Compass for brand builders

Compass for brand builders

How do customers navigate brands and advertising in uncertain times?

Background and objectives Our immediate environment, broader society, and even the world are all changing at a hectic pace. This change impacts how consumers navigate and make decisions. Where does their compass guide them in uncertain times? What is important to consumers and what are their expectations? And what opinions do brand builders hold on these matters?

The Netherlands Advertising Jury Foundation (Stichting Adverteerdersjury Nederland or SAN) and market research firm MetrixLab have come together to give brands greater insight into this consumer compass. Insights from qualitative research help gain understanding of how consumers make decisions and what they expect from brands.

At the same time, brand builders are responsible for determining the message transmitted to consumers.

For this reason, we also interviewed these professionals. The research combines similarities and differences substantiated from external sources (including Brand Activism by Peeter Verlegh and Cost of Living research by MetrixLab).

Research objective: To give professionals the tools they need for better insight into consumers' brand choices and expectations.

We will answer the following two questions from two different perspectives (consumers and professionals): • How does the consumer compass work and how do consumers navigate brands?

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What do consumers expect from brands?

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What social issues are important to consumers and what do they expect from companies in this regard?

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What do consumers think about the use of social issues in advertising and what are their interests in this regard? metrixlab.com | 2

We will answer these questions both from the perspective of consumers and the perspective of brand builders, substantiated by industry thinking.

For this purpose, we used MetrixLab's highquality research solution 'Immerse,' an AI-driven platform featuring online interactive sessions overseen by a local moderator. The discussion guide guaranteed consistency between the various sessions while ensuring sufficient flexibility and freedom to ask questions about different elements or other spontaneous questions. For this study, two sessions were conducted with a total of 130 consumers (18+).

The brief interactive sessions (60 minutes) discussed social issues and to what extent they influence the decision-making process. We also conducted an interactive discussion with 11 professionals affiliated with SAN. We talked about their views on social issues and their impact on consumers.

Desire does not necessarily mean action. This applies to both consumers and brand builders and depends on values and resources.

Summary of key insights

The world is a complex place for both consumers and brand builders.

From the consumer's perspective: •

Rising prices for practically all food items

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War in Ukraine

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Energy crisis

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Housing shortage

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Climate crisis

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Nitrogen crisis

"Climate change. We have exhausted the world, but the next generation wants to have a good life too."

"Disasters and wars, due to their massive impact on so many people."

"Poverty: prices nowadays are extremely high."

From the brand builders’ perspective: •

Affordability of products and services

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Sustainable production

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Inclusivity and diversity

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Talent management

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Pressure on supply chain

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Geopolitical shifts

"Keeping costs down: due to inflation, people have less money to spend."

"Climate: the realization that it affects us all is slowly sinking in."

"Consumers are increasingly critical of the origin of products and how things are made. They are more actively researching these issues but they want all of the information to be quickly and easily available."

Consumers expect proof of the claims made by brands It is important to consumers that brands take a position regarding social issues such as sustainability and inclusivity. However, the bond of trust between consumers and brands is not very strong when it comes to brands making claims about social issues in their communications.

Consumers suspect brands of using social issues for PR purposes or for commercial gain. Consumers want -and actually demandtransparency and concrete proof from brands that make claims regarding social issues.

Brand authenticity is often under pressure due to consumers perceiving brand communication on inclusivity and sustainability as over the top. Kirsten van Wingerden, Group Account Lead at MetrixLab, explains: "Making campaigns inclusive is a 'hot topic' among marketing professionals and their communication must be a reflection of society. In this regard, it is sometimes the case that too many brands adopt the same approach, such as showing families with multicultural members. However, greater depth is required to achieve authenticity."

Sustainability: a crucial role for marketeers in creating strong brands The balancing act between price and sustainability also provided interesting insights. Consumers are certainly willing to pay higher prices for more sustainable products, although under certain conditions: they want higher quality and transparency regarding, for example, how they help improve the environment. Consumer: "I expect the product will be more expensive, though I also expect them to explain where the money goes. Conversely, only a small group of consumers say it is acceptable for brands to decrease prices by compromising on sustainability. This therefore creates clear opportunities for marketeers in the area of sustainability. Although there is a value-action gap, both consumers and brand builders agree that the current social trends will remain an important factor in how brands present themselves in the market for a long time.

