Survey reveals eroding consumer confidence in packaged goods brands

In a new IBM survey, a majority of consumers revealed the level of information consumer products companies provide on the contents, origins and environmental impact of their products greatly impacts their level of trust in those companies.

Recent product contaminations and recalls coupled with confusion over marketing claims have contributed to an erosion of consumers' trust in Consumer Product manufacturers, according to the IBM survey of 1,600 consumers in the U.S. and U.K. More than 70 percent of consumer expressed a low overall level of trust in the claims 'branded food products' make about their environmental impact and health and wellness benefits. Nearly half of consumers are more concerned about safety, and two of every five consumers said they buy different brands today because of these concerns.

Almost 60 percent of respondents told IBM they have more knowledge about the contents of the food they buy versus two years ago. Despite this increased awareness, more than 70 percent of consumers want even more information about the source, the production methods, and the contents of the food products they buy.

In a complementary IBM study, released in conjunction with the survey results, the company identifies a new breed of consumer who is driving this shift. The study titled "Establishing Trust through Traceability," calls this new consumer the "Omni Consumer." These consumers are concerned, empowered and more connected than ever - with sophisticated technologies at their fingertips.

According to the IBM study, the Omni Consumer is also purchasing a wider range of products and is actively and frequently tuning in and out of unwanted marketing messages. "Clearly the factors influencing consumer purchasing behavior have changed dramatically over the past five years, said Bill Gilmour, global consumer products lead, IBM Global Business Services. "While product, packaging and branding are still relevant, their significance has been topped by a number of other factors. The Omni Consumer wants products that deliver incremental health and wellness benefits coupled with an understanding of the impact of these products on individuals, society and the environment."

IBM suggests in the new study that companies align a roadmap to "Full Value Traceability" with their brand vision in order to set themselves apart from the pack.  These new systems can both safeguard the food supply and enable the trust and transparency necessary to instill consumer confidence and, in turn, protect and empower the brand. The linkage of the physical and information supply chain coupled with engaging all the relevant stakeholders, is an imperative in building a "Full Value Traceability" system.

"To date most traceability systems have been driven by regulation," said Tom Peterson, general manager, IBM Consumer Products Industry. "We're recommending our clients expand these initiatives beyond a defensive posture and leverage them for brand empowerment. This enables them to better protect their brands against contaminations, recalls and private label competition while restoring consumer confidence and aggressively entering new, high-value markets. The era of the Omni Consumer is requiring a deeper commitment to transparency, and the companies who deliver on this will be the clear winners."

As part of its ongoing consumer research efforts, IBM is making the full IBM study on "Enabling Trust through Transparency" is available for free download. Further details on IBM's work in the Consumer Products industry is available at: www.ibm.com/consumerproducts.

Survey Methodology

Conducted by Harris Interactive on behalf of IBM, the Internet survey was fielded among a representative sample of 1,600 adults in the U.S. and the U.K. during the First Quarter of 2007. The results can be considered statistically significant at the 95% confidence level and have a margin of error +/- 3.1 percent for the U.S. data and +/- 4.0 percent for the U.K. data.

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