G o t t o B e a t T h e B e s t
The Framework for Incorporating
Competitive Context
Competitive Context In The
Respondent Exercise
Yet strangely, marketing research does not always incorporate competitive context into the respondent exercise
or the analysis. Concepts and products are often exposed
monadically. Questions are asked in a vacuum without
providing appropriate context. Commonly accepted metrics such as Purchase Interest, Likeability, etc. are usually
presented as absolutes or (worse) compared to historic
databases containing previously tested concepts or products in the category. None of these approaches simulates
how consumers actually make their decisions.
Competitive context is a fundamental principle of Ipsos
Marketing, Consumer Goods. We imbue it in all our
research – concept and product optimization, pricing,
brand equity, as well as forecasting studies. With the
appropriate scope and breadth (depending on study
requirement and constraints), we seek to incorporate a
measure of competition into every stage of our methodologies – respondent exercise, stimuli exposure and the
actual analysis and modeling.
The ultimate goal should be to capture what consumers
will see as the relevant competition, however difficult. We
are quite confident it’s not all previously tested concepts
incorporated into traditional normative databases! To
address this issue, Ipsos has developed a system and
database that benchmarks innovation against the consumer defined competition, not historic norms. As outlined in the Ipsos Point Of View “Are Concept Databases
Leading CPG Marketers to Make the Wrong Decision”2
(Lee Markowitz), the Ipsos database compares the test
concept against the respondent’s Most Often Purchased
Product (MOPP) to realistically reflect the competition in
the marketplace as the benchmark for success – to be the
best you have to beat the best!
Equally important, we have found that the relationship
between the test concept and the MOPP transcends
country and category constraints to produce a stable database for evaluating innovation across a wide variety of
conditions. Essentially; the MOPP comparison captures the
effect of category and cultural differences. (See Figure 1.)
Figure 1
© 2010, Ipsos
Consideration Set
Most Ipsos research begins with establishing a realistic
competitive landscape for the innovation evaluation. At
the very minimum, we ask respondents to review and
express their preferences for the leading brands in the
category. Typically, established brands can serve as the
reference point for most consumers in the purchase decision process.
Ideally however, we prefer to have respondents define
their own individual competitive set to more accurately
simulate their view of the marketplace. As noted earlier,
this includes the MOPP but may also (in the case of variety
seeking categories) include the respondent’s full considered set. The set can be framed with a traditional category
definition (for example candy bars) or it may be more
broadly defined around a need (products you buy to
satisfy sweet cravings). Again the critical element is to
incorporate the competition the innovation will face in the
market (and in the consumer mind) and to capture the
initial primary advantage of current brands vs. new entrants.
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Clutter Exposure with Competitive Concepts
Consumers are bombarded by media and brand messaging, with one estimate placing the number of ad messages to which consumers are exposed daily in the range
of 5,000.3 Whether via clutter reel, portfolio of leading
market brands, or careful prompting, new ideas are not
exposed in a vacuum but rather in a manner similar to
what consumers experience in the marketplace.
Retail Environment
Competition at the shelf is also a driver of product selection. When appropriate, Ipsos simulates the clutter of the
retail environment and the symbolic fight to gain buyers
attention. Forcing the respondent to make a selection
from the numerous alternatives can provide a key indicator of future behavior.
Relative Preference
The test concept is often directly compared to the existing
competition of considered brands and market leaders.
Respondents are asked to express their relative preferences, just as they implicitly do in the marketplace. It is
important to emphasize that these comparisons are to
the brands or products the individual respondent considers relevant – not to some designated standard. It is the
individualized comparison that provides the sensitivity
to measure small but meaningful differences. Does the
innovation gain preference versus the consumer’s alternative choices?
Index
Relevance
4.9
5.2
94
3.3
3.0
91
Differentiation
5.5
5.0
112
Market Permeability
Ipsos also incorporates the competitive structure of the
market into the analysis and share estimation provided
within our volumetric tools. The permeability and fragmentation of a market or category are critical determinants to the success of any product.
For example, in a variety seeking fragmented category
such as candy, a brand can enjoy financial success by
becoming a reliable third or fourth choice for a buyer.
However in a more tightly defined, loyal category such as
detergent, it may be necessary to be number one among
your target to ensure the viability of the brand.