Strong brands are expected to pay attention to sustainability, not only in relation to communication and price, but throughout the entire marketing mix (price, distribution, product/ service) and in all business operations. This will make the marketeer an important mouthpiece and influencer for the entire company.

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Being realistic in campaigns is key

Brand builders have a reasonably good idea of how consumers think and how this affects their decisions when making a purchase. At the same time, they have a tendency to express this too much and too often in their campaigns. In short, brand builders can optimize their campaigns by incorporating social issues in an authentic and believable way.

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Align with consumers' values: It is important to consumers that brands share their values: it encourages positive reactions to brand activism. Knowing and addressing the values of the target group helps build an emotional bond with the public.

2. Credible and realistic: Avoid exaggeration in adverts in order to improve credibility. Choose social issues that match with the values of the brand and communicate them in the usual way to achieve a sense of authenticity among consumers.

3. Transparency and proof: Clearly communicate how the brand is making a positive impact on social issues in order to reduce mistrust among consumers. Providing proof of concrete activities helps increase trust among consumers.

Our findings in detail Consumers expect higher quality in their socially responsible products and services and are willing to pay a higher price. Honesty and transparency are key factors in this regard.

What do consumers bear in mind when making a purchase?

Price and quality are the most important criteria for consumers when making a purchase. These two main factors are followed by sustainability, first-hand experiences, and secondhand experiences. Consumers first mention quality, price, experience/ reviews, and sustainability.

Brand builders are realists. They have a reasonably good idea of how consumers think and how this affects their decisions when making a purchase.

What stands out is that brand builders...

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Accurately estimate what consumers think in general and cater to their needs concerning socially responsible products and services.

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Underestimate the degree to which consumers pay attention to the particular social responsibility value when making a purchase.

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Overestimate the emotional connection that consumers develop with a brand based on communication about social issues.

Boost consumer trust: pay attention to social issues

What do consumers expect from socially responsible products and services?

Consumers expect socially responsible products to be of higher quality.

Furthermore, a range of aspects of sustainability are important to them.

Brand builders focus on these aspects when devising their strategy. When it comes to socially responsible products, consumers primarily expect them to be sustainable and high-quality.

Sustainability and quality are also important in relation to service, although consumers also mentioned good service and transparency as important factors.

What consumers say: "Sustainability, how long it will last and what country it comes from."

Boost consumer trust: pay attention to social issues throughout the entire marketing mix and business operations.

Joost Vossen, SAN board member and VP of Global Customer Experience at Elsevier, adds: "By allowing social issues to play a role in the entire marketing mix and business operations, the brand can maintain consumer trust. This will be an important role for marketeers both now and in the future."

Young people more often say that they consider the issue of sustainability when making a purchase.

Sustainability is more top of mind when you ask consumers to think more about important factors. Other important factors they mention include availability, how easy it is to buy, delivery time, return options, guarantee, and the look and feel.

"Sustainability, a fair price for the factory/designer."

What consumers say: "Quality that lasts.

A higher price is okay, but preferably still a good price.

The price-quality ratio has to be good."

"Price and quality, but okay, past experiences can also play a role."

"Price. Everything is now so expensive, so I focus on price."

"Price and quality, and whether there is a special offer or promotion that allows you to pay less."

"Maybe past experiences I've had with the brand/product, other people's experiences, price, quality, information on the label."

"Availability in shops, i.e. either online or if the shops are nearby."

"How easily I can buy this and how quickly it can be delivered."

"Where it's made, return conditions, payment methods, experiences with the brand."

"Return options, guarantee conditions."

"For clothing: the fabric, the design, the look and feel. For other items such as appliances: the price, how well-known the brand is, the guarantee."

What consumers say about products: "Minimal or no CO2 emissions, good treatment of employees and suppliers. Customers are treated fairly."

"The products are fair in relation to people, animals, the environment and the Earth."

"Fair ingredients, fair wages, sustainability."

"Quality, organic, fair trade."

"Green biodegradable packaging/ products with quality that is at least equal to competitors supplying non-green/ biodegradable packaging/ products."

