In the last five years, custom panels have brought tremendous benefits to market research teams across multiple industries. More recently, online communities have started to replace traditional qualitative methods like in-person focus groups. At FGI Research, we help many of the country’s leading utilities draw maximum benefit from custom panels and online communities alike. Every utility client sees promising results as it adopts these up-and-coming market research methods. Below is a summary of key benefits that utilities are generating:

#1 –Savings: Market research is a major expense for electric and gas utilities. Their core studies often include customer satisfaction trackers, concept and ad testing, and saturation studies. Altogether, the cost for these studies can eclipse a million dollars or more per year. Properly implemented, custom panels and online communities can help a utility’s MR department shave off 20-40% of these research costs. Even when trackers require multi-modal designs, the cost savings from using custom panels and online data-collection are huge.

#2 –Quality: Utilities dramatically improve the quality of their market research when they conduct studies from their own custom panel, for several reasons. First, a custom panel with FGI provides a private source of sample that we recruit from the utility’s customer file and use exclusively for their research. Second, FGI Research stresses the importance of appending in-house data such as segmentation scores and customer usage information to a utility’s custom online panel. Commercial online sample sources simply cannot match the depth, quality and reliability of data that such a well-constructed and -managed panel provides. Finally, a utility’s online community (especially when it incorporates both qualitative and quantitative elements) yields data and insights that go far beyond the results generated by traditional focus groups.

#3 –Speed and Flexibility: Custom panels and online communities combine to form a ready and reliable platform for any number of real-time market research applications. For utilities, this means that studies launch quickly and field efficiently. In most cases, FGI’s utility clients can conduct multiple studies in the time it used to take to complete just one. They can much more rapidly determine the feasibility of a proposed study and design an approach that will meet their analytical, budget and timing requirements.

Custom panels and online communities help gas and electric utilities generate better, faster and more cost-effective market research for their internal clients, which in turn helps them satisfy those clients more effectively. Even better, new insights from innovative research methods fuel superior decision-making across the board, so a utility can see gains in its overall performance.

David Wilson
CEO
FGI Research

Popular association with poor quality and “looking cheap” have often kept store brands (private label products) from enjoying broad acceptance and sustained market share. There is even a lingering perception among some consumers that “store brands” equate to “generics,” an antiquated association to be sure. Yet store brands also have a universal reputation for saving consumers money. Data from a recent FGI study shows that 97% of US consumers believe “store brands cost less than national brands.”

Our findings suggest that consumers are poised to expand their purchases of store brands. Not only do a third of those surveyed buy more store brands than they did a year ago, but 1 in 4 plans to increase his or her store brand purchases in the future. As this CBS report reveals, even brand loyalists are open to switching to store brands, especially when the perceived quality is as good as, or better than, the national brand.

A Massive Market is at Stake
Of the $500 billion dollars that United States consumers spend yearly across all categories, store brands claim only 17% ($84 billion), but that share is growing –and national brands large and small have felt the shift. Store brand sales have even seen gains in categories that national manufacturers used to consider “safe,” like baby food, feminine hygiene, health and beauty products, household cleaning goods, and oral care, among others. The change is less surprising when you look at other markets around the world. In Western Europe, for instance, the market share of store brands is 2-3 times larger than that of national brands. As American consumers’ habits start to mirror this tendency, American companies are responding: Target plans to add another 100 products to their “UP & UP” brand in 2010.

Store Brand Quality Catches Up
FGI Research asked US consumers how they view the quality of store brands vs. name brands. Specifically, we asked how much they agreed with this statement: “The quality of store-brand products is just as good as name brand products.” A full two thirds (65%) of consumers said they “strongly agree” or “agreed somewhat.” Furthermore, four out of five (79%) consumers strongly agree or agree somewhat that “store-brand products are an excellent value for the money.”

“Store Brands are Just as High-Quality as Name Brands”

These data suggest strong consumer confidence in store brands on questions of quality and value. On the whole, consumers view store-brand products as comparable in quality to name brands. Given the 97% who believe store brands are less expensive than name brands, and the more than 60% who believe store-brand products give them a good value for the price, it follows that switching from name brand to store brand may be one way consumers can save money without sacrificing quality. But how many will actually make the switch? FGI answered that question with some data about purchasing habits.

Store Brand Purchases Pick Up
Over a third (35%) of consumers said they were buying more store brands than a year ago. Asked to project their purchasing habits for the next year, 25% said they plan to increase their consumption of store brands. These results support industry predictions that store brand growth will be 13% annually. Should the US growth rate reach half of these levels, store brands could capture another $5 billion per year in consumer spending. This is a healthy “trial” statistic; retaining that share of wallet will ultimately depend on consistency of store brands’ competitive quality and pricing.

Grocery Store Brands Fare Best
FGI Research asked a few specific questions about store-brand food products (groceries). Up to 79% of consumers believed store-brand food products were “just as nutritious as name brands.” A larger percentage (83%) was willing to serve store-brand food products to family members. Meanwhile, 63% of consumers said they were “extremely likely” or “somewhat likely” to buy store-brand food products compared to national brands, while only 15%  said they were “extremely unlikely” or  “somewhat unlikely.”

“Thinking Only of Food Products, How Likely are You to Buy Store-Brand?”

Store Brands Gain Traction Across Categories
Store brands consumers were most likely to buy included food, household goods, and “general merchandise” (a broad category that encompassed seasonal items, school supplies, automotive needs, etc). Hair care products, over-the-counter drugs and baby care also fared well. Consumers were less likely to spend on store-brand apparel and home goods like appliances.

“In which of the following categories do you purchase store-brand products?”

Actionable Insights
This FGI Research study demonstrates growing consumer confidence in the quality, price and value of store-brand products, confidence which translates into higher consumption of store brands. Consumers are likelier to purchase store-brand food, household items, general merchandise, and health and beauty (less so home goods and apparel). So, what are some key actions to consider based on these findings?

• Retailers and manufacturers should continue to invest in store-brand offerings. These products usually bring higher margins for retailers and significant gains are possible with the proper research, product development and marketing.
• Some store brands’ packaging might need improvement. High quality, professional packaging and attractive pricing will drive sales.
• National brands must stay abreast of consumer preferences and behaviors, especially as regards leading store-brand offerings. Further erosion of their market share is likely without aggressive research, product development and real differentiation, and marketing.
• Private label manufacturers must remain aware of quality concerns to maintain their strong performance relative to national brands and even enhance their competitive edge. This means robust marketing and packaging research and conscientious response to consumer preferences.

Next Steps You Can Take

• Learn more about the results of this study: complimentary access to the data in this report, including cross-tabulated results, is available upon request from FGI Research.
• Contact FGI Research: click here or call us at (919) 929-7759
• Explore FGI Research’s market research solutions, including custom panels, full service research, and our online sample (SmartPanel).
• Join FGI Research’s online panel to participate in future studies.

Survey Methods
Respondents: 367
Date of Survey: February 26th-28th, 2010
Sample Source: FGI SmartPanel

This nationally-representative sample consists of adults aged 18 and up and is balanced to the US population using recent census data. One can say with 95% confidence that the maximum margin of sampling error is ±4 percentage points.