Consumer Institute's endorsement scheme still flying under the radar

  • Marketing
  • February 8, 2010
  • Ben Fahy
Consumer Institute's endorsement scheme still flying under the radar

In May last year the Consumer's Institute announced the release of its new endorsement scheme Consumer Recommends. But since then Sue Chetwin, chief executive of the Consumer's Institute, says only "seven or eight" companies have signed up to use the brandmark in their advertising and promotional activities.

Chetwin says there were three main reasons the scheme was kicked off last year and, while the numbers seem small, she is "pretty pleased with the way it's gone so far".

"1) Sometimes consumer organisations can be seen as knocking machines 2) It's a way of getting our name out there; so that Consumer would be seen and it would be top of mind. And 3) it might provide an alternative revenue stream. When we decided to go down this track, it made us look at our systems and test whether our measurements were robust and they pretty much were. We were pleased with our own internal research. But it did make us look at our ratings."

Chetwin denies claims that, as a result of this new endorsement scheme and the potential revenue it now offers the organisation – particularly at a time when some industry folk believe the magazine, which is run as a non-profit organisation, doesn't feature advertising and pays for all the products it tests "as the consumer would do", is struggling on the newstands after its launch around one year ago – it might not be in its best interests to give bad reviews.

She says there have been no questions about the motivations behind it and says similar schemes run by independent consumer organisations are common overseas, with the Australian equivalent of Consumer soon to announce its own accreditation process.

"We did quite a lot of research to make sure we did preserve our independence and objectivity. And I think the way we've gone about it, we've done that. We continue to do the testing the same way, and when we get the results, we invite the people who have got recommendations from us to partake in the scheme."

Chetwin says it makes absolutely no sense for Consumer to change the way it reviews products and take a more commercial approach, because its reputation rests on robust testing, thoroughness and independence; on 'a getting New Zealand consumers a fairer deal'. It's just a logical brand extension.

The endorsements, which run for six months, are listed for sale on the website at $10,000. But she says the price has been dropped to $5,000 to "get the ball rolling".

Of course, Chetwin realises it can be dangerous for organisations like Consumer to endorse products, particularly when things go wrong (Toyota was recently 'un-endorsed' in America following its recall issues), which is why the contracts are pretty tight as to what Consumer will and won't allow (the brandmark can't be used for any of the brand's other products).

There are no case studies from the companies involved so far (Sunbeam, Fisher & Paykel, Econergy hot water heat pumps, a health insurance company and two tyre companies) to show how much of an effect the endorsement scheme has had on sales. But Christine Johnston, Sunbeam New Zealand's general manager, was the first to sign up last year after one of its coffee machines was given the tick of approval.

She thought it was a great idea as soon as she heard about it, because it created a point of difference at point of sale and also offered an opportunity to leverage a good review in the magazine and allude to it in the shops, where it might have a more powerful effect. But she isn't too sure whether it's made much difference to sales. And she thinks is quite expensive for just six months.

The biggest difficulty, she says, was trying to get the retailers behind it. "All they had to do was smile", she says, but Harvey Norman "didn't want to be part of it at all" and couldn't seem to get their heads around the scheme. Farmers and Noel Leeming, however, were in Johnston's camp and thought it was a great idea.

"In-store point of sale is a very difficult thing to handle, because the [retailers'] point of sale comes first," she says. "Plus, it also got a bit lost over Christmas."

She says it was a very litigious document she had to sign ("my mortgage agreement is simpler," she says). But she realises it's because Consumer is trying to protect itself and its reputation down the line.

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