"The brand has a good reputation or is at least trying to improve."

"The price-quality ratio, where it is from and how sustainable it is."

"Quality, sustainability and price."

throughout the entire marketing mix and business operations.

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"We don't do much with this issue given that we provide a service."

What consumers say about services: "The price-quality ratio must be good and the sustainability of products must be guaranteed."

"Their services must be truly sustainable, locally produced and small communities must benefit from them." "Recyclable."

"To me, it is important that the production process is sustainable and the employees are treated and paid well."

"That they are there to help you, treat you fairly and don't mess you about."

"That they make themselves available when you need service and are open and honest if you ask them about quality and production."

"Honesty, transparency."

Brand builders focus on all of these elements when devising their communication and strategy, and this applies to both products and services.

What brand builders say: "You try to be as concrete as possible, sometimes even explaining why certain decisions were made that may seem unsustainable at first glance."

"Our product range is increasingly focusing on more sustainable providers in the sense of natural and eco-friendly. Sustainability in the sense of long-lasting is something we have worked on since day one."

"Not at all, as it isn't relevant to our brand." metrixlab.com | 6

"You tell them about what and how you wish to improve and remain open to suggestions from consumers and organizations."

"We particularly ensure transparency regarding the carbon footprint of our services."

"We do focus on transparency and social responsibility."

What do consumers expect to pay for socially responsible brands?

Most consumers don't have a problem paying more as long as socially responsible brands are honest and transparent about the higher price.

When we asked consumers about their price perception for socially responsible brands, they say that a higher price is okay. 63% of the consumers expect socially responsible brands to be more expensive as costs will be higher, e.g. due to fair wages, sustainable materials, no child labor or exploitation, and fair prices for suppliers. A minority of consumers do not agree, as they believe customers should not have to pay for this.

Brand builders also emphasize the importance of transparency. They recognize that, at the moment, it is not always clear for consumers and mention scaling-up as an important explanation for this.

How do consumers assess prices?

The majority (59%) of consumers are prepared to pay a higher price for a socially responsible brand. They are also willing to invest time into looking for a socially responsible brand with

a reasonable price (64%). However, when consumers are on a tight budget, they will choose a cheaper and less socially responsible alternative (63% are unwilling to pay more in this situation).

How do they incorporate this into their strategy?

"It is still the case that sustainability claims can be made in combination with price-aware brand policy."

What consumers say: "With inflation as high as it is at the moment, price has become a vital factor. My number one priority is making ends meet, with social responsibility issues coming a close second."

"A less expensive brand, if you don't have much money then you can't really afford lofty ideals."

"Honestly, I think the pricequality ratio will ultimately be most important, so sometimes I'll simply go with the cheapest!"

"I'd rather pay for quality than for cheap rubbish that will ultimately end up polluting the environment. The cheap option is often a bad choice."

The majority of brand builders also think that consumers want to pay more for a socially responsible brand. Half of them think that consumers are reasonably willing to put more effort into searching for sustainable brands with reasonable prices.

"Try to capitalize with value propositions without compromising sustainability."

"We try to explain carefully that we invest in sustainability, although this message often doesn't get across. Consumers usually decide with their wallets."

"When money is tight, sustainability takes a back seat.

However, this will not derail our strategy at the moment."

It is important to consumers that brands adopt a position on social issues. All kinds of issues are important to consumers, such as poverty, climate, the environment, and human rights.

The majority of consumers (67%) find it important that brands adopt a position on social issues. They (66%) consider this factor when making a purchase, especially young people. Brand builders underestimate the degree to which consumers pay attention to this factor when making a purchase and think that socioeconomic factors play a greater role.

"The cheap option is often a bad choice."

Other than price, what is important to consumers?

Another important factor to consumers is that brands share their values. This factor is followed by sustainability, local production, fair treatment of employees, and an extensive product range. Brand builders accurately estimate that shared values are important to consumers, although they underestimate the importance of sustainability and local production.

This is also shown in 'Brand Activism'

by Peeter Verlegh: "Brand activism should be aligned with its (potential) customers. All other things equal, consumers who agree with the brand will have a positive response to brand activism, while those who disagree with the brand will have a more negative response."

