Abstract
Overview
Introduction
As many consumer goods markets and segments reach maturity the importance of customer retention has become an even greater issue especially as the number of new customers available becomes increasingly small. Deep brand loyalty is the ideal goal of any marketer, bearing in mind the often-stated link between loyal customers and increased profitability.
Scope of this report
- Quantitative data from Datamonitor' s proprietary multi-nation consumer surveys highlighting the extent of consumers' variety-seeking behavior.
- Insights into the varying levels of importance consumers ascribe to brands with specific national and demographic perspectives.
- Adaptations and summaries of leading academic frameworks aligned with real world brand purchase issues.
- Detailed action points offering practical strategies and examples of best practice innovation and marketing campaigns.
Research and analysis highlights
Nearly half (45%) of consumers across Europe and America believe that there is too much choice when making most purchase decisions. Nevertheless, consumers also think it is important to be open-minded about trying new experiences.
Brand loyalty appears to increase with age in Spain, as brand loyalty is considered important to some degree by almost 60% of consumers aged over 50. Brand loyalty increases further among those aged 65 and above.
The added choice characterizing the consumer marketplace today is both a driver and an inhibitor of brand loyalty. On one hand, more promiscuous, experimental consumers are encouraged to explore new things. In contrast, time-pressured shoppers feeling overwhelmed by daily obligations are choosing tried and trusted brands.
Key reasons to read this report
- Explore national differences through quantitative and qualitative market data and compare different nations to plan for future developments.
- Gain insight to better understand consumer brand purchase motivations and demotivations.
- Access valuable action points that highlight the way forward by examining existing best practice and new innovations.
Table of Contents
- DATAMONITOR VIEW
- INTRODUCTION
- Brand loyalty reflects a longer term commitment from the target consumer
and can be expressed by two types of buying behavior
- Loyalty is characterized by an emotional and behavioral response
- There are two forms of brand loyalty from a consumer behavior
perspective
- Creating loyal consumers will help reduce costs and maximize revenues
in the long-term
- The importance and impact of brand loyalty will vary by industry,
sector and product category
- Two important contingencies must be accounted for when it comes to
brand loyalty
- ANALYSIS
- TREND: Consumers are becoming increasingly experimental and
self-expressive
- Consumption is increasingly characterized by the ' butterfly effect'
- Consumers are becoming more transient in relationships with people,
institutions and brands
- But consumers do value brands which reinforce their self-identity
- Consumers are becoming more transient and less brand loyal
- Divorce rates remain high as relationships lose their permanence
- Variety-seeking behavior is on the rise, thereby limiting the scope
for consumer loyalty
- Consumers feel their variety-seeking behavior is viewed favorably by
fellow consumers
- Takeout: securing longer term brand loyalty will be made more
difficult by the ' butterfly consumer'
- TREND: Consumers are often overwhelmed by choice
- Increased choice in the shopping environment can make people
emotionally overloaded
- Consumers are rebelling through ' auto-pilot purchasing' in order to
narrow down the choices
- The ease of online grocery shopping further elevates ' auto-pilot'
shopping
- Takeout: Brand loyalty exists on different levels
- INSIGHT: Some consumer demographics are more brand loyal, while others
are defying conventional wisdom
- Household personality has a major impact on purchasing behavior
- Boomers are less brand loyal than previous generations of mature
consumers
- Research indicates that