By Max Jenvey of Oxxygen Marketing Partnership, a strategic business accelerator specialising in the bakery, foodservice and convenience retail sectors.
My grandmother always used the saying "Penny wise but pound foolish" and, over the years, I’ve come to really understand what she meant.
We all need to watch our pennies these days and even more challenging is where we spend our hard-earned pounds. The smart money follows consumers’ views and spending behaviour and delivers back exactly what the consumer demands quality products at value pricing. The real question is can this strategy work for us on the high street?
The answer may lie in Sayer’s new brand Poundbakery and, as the name suggests, patrons can find their favourite fresh sandwiches and filled barms for £1, two meat and potato pies for £1 and hot drinks for 50p. This brand development represents a dramatic departure from Sayers 2008 research, which focused on traditional bakery values.
Following newly commissioned extensive consumer interviews of all demographics by the Market Creative Consultants in July 2010, Poundbakery was launched as a strategic answer to a challenging economic climate. Sue Benson, managing director at Market Creative told us that they focused on local competitors specifically looking at price sensitivity above and below £1. Results confirmed price versus quality was vitally important in the consumer mind-set, especially in the bakery category. Value at that all-important £1 price point was key, with quality as number one. Other insights included ingredients, locally sourced produce and freshness.
This was a very bold move indeed, as not only did Sayers want to retain its loyal customer base, but also gain market share by enticing non-users into its stores.
Our colleagues at him! told us that 23% of customers are actively seeking lower-priced or cheaper products today compared to 12 months ago (Food-to-go 2009 report average).
Given this focus on lower-priced products are customers prepared to compromise on quality? The short answer is no. Consumer research company him! told us that 43% of customers make their purchase decisions based on product quality, which ranks top. When choosing what food to buy 52% base their selection on freshness, followed by 33% on taste.
We can clearly understand why price vs product quality is a recipe for success, so good luck to Poundbakery we’ll be watching your progress.