(Prof. Peeter Verlegh, 'Brand Activism', SWOCC, Amsterdam, 2023)

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Why is this important to consumers?

What brand builders say about this:

"Selling products is one thing, but treating your employees, the surrounding area and/or the environment responsibly is also important these days."

"Adopting a strong social position is relatively important, although mainly when the target market considers it important as well. If there's no interest in the issue, the product can expect a long stay on the shop shelf."

"I think it's ridiculous that brands have to pay attention to environmental and other social issues. It just makes it more expensive and it's for the government, not for them."

"The product is the main thing for me, with the social aspect in second place."

"It's not the only thing that influences my choice of brand, although it is a vital aspect and is considered increasingly important given the current state of the environment/climate."

"People mainly choose based on price/budget, with sustainability lower down the priority list. It's not that it's unimportant to them, it's just that people vote with their wallet or with their fork."

"Very important. Consumers are increasingly critical regarding the origin of products and how things are made. They are more actively researching these issues but they want all of the information to be quickly and easily available."

"Purpose is becoming increasingly important, especially among young people: the 'unlucky' generation."

"Quite important. More educated people often pay more attention to this, as do post-modern hedonists and cosmopolitans."

What issues do consumers focus on most?

A wide range of social issues are important to consumers, such as poverty, the environment, and human rights. Current events play a major role in the issues considered important.

Brand builders focus mainly on climate and the environment.

What consumers say: "Poverty, exploitation, extremely low wages, safety, slavery (clothes manufacturing)."

If a brand adopts a socially responsible position, then this doesn't make the brand authentic. The execution is crucial: transparency, credibility, and evidence of action is important to consumers.

What social issues do consumers mainly see featured in adverts?

Consumers predominantly see issues such as sustainability, loneliness, diversity, and the environment in adverts. Around half (52%) of consumers are positive about this, mainly young people. The older group is more skeptical and more likely to take these messages with a pinch of salt, while 7% have a negative impression.

What consumers are positive about:

What consumers are negative about:

"Touching, reminds me of childhood."

"A huge pinch of salt, adverts and marketing are solely intended to boost sales, it's a con."

"I thought it was innovative and in keeping with the times."

"Clear, expertise, credible, reliable, informative, neatly summarized."

"A good initiative and a nice path to sustainability."

"Inspiring and very modern."

"They need to prove it first, I have so many doubts, they say all kinds of things."

"This is insincere, it's just greenwashing."

"I'll believe it when I see it...I don't think most companies can easily be taken at their word."

"Poverty, education, war and disasters. As these issues are hugely affecting the world at the moment."

"Poverty: prices are extremely high, especially now."

"That positive impact is being made regarding environmental issues. We'll be on this Earth for a very long time and we need to take care of it."

"Climate change. We have exhausted the world, but the next generation wants to have a good life too."

"Equality between races and sexes, sustainability, no overproduction, care for the climate and careful use of energy and fuel."

Research by Peeter Verlegh also shows that certain issues are less suitable to be featured in adverts.

"Dutch consumers show a somewhat skeptical response to brands (big brands, favorite brands) that speak up about social issues. The percentage who says they are not willing to listen (38%) is higher than the percentage that does want to listen (26%). When brands speak up, about 1 in 4 consumers are willing to listen, think more about the issue, and perhaps are even willing to change their opinion.’

(Prof. Peeter Verlegh, 'Brand Activism', SWOCC, Amsterdam, 2023)

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What aspects of adverts do consumers like or dislike?

Recognition of regular people's lives and humor are aspects that are received positively by consumers when used in communication. Adverts have a negative effect on consumers when they exaggerate or when they use greenwashing.

What consumers say: "The recognizability of regular people in the adverts and the issues they raise."

"You see different types of people together in the adverts."

"It's often communicated with humor, which holds your attention."

"They are not only promoting their product, they're also positively contributing to social issues."

"In any event, they are thinking about how to tackle social problems. If only every company would do this..."

"Sometimes they exaggerate their position a bit. It could stand to be more subtle and authentic."

"Too much of a good thing, life isn't always like that."

"It doesn't come across as believable. It's a social issue.

All companies claim that they are doing something for the environment but it's more of a sales strategy."

Brand builders believe it is important that the topic is appealing and the communication method is correct.

