Find out what the customer wants

Consumers are willing to pay more for those eggs that contain tangible product quality characteristics as defined by them. And, fortunately, sensory research results demonstrate that those meaningful product quality characteristics are not too difficult to obtain, and can be controlled, monitored and delivered on a consistent basis, James Kellaway, Australian Egg Corporation Ltd. (AECL) said. "So, get out there and market your eggs. Be demand driven, not production focussed, be proud of the product you are producing, as long as it is meeting consumer requirements, and never compromise on price."

Price, especially among those who purchase produced cage eggs, is the single largest product characteristic that determines what brand of eggs consumers buy, Kellaway said. This is because consumers do not see a tangible or meaningful difference in eggs that were more expensive. As a result, consumers are only shopping on price and brand loyalty is extremely small. In Australia, a meager 4 percent of the market recognizes and remains loyal to any one proprietary/producer brand, he said. This indicates that most consumers don't think there is any difference. "Or if they do, they are willing to trade off your difference for cheaper eggs," he added.

Given this market situation, owners of private-label/generic branded eggs have realized a market opportunity. They have worked out that most consumers think that an egg is an egg and would switch if there was a cheaper brand within the category. Kellaway continued, "Private-label branded eggs have increased their market share and now represent 62 percent of all retail eggs sales when back in 2000 their market share was just 19 percent."

The price of private-label eggs had increased from $2.58 per dozen in 2000 to $2.90 per dozen in 2007, representing a gain of 12 percent. However, this is not impressive when according to the inflation price index; they should have averaged $3.31 per dozen in 2007. In contrast, producer-branded eggs increased in price from $2.75 per dozen in 2000 to $4.16 per dozen in 2007, an increase of 51 percent.

This shift in branded sales has resulted in the egg category becoming a commodity business with little meaningful brand presence and product differentiation. Private-label brands have cannibalized proprietary egg sales, resulting in overall category sales turnover or revenue being reduced.

Egg producers do not own or control private-label brands. As a result, the product quality, distribution, price points and sales promotion are not being determined by egg producers. Australia's producers are becoming packers for these brands with a greater number of business decisions being out of their control. Kellaway added, "We have become servants to supply chain partners, not our consumers."

So, how could egg producers build value back into their product and gain increased sales turnover, grow brand loyalty and boost market share of their brands? The answer is, "Listen to the consumer as opposed to listening to the customer. We now need to become market or demand driven by listening to the consumer," he said.

New Consumer Study

The AECL has recently completed the industry's second national Usage & Attitudinal Study and also a full sensory market research project among consumers. As a result, the Australian egg industry now hads a very clear understanding of the consumer regarding their attitudes, behavior, usage and consumption patterns of eggs. "We know what consumers want and how much more they are willing to pay," he added. More importantly from a product quality perspective, the sensory research had objectively defined the perfect egg' in the eyes of the consumer. "By achieving this, the egg industry could start communicating to consumers that there is a real difference between the eggs offered for sale and that our proprietary brands do contain eggs that meet their preferences."