Share of Choice
The relative preference of test and competitive brands
gathered in the interview are typically converted into
shares of choice. Internal research suggests that for most
CPG categories only 20% or less of any one respondent’s
purchases is legitimately available for switching. Choice
estimates indicate relative strength of brands and provide
sensitive measures of degree of competition via sources
of volume and cannibalization. (See Figure 2.)
Share of Choice
When pricing analysis is warranted, Ipsos recommends
choice analysis where we incorporate competitive brands
and prices to simulate trade-offs and interactions, rather
than simply rely on a monadic evaluation of price.
Brand
C B
Brand
Not only does grounding the respondent exercise in
competitive context provide a face validity that monadic
product evaluations often lack, but it also provides a
framework for powerful analyses.
Brand C
Brand A
Brand D
Analysis Within Competitive Context
Test
Concept
The adherence to competitive evaluation continues through
the analysis of the data and presentation of results.
Indexed vs. Competition
© 2010, Ipsos
MOPP
(Mean Score)
Expensiveness
Choice Sets
The primary Ipsos evaluation models are built and calibrated against the competitive brands, rather than against
some previously established set of database norms. We
firmly believe this reflects the actual consumer decision
process – test concepts and products must outperform
relevant competition in order to win customer’s business.
Monadic ratings may provide useful diagnostics but they
can only infer competitive advantage.
Test Concept
(Mean Score)
Source of Volume
Brand A
Brand B
Brand C
Brand D
Figure 2
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Market Drivers
Taste
(39%)
Everyday
Use
(16%)
Health
(15%)
Variety
(9%)
Functional
(8%)
Energy
(6%)
Crispy
(5%)
100
80
60
40
20
0
–20
– 40
–60
–80
–100
Points of real differentiation versus the market
––– Your Innovation ––– Competitor 1 ––– Competitor 2
Figure 3
Competitive Driver Map
About Ipsos Marketing
Ratings of specific attributes and perceptions (both functional and emotional) for the test and competitive brands
are always analyzed and presented in actionable competitive maps to identify perceived differentiation. The most
important and salient dimension can then be leveraged
to create competitive advantage and preferences. In our
forecasting models, the relative advantage/disadvantage
on key drivers is actually directly incorporated into the
volume prediction. (See Figure 3.)
Ipsos Marketing – The Innovation and Brand Research
Specialists – is the Ipsos brand for Marketing Research.
Compete is a Verb
As markets become more fragmented and competition and
choice become even more intricate and subtle, the ability
to understand and measure the competitive landscape
at the individual consumer level will become even more
important in developing and sustaining viable brands.
Whether launching a close-in-line extension or a new-tothe-world product, this continued focus on understanding
and capitalizing on the nuances of competitive opportunities will allow marketers to enjoy a higher degree of success
in the more sharply contested mass and emerging niche
markets of today’s economy. Ultimately, consumers will
always welcome a new or improved product that out performs the competition on dimensions that matter to them.
Ipsos Marketing helps clients to develop and launch new
products and services and reposition existing brands,
understand the success factors behind their brands and
maximize the impact of their marketing decisions. Supported by specialized teams, Ipsos Marketing offers an
in-depth understanding of the drivers of consumer choice
and of the marketing challenges faced by our clients. Our
leading-edge solutions integrate qualitative and quantitative research, using engaging digital tools as well as
advanced modelling and forecasting techniques.
Ipsos Marketing is a specialization of Ipsos, a global surveybased market research company that offers expertise
in Advertising and Marketing research, Customer and
Employee Relationship research, Media, Content and
Technology research, and Social and Corporate Reputation
research. Ipsos is present in 64 countries, with a leading
position in both mature and emerging markets. In 2009, it
achieved global revenues of 943.7 million euros, Marketing
research contributing to 47% of Ipsos’ total global revenues.
Visit www.ipsos.com/marketing to learn more.
Author
Steve Perry, Senior Vice President, 203.840.3431
steve.perry@ipsos.com
References
Michael Porter, Competitive Advantage, Free Press 1985
Lee Markowitz, Are Concept Databases Leading CPG Marketers to Make
the Wrong Decision, July 2010
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Louise Story, Anywhere
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© 2010, Ipsos
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