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Brand differentiation more critical than ever

Evidence continues to mount that it is “delight” that defines the consumer relationship with brands in the beverage category.

That’s the conclusion drawn by Robert Passikoff, president, Brand Keys, based on the findings in the Brand Keys 2012 Customer Loyalty Engagement Index (CLEI).

For all 30 brands tracked in the Beverage category, attributes relating to “drinkability” and “brand value” are exerting the strongest impact on customer decision-making, category-expectations, and engagement with brands.

While expectation levels for delight vary by category, brands in the Beverage category that were best at creating customer delight are:

• Coca-Cola (displacing Pepsi in Soft Drink category)
• Diet Coke (displacing Diet Pepsi in Diet Soft Drink category)
• Dunkin’ Donuts (Coffee)
• Dunkin’ Donuts (Packaged Coffee)

“Consumer expectations have been accelerating for some time,” said Passikoff. “Many industry pundits have looked at the pressures on price and drew the erroneous conclusion that brands have lost their value. Quite the opposite is true. Real brands are more valuable than ever. We need only look to the continuing success of luxury brands as evidence. Brands that lack meaningful differentiation are being punished by economic and behavioral shifts, becoming ‘category placeholders’ because consumers do not look for commodities in their search for delight.

“Given the levels of commoditization we’ve witnessed in product/services and pricing/promotion strategies, it’s no surprise consumers are looking to strong brands to offer a difference,” Passikoff continues. “Consumers know the brands, know what they do, and know what they’re willing to pay. Satisfaction has never been more cost-of-entry while delight is the new differentiator. Experience is key, whether it's experience with products themselves, or how products are put into the hands of consumers – from rapid delivery to product introductions – including the after-life of service and support that the consumer experiences. Consumers want a higher level of experience.”

This year consumers’ skyrocketing desire for experience and authentic brand values are exerting the strongest impact on customer decision-making and profitable engagement with brands. Brands that can meet, or exceed, consumer expectations become category leaders. “This only matters, of course, if marketers keep score by counting sales and profits, not by merely tracking awareness levels,” noted Passikoff.

Beverage brand loyalty and engagement rankings for 2012:

1. Dunkin’ Donuts
2. Starbucks
3. McDonald’s
4. Tim Hortons

Packaged Coffee
1. Dunkin’ Donuts/Starbucks (tie)
2. Green Mountain
3. Folgers/Peets/Allegro (tie)
4. Maxwell House/Chock Full 'O Nuts/Seattle's Best (tie)
5. Caribou/LavAzza/Eight O'Clock/Millstone (tie)
6. Nescafe
7. Yuban

Soft Drinks
1. Coca-Cola
2. Pepsi
3. Mountain Dew
4. 7-UP/Sprite (tie)
5. Dr. Pepper
6. Fanta

Soft Drinks (Diet)
1. Diet Coke
2. Diet Pepsi
3. Diet Mountain Dew
4. Diet Dr. Pepper
5. Diet 7-UP

“At a time when brands are struggling to differentiate themselves and to find ways to profitably engage with customers, the changes in the 2012 Brand Keys Customer Loyalty Engagement Index serve as a benchmark for marketers. Products and services that respond with a meaningful consumer-centric view of their category – delighting the customer – based on predictive loyalty metrics, stand to gain the most, and will establish themselves as this decade’s brand leaders,” concludes Passikoff.

The complete listing of the 83 category rankings can be found at Brand Keys.

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