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CONFECTIONERY FROM PAGE 59 high base prospects, you want quality frequency, and then you’ve got to find that beautiful equilibrium of price and promotion, as opposed to a merely high/low strategy or the everyday-low- price strategy. “Again, now with a recessionary mindset, you need to understand elasticity to understand where you should play. So, beyond price, we're talking now about value and how to communicate value to clients or consumers. It’s all about what they’re going to get beyond just cheaper products, through marketing.” According to Ferndale Confectionery General Manager Leigh Edward, price promotions and displays are generally key factors for driving sales and rewarding consumer loyalty. He points to a general expectation of price promotion in the retail industry. “We’re trained to understand that at some point, a confectionery product will be on promotion, so, as manufacturers, we have to participate in this type of marketing,” Mr Edward said. “The challenge for manufacturers and retailers is the frequency, because it’s a fact that consumers can be trained to buy two or three packets of confectionery when on special and then to avoid buying the product until it’s on special again. “So, price promotion is important, but it can’t take place too frequently.” When it comes to marketing, Mr Nel advises companies not to “go quiet”, but to step up, “be present, show that you're there with your consumer". He says it’s advisable that companies spend on research, because the consumer has changed, which means that companies need to understand their priorities and behaviours, streamline their range, put their best foot forward, not underestimate the importance of NPD and capitalise on digital marketing. “Keep chatting, avoid going dark, and maintain relationships with consumers,” Mr Nel said. He emphasises that brands that offer a small additional indulgence have opportunity because consumers are looking to treat themselves with some indulgences during trying times and that range, rationalisation and innovation are themes of the day. IRI Lead Consultant Jan-Willem Verstraten says he suspects that in the past, promoting ‘Australian made’ on packaging has done little to trade up a product. He believes, though, that at the close of this pandemic, ‘Australian made’ on packaging will be much more relevant for products because of the perception of health around the claim. “The ingredients in the product could be cheaper to make and have the same effect on the consumer that the idea of ‘organic’ has,” Mr Verstraten said. Nielsen agrees that local origin has become an important accelerator in brand/product decision making during Covid-19 and will remain a major choice driver into the future. Much of this has been due to interrupted global supply chains, as well as the need for local transparency and trust of local ingredients and sourcing. Power of consumer spend varies Consumers, says Nielsen, will adjust how they allocate their available spend depending on their circumstances. The data analytics company says that as unemployment levels increase and economic and business forecasts plunge, two types of consumers are emerging. There are those relatively unaffected by or insulated from health or income loss who have similar or even more discretionary income due to their inability to spend on out-of-home eating, entertainment, travel, etc. In contrast, a second group of consumers have had their income and spending significantly curtailed or constrained due to unemployment, furloughing or other Covid-19-related challenges. For some, initial cutback measures will be precautionary, but as living restriction horizons extend, these measures will become mandatory as incomes are further compressed and strained. Insulated consumers, predominantly those with middle to higher incomes, with minimal or no employment impact as a result of Covid-19, will have more freedom to buy what they want and need, and may even trade up in certain categories to replace the ‘out of home’ experience that has been out of reach amid restrictions. However, as horizons expand, even this group will become increasingly cautious with their spend, thinking they ‘may be next’, resulting in a focus on savings and cutting back on higher-value discretionary spend, Nielsen says. The company adds that constrained consumers, often lower income but not exclusively, will be looking for value and seeking ways to make savings in their everyday lives given their new financial restrictions. As their uncertainty extends depending on the length of this situation, their cutbacks will start to become more desperate and even small indulgences will be scaled back as they seek cheaper alternatives or avoid certain purchases altogether. On the upside, Nielsen says this situation offers retailers and brands the chance to rethink and reset their direction moving forward. Everyday low prices, shallower discount levels, and economy or bonus packs may be better ways to incentivise loyalty to both brands and retailers as consumers continue to limit their number of shopping trips and visits to multiple stores even when stock levels start to stabilise. Nielsen says brands will need to truly differentiate themselves, with a focus on new consumer priorities, to ensure they deserve to be on shelf – by offering true incrementality for each item in a given range. TO PAGE 62 60 CONVENIENCE WORLD SEP/OCT, 2020