Many of the trends shaping the future of personal care products are indicators of today’s larger top-of-mind issues—health, environmental sustainability, trust and integrity. Because of these concerns, many people—especially millennials—are thirsting for greater transparency.
This demand for transparency had given rise to a movement toward “clean labeling.” Clean labels tend to call out what “good” ingredients are included, such as natural or organic ingredients, or on the other hand, what is excluded, such as “no added sugar” or “no added preservatives.” Consumers are attracted to products with clean labeling such as these, which is driving sales.
“Neglecting the clean-label movement will cost you customers and workers; avoiding it as a purposeful strategy could destroy the company or a few careers.”
Andrew Winston, Harvard Business Review
Nielson’s data shows that, for example, personal care products that have a “Natural and No Artificial Fragrance” claim have an average of 16% annual dollar growth—greatly outstripping the growth of the market. They also report that food and beverage products that claim to be “free of additives and artificial ingredients” show an 8% increase in annual dollar sales. Knowing this, and having conducted a series of studies on clean labels, we sought to dig into this issue further to see if people were willing to pay a premium for clean labeled products.
Claims test experiment
We ran an experiment to see if people would be willing to pay more in order to have products that promote clean claims. We tested seven claims, including two mentioning “natural” and “chemical-free,” two mentioning “organic” and two that offered either a lower price or more product. These were compared against each other and a control statement.
We learned three lessons from this experiment:
1. People are willing to pay more for clean claims;
2. Wording matters, to a degree;
3. Testing claims can be lightning quick and super easy.
The claims we tested were for a non-descript brand of shampoo (Brand X). This helped us ensure we were avoiding any brand biasing in responses. The control claim we provided further ensured there were no callouts to anything involving the clean labeling, or the price or product claims, serving as a baseline for comparison. The control claim was “Shampoo Brand X comes in a standard shampoo bottle with a flip top cap. This shampoo is for all hair types, and works to nourish and moisturize your hair while cleaning it from root to tip.”
To test the impact of other claims, we added one of the following claims to the control claim and asked Americans which product they would prefer to purchase.
• Shampoo X is now chemical-free and all-natural!
• Shampoo X now contains zero chemicals and is all-natural!
• Shampoo X now contains 98% organic ingredients!
• Shampoo X now contains only 2% non-organic ingredients!
• Shampoo X now comes with a bonus of 10% more shampoo!
• Shampoo X is now on sale for 10% less!
Overall, the all-natural and chemical-free messages were the biggest drivers of preference, followed by the 10% discount/bonus messages. The 98% organic messages trailed behind those, and the 2% non-organic message tested no better than the plain control message. We used a Thurston Case V transformation to reveal the relative preference for these claims, with the items at the top being the most often preferred and the ones at the bottom the least often preferred.
The difference between the appeal of “organic” vs. “all-natural” is an interesting one, in that organic should rationally speaking, be more compelling. Organic claims are subject to specific and relatively rigorous standards, while “all-natural” has no legal definition in the U.S. Despite this, the “all- natural” and “chemical-free” claims resonate more powerfully than “organic.”
People have become more skeptical about the claim of “organic.” According to Time “more than half of shoppers say they believe that labeling something as organic is “an excuse to charge more,” and more than one-third say they believe “organic” is just marketing jargon with no real value or definition.” We see the effect of that very clearly here.
Comparable and consistent
These results complement other findings from our growing body of work on clean labels. In our publication Truth, Trust and the Power of Transparency: how mass CPG brands can survive and thrive in a post-truth world we report, for example, that 84% said it is an important driver of their choice about what to buy when it comes to dairy products.
The Future of Food: are you ready for the Millennials? highlights the clean label case study of breakfast cereal Trix. That study shows how a clean label—which emphases what is not in Trix—resulted in a 25% greater purchase intent than with the old label, and a doubling of association of the cereal with a number of health-related positive attributes such as “nutritious,” “wholesome ingredients,” “good for me/the family” and “healthy.” Consistent with our work in the Future of Food, we again see that millennials and those with higher levels of education and income tend to be more attracted to clean label claims.]
People are willing to pay more for clean claims
Our results make it clear that an all-natural and chemical-free message is compelling enough for many people to choose it over a 10% discount or 10% volume bonus. That’s a significant benefit to forgo, for the sake of an “all-natural” claim. It confirms that clean labeling opens the door to being able to charge a powerful premium, even in a market where sales and promotions are an important factor.
It is interesting to note, however, the lack of differentiation between a 10% discount and a 10% volume bonus. While a 10% discount means giving away profit, a 10% volume bonus—depending on the cost of goods and cost of packaging—can be a much less expensive proposition.
Wording matters, to a degree
While a “98% organic” message is much more appealing than a “2% non-organic” message, it is also important to note the lack of difference in preference between “chemical-free” and “zero chemicals.” We often see this kind of result in claims testing.
Small differences in wording can loom large in the eyes of agencies and product managers, but consumers see them for what they are: insignificant. That’s why we encourage testing bold differences in the wording of claims and message testing. There is nothing more frustrating for all involved than testing subtle differences only to find that no one differentiates between the claims because they are truly interchangeable. Be bold. Be different.
Testing claims can be lightning quick and super easy
We looked at the trade-off between clean claims and discounts in the morning, put the questions on our Springboard America omnibus by noon and had results the next day. That made it quick, easy and inexpensive—making it attractive to test early and to test often.
We have another agile approach to claims testing called Message Filter which measures additional attributes like clarity, credibility, appeal, relevance, among others. Through research on research we streamlined it so that all the data can be collected in a single question that takes roughly 30 seconds to answer, and ultimately, is more sensitive than longer, more involved, questions. That means it is possible to test half a dozen messages on an omnibus or as a short part of another survey, again making message testing lightning quick and super easy.
This approach is also suitable for use with our Instant Insights solution. It offers rapid deployment of agile surveys, with access to near instant reporting of results. To learn more, click here.
Obviously not all claim tests are that simple. Sometimes there is a call for a MaxDiff trade-off or even a choice-based conjoint exercise, where we might trade-off different claims, prices and even packaging. We select from our array of claims testing approaches based on your information needs. But, regardless of the method, we strongly encourage early testing of a wide variety of claims.
Small claims can make a big difference
This modest experiment makes it clear that there is great opportunity in clean labeling. The Trix case study mentioned earlier confirms that clean labeling can improve the image and sales of even neon-colored children’s breakfast cereals. The lack of difference between the natural and chemical-free claims reinforces the notion that there is much more value in testing boldly different claims than in trying to discern whether minute differences matter. And the speed with which we executed the study, underscores that claims testing can be quick and high value.
Learn more about our market research solutions for the CPG sector.
To review some of our public research on clean labels, download our whitepapers:
- The Future of Food: are you ready for the Millennials?
- Truth, Trust and the Power of Transparency: how mass CPG brands can survive and thrive in a post-truth world.
To learn more about how personal care is being transformed by digital shopping check out our publication Emerging Digital Shopper – Trends and Triggers Across Five CPG Categories.
 It’s clear: transparency is winning in the US retail market, the Nielsen Company, August 2017