The Liquor Control Board of Canada (LCBO)

CLIENT:

The Liquor Control Board of Ontario (LCBO) is a provincially owned Crown corporation with 611 stores and over $4-billion in sales annually. Although a small number of other entities are able to sell beer and wine in the province, the LCBO is by far the largest retailer of beverage alcohol—and in some product categories (such as hard liquor) the only retailer. In addition to its role as a retailer, the LCBO has a strong social responsibility mandate that includes not only the responsible sale of alcohol but also public awareness initiatives on issues ranging from impaired driving to underage drinking.

CHALLENGE:

During the past decade, the LCBO has pursued a strategy of transforming the purchase of beverage alcohol into a “discovery journey”: a guided exploration of a wide range of products from around the world. Early results suggested this experiential focus appealed to customers, but the client’s next step was to deepen their understanding of how customers were connecting emotionally with the LCBO brand—and how various elements of  the LCBO’s marketing and operations contributed to that emotional connection. Any model developed for measuring customers’ brand engagement had to take into account that people come to the LCBO with a wide range of orientations to its products. Because it occupies nearly the whole beverage alcohol market, the LCBO serves everyone from passionate wine enthusiasts to the most casual consumers.

PROJECT:

Environics set out to establish robust metrics for customers’ emotional engagement with the LCBO brand, while acknowledging that the client was serving people whose needs and interests differed substantially. The Environics Consumer Practice , led by Robin Brown pursued a three-stage process. First, the team reviewed the client’s pre-existing qualitative research on brand perception to establish a comprehensive list of the LCBO’s tangible and intangible brand attributes as identified by its own customers. Environics then designed an online quantitative study, using the attributes captured in the qualitative data as well as a range of other measures of brand personality and brand relationship quality. (To further refine the questionnaire, Environics began with an online pilot study that helped to determine which concepts and questions were most meaningful in the LCBO’s context.) With the main study complete, Environics performed advanced multivariate and other analysis to sort LCBO customers into distinct groups. Through cluster analysis, the research team identified five key customer segments, defined broadly around attributes such as attitudes to food, entertaining, and beverage alcohol, as well as their overall orientations to caution/control versus hedonism. Ultimately, Environics was able to use the online survey results and subsequent analysis to establish an aggregate measure of emotional connection to the LCBO, and to reveal how LCBO investments could shape this connection over time.

RESULTS:

The study has proven extremely useful to the client, offering the LCBO a solid understanding of various customer groups and how to communicate with them. For instance, Environics isolated one group of customers (the “Inexperienced”) who stand out in their desire for guidance and information about wine and spirits in order to reduce their intimidation about product selection. To reach this segment, the LCBO has produced a range of approachable, educational marketing materials, such as “Wine 101” information guides. Isolating its key customer segments has enabled the LCBO to conduct data-driven targeted marketing, which has reduced costs and increased customer engagement and satisfaction. The LCBO has also made use of Environics research in creating a “Brand Dashboard” and scenario-planning tools that help managers to understand how particular investments are likely to affect customers’ relationship with the LCBO and its brands.