There once was a time when mom would insist on using only General Electric appliances, dad would only drive a Buick, and kids would insist on riding a Schwinn. Even when it came to things such as insurance, it was nearly impossible to convince Mr. and Mrs. Smith to switch plans even when a better deal was out there. Regardless of age, consumers wanted a Kleenex not a tissue, a Band-Aid not a bandage and it wasn’t that long ago that we “Tivoed” a TV show, not “DVRed” it. Has brand loyalty gone the way of the CD player?
photo credit: Pixel Drip via photopin cc
Assessing the State of Brand Loyalty
According to an Ernst & Young survey of approximately 25,000 people spanning 34 countries, less than 40 percent said that brand loyalty was a factor in their purchasing decision. In the United States, that figure drops to around 25 percent. While many consumers opt for well-known brands for some purchases such as clothing and electronics, many consumers tend to go where the deals are – regardless of who manufactures the product.
Technology and Brand Loyalty
The advent of the smartphone is having an impact on brand loyalty as well. According to survey sponsored by AisleBuyer, 75 percent of those surveyed said that they would consider changing their purchase decision if they were offered a better real-time deal via their smartphone. A study by WSL Strategic Retail on spending trends among the younger generation revealed that 80 percent of millennials put price as their first priority when making a purchase. Approximately 60 percent would bypass their favorite brand if they find the same product cheaper elsewhere.
Social Media Marketing and Brand Identity
When these stats are considered, it just makes sense that retailers are making more efforts to establish their brand via social media. Many retail outlets are offering free apps to customers to notify them of real-time deals in an effort to keep their name out there. The problem with hitting consumers over the head with your brand via social media, however, is that surveys show that people don’t like having blatant ads shoved down their throat while doing what they do online. The key around this is to provide content that is relevant without being an overt sales pitch. It’s too soon to tell whether or not these efforts will reverse the trend.
Economic Conditions and Brand Loyalty
“I’d love a Lamborghini, not ask me what I can afford,” is a familiar refrain for most people in today’s economy. It also sums up how the economy may be hastening the death of brand loyalty. Granted, this isn’t the first time in history that the economy has driven what people can afford. The big difference is that lesser-known brands now have the ability to make their pitch right along side the name brands via social media and smartphones. If young people today get into the habit of choosing the cheaper brand, will they reverse that trend when they get older and have more spending power? It might not be that easy to reverse an established mindset where a deal is more important than loyalty to a manufacturer.
As long as the big guys continue to pour millions into advertising efforts, it’s not likely that brand loyalty is going to disappear completely. Most consumers are still hesitant to try off-brands for large scale purchases such as big screen HDTV, speaker systems and cars. The main difference between now and a few generations ago is that it is a lot easier to dangle a lower price in front of consumer and have them take the bait, so to speak.
@bowden2bowden
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Excellent post Randy. I especially love the paragraph regarding smartphones, I am one that believes that the vast majority of communication on any level will quickly become the mobile method. Further, I think the economy has a lot to do with the equation. I would love to see this study again when the economy is booming and spending is much more "reckless".
Here's a thought, if the economy is a factor, why then did a very loyal generation that went through the great depression either as kids or adults remain so loyal to a particular brand. Tells me that maybe the economy might not play as large a role as thought.
Excellent post, thought provoking, thanks
Thanks for the input Gerry, I am sure the economy has an impact, I long for the "good 'ol days!" A difference today than during those long ago times, convenience and the multitude of product sin each category. makes the playing field a little more convoluted…
I don’t completely agree, while it is true that millennials consider price over loyalty, I think it affects bigger brands with low-involvement products. Millennials will favor occasionally a brand over price, for example Seventh Generation or Warby Parker these brands have cultivated a culture, a mindset and hence a community that prefers them over price. Can larger brands replicate similar results? I think so, Coke and Oreo come to mind as strong examples of integrating social media with traditional advertising to remain relevant and drive stronger affinity. Does it drive sales for them? Hard to attribute that to just social media. But for smaller brands with little to no traditional advertising and are premium priced I think social media does drive preference and loyalty.
I am a tad on your side Krithika as I consider myself brand loyal (and I make brands, lol), who still insist on a Chevy, buy the same outdoor gear even with lower price equal if not better products now reside in the category and it has to be Coke! However the results of the study are revealing. As for new and upstart brands that do it right, they do receive a rush of initial interest and consumer promotion, the tell of the tape in brand loyalty is longevity. Integrating SM is or can be a tremendous asset, but when a small business enters the market with little advertising money, then they have made a mis-step in their model.