Peeter Verlegh particularly emphasizes the latter factor: be realistic and give consumers freedom. "Authentic activism connects the issue to consumers’ everyday lives. Brands can use storytelling to provide a 'hook' that helps the brand draw in their audience and motivate consumers to act. These messages should be realistic and not exaggerate, and should not be belittling or overly directive. They should give consumers the freedom to choose whether they want to engage with the issue or not." "A high functional fit can sometimes induce skepticism, because it may lead consumers to question the brand's motives."

(Prof. Peeter Verlegh, 'Brand Activism', SWOCC, Amsterdam, 2023) And what about the theme of inclusivity?

Inclusivity is an important theme that most brands have already incorporated.

However, brand builders and consumers agree that there is room for improvement: it needs to be realistic and sincere without being over the top.

The majority of consumers consider inclusivity to be an important issue for brands. They say: "I think it's important that advertising reflects society, so all groups should be reflected." Some of the respondents believe it needs to be voluntary: "That's good, as long as it's not too forced. "

"I don't like brands endlessly banging on about sustainability and the environment."

What do consumers think of how brands handle this issue and what can be done better?

"You have to realize that life is much harder for some people."

"In principle, I think it's a very good thing that increasing attention is being paid to inclusivity. I just think that some companies go way over the top in their marketing and it's just not believable."

"The people are often attractive, you rarely see anyone overweight."

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"Quite good, but some brands lay it on a little thick."

"I feel like they're not always honest: like they keep quiet about things to make them look better."

"It's going in the right direction and there's more diversity in adverts, more people of color/ LGBTQ+ people, more tolerance."

"There is still too little attention paid to inclusivity...there's still too much of a 'pigeonhole' mentality."

Don't go over the top: "Just keep things normal and show a varied mix of people. Don't go so obviously over the top."

"Advertisements about inclusivity need to be sincere."

"Transparency."

"Maintain a balance between inclusivity and believability. And be inclusive without constantly overselling it."

More realistic: "Represent the true reality of society in the adverts."

"Show more real people and provide evidence of the claims made."

Brand builders also consider inclusivity to be an important theme "as brands want to achieve and portray an accurate reflection of society."

How are brand builders currently dealing with this issue and what do they believe can be done better?

"In adverts, including as many backgrounds as possible can often be ridiculous. You would be better off incorporating this into the business operations. The proof of the pudding is in the eating."

"It is now mainly being used as a marketing trick and as a 'fad of the week', it doesn't feel genuine."

"Often too forced, it looks like minorities are the only people in adverts."

"Too desperate and forced, not believable."

"We are not!!! Just get it done and consumers will become aware of it naturally."

"Actions speak louder than words.

And don't keep shouting it from the rooftops."

Do consumers consider brands to be authentic?

At the moment, a majority of consumers don't consider it authentic when a brand talks about social issues. They think that brands do this in their own interests, to follow trends, and that it is just for show. Brand builders are aware of this.

They indicate that it all depends on the brand, the way the brand talks about social issues, and the issue itself. These elements are also mentioned in Peeter Verlegh's research about Brand Activism: "Activism is perceived as authentic if it (1) fits within the brand’s purpose and values, (2) is aligned with corporate practice, and (3) is communicated with the proper tone of voice. Authentic brand activism means that the brand advocates a stance that is aligned with its ‘best self’, but also that it communicates this stance in a manner that is consistent with its regular tone of voice, imagery, and personality."

(Prof. Peeter Verlegh, 'Brand Activism', SWOCC, Amsterdam, 2023)

"Stick to your own beliefs, make it relevant and provide proof."

"Make it very implicit, although keep testing your communications before they go live."

What should brands bear in mind?

Half of consumers (50%) feel more emotionally connected with brands when the brand handles social issues in the right way. Important factors in this regard are credibility, relevance, and authenticity.

Consumers are mainly looking for honesty, transparency, and proof of actions taken.

Honesty and clarity:

Give evidence:

"Be clear, believable and reliable, demonstrate quality and be sustainable and human."

"Mention concrete action and activities and how they specifically make a contribution."

"Transparency, an honest and verifiable story, and share the results."

Real people:

"That they communicate verifiable facts and that they clearly demonstrate the actions they have taken."

"I would like to see the people who the social issues actually affect brought to center stage much more to show what the brand can mean to these people."

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Brand builders are also taking action in this area: "Transparency means the people looking for evidence can easily find it."

"Definitely. CO2 reduction claims go hand in hand with facts and figures."

"Very much so. Guidelines are becoming increasingly strict, including those set by the ACM (Consumer and Market Authority).

Greenwashing is no longer possible."

They particularly recognize the importance of relevance and authenticity: "Make it relevant and personal to the target group."

"Authenticity: back up your claims with facts and figures."

"Realism, and don't make it too heavy."

"Authenticity, lived experience: as a company, you mustn't go looking for social relevance. You have to want to be relevant from the beginning."

"There must be a relevant match between the company, the product, and the issue. Otherwise it's just window dressing."

Consumers and brand builders think that social issues will remain an important factor in advertising.

In particular, sustainability and climate-related issues offer the greatest potential in the long term.

The majority of consumers think that the use of social issues in advertising will continue for a long time.

Looking ahead, consumers and brand builders expect the environment and sustainability to have the most impact in the long term and expect these issues to feature more frequently in the future. Brand builders also see a greater role for inclusivity.

Both consumers and brand builders see a major role for more sustainability in the clothing and food industries.

In addition, brand builders see opportunities within the aviation industry.

sustainability, climate, the environment, food, clothing, cars, transport, opportunities within the aviation industry

Brand builders are more worried that the use of social issues in advertising will result in polarization of society.

Brand builders often actively communicate about social issues. The following is a selection of statements about consumer expectations: "That brands are clear about where they stand on issues, brands are expected to be firmer, to show where you stand regarding important social issues." "They expect honesty, just as you expect honesty from people. So it's better to say nothing than to exaggerate or lie."

In addition, poor execution can negatively influence brand perception: "This definitely has an impact, although it can be positive or negative. Bad examples will backfire on the brand."

"It does have an effect, but not always in a good way."

"If the claim is vague or exaggerated, then this will affect how people value the brand."

There is a fear among marketeers that the use of social issues will cause polarization. It offers an opportunity to get closer to the target group regarding values, but this also creates a risk as it is almost inevitable that certain groups of customers will be repelled. Trends that they are worried about: • "Inclusivity and the gender debate. Oddly enough, this causes major polarization.

Tolerance for apparent differences is an important issue."

• "That people are becoming increasingly skeptical and that before long, their minds will no longer be open."

• "Hardening of society. We don't listen any more, we respond first and think later."

trends "The need for realism and accuracy also pertains to the goal that is set by the brand. This should be attainable and should avoid wishful thinking or boasting.

Brands need to be able to support their claims with (independent) evidence, precisely because the brand asks consumers for their support on an important social issue. The tone of voice of brand activism should not be belittling or overly directive."

(Prof. Peeter Verlegh, 'Brand Activism', SWOCC, Amsterdam, 2023) metrixlab.com | 12

consumers brand builders trends trends sustainability, health (sugar, plant-based), inclusivity, food, clothing, aviation

About the SAN

About MetrixLab (metrixlab.com)

With 200+ jury members, the Netherlands Advertising Jury Foundation (Stichting Adverteerdersjury Nederland or SAN) is a leading institute for professionals in marketing and marketing communication. Its goal is to assess the best campaigns in the Dutch advertising sector and to put them in the spotlight, as well as sharing knowledge in order to structurally advance the profession of marketing communication. Every year, the best marketing communication campaigns are recognised via the SAN awards. The foundation also presents the prestigious Advertiser of the Year and Agency of the Year awards (see https://sanaccent.nl/sanarchief/ for inspiring campaigns).

MetrixLab is a rapidly growing international market research firm. By combining cutting-edge technology with passionate experts, they help local, national and international brands to generate greater impact. From creative testing to brand tracking and from packaging to e-commerce optimisation, MetrixLab provides solutions to suit every problem, budget and time frame. MetrixLab is active in over 90 countries, is a proud partner of more than half of the world's top 100 brands and is a subsidiary of Toluna.

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Compass for brand builders How do customers navigate brands and advertising in uncertain times?