I found these stats (25% brand loyalty in US) surprising. But given the economic situation, I can understand why this is so.
Smaller companies can't compete with big brand advertising. I don't think their TV spots engender loyalty so much as they make sure that their product is in consumers faces when they decide to buy.
If you're buying soap, you'll buy the cheapest. As you say, the bigger the item the more likely brand loyalty is an issue.
I think smaller companies have an advantage if they use social media well. They can be closer to the consumer and add a layer of humanity to their product.
Racing to the bottom of the price scale is a strategy that smaller companies can't afford.
Enjoyed this, Randy. Thanks.
Thanks Ray for the insight and agree. In the convoluted and crowded space of todays enterprise they race to the bottom is gaining participants, not that they have not always been there. Shame, I see some great brands with awesome potential sell short, so to speak…
Wicked post Ray. It's been a topic of discussion with my colleagues. To some degree, it's dead. You make a very good point about the economy as a critical factor. I'm guilty of opting for a cheaper version if I can find it. I think quality is key to holding me loyal to a brand especially technology and maybe even clothes (but it has to be on sale!) If I were to buy candles, I might buy one on sale at a large department store instead of Yankee (which I do love btw). Another epic factor is peer influence – Yelp reviews, Amazon reviews, or word of mouth-text-twitter-etc. We trust fellow consumers more than ever now.
Thanks for stimulating my mind this morning! Cheers friend :)
I'll pass that along to Randy :-)
Anne, a few years ago I paid $1800 for a HD flat panel and I priced the newer model the other day form the same manufacture and it is now $400! Great quality, good brand but in so many ways things have become disposable which allows for the peer pressure to mount. Thanks for sharing your thoughts…
Randy,
I agree with much of what you have to say. The stats and trends you mention are quite important to consider as a marketer, and as a business person making a budgetary decision.
As a person and consumer, what I think is most important is the instilled value of "quality over quantity." For that would be the key to keeping or changing trends and values down the road, as you mention above.
I'm a quality over quantity girl — There are times a better price would make a difference to me in making a purchase. But usually I have done enough research to know where I can obtain an item for the best price AND service. Other times I know I want *this* brand because I know the price is worth the investment.
This element of consideration is absent from our society much too often. Is there room to consider that in business and marketing…?
~Keri
Keri, not sure that most are intentionally sacrificing quality, I am not! It has become a very very competitive market place. Where many skimp, is on how they go-to-market and how they utilize the channels…I am in your boat, I do my research (homework), but have found that there are of equal quality often at a much lower price…I am discovering new "like' brands everyday :)
I love this post, Randy. As we know a brand is more than the product, that is where the opportunity lies for brand to still have relevancy. You hit the nail on the head, content is where it is at.
Becoming a trusted resource, being there for the consumer from a customer service perspective, etc. Teaching the audience how to use the product. Some products are commodities, but the reason to build a brand is to build justification around one's product and service so that you offer more than JUST another option.
Good stuff Randy.
Thank you David, much! Brand is often misunderstood by those who try to "sell" it. So much more is involved to become, as you say "a trusted resource." Tires are tires right, but I want something that will give me service and provide me with safe travel… a feeling of comfort! Thanks for your input, I value it.
I believe the way the world has become smaller and more transparent is a factor, too. We can find off-brands with great reviews on Amazon and make a switch because we've learned to trust what others say. Great post – one thing is for sure, loyalty ain't what it used to be!
So true Anne, the game rules have shifted a bit!
I know I am not as loyal a customer as I used to be, but then I have a heck of a lot more choice than I did 20 years ago.
As the world has become smaller, our product choices have expanded exponentially. For instance we have a German chain of supermarkets in the UK now, who are considered cheap. Their products are not low quality, but they are able to provide off-brand products at a much cheaper price. I'll now shop around for quality and pay the lowest price for it that I can.
Although I am loyal about somethings – generally the ones that I have some kind of emotional bond / trust relationship with – coffee is one and technology is another. That doesn't extend to washing powder, soaps, and small incidentals – there I don't hesitate to switch. I also have no brand loyalty for fresh produce, it just has to be locally sourced and well priced.
This is a huge difference to how I interacted with brands a couple of decades a go…
Great article, thanks for setting off that train of thought.
Great point Kittie, today our choices are vast and it is easy to switch from several motivators. I tend to hold on to a few loyalties but have left have seen my shift to others that at one time I would have not considered! Hmm, what doe the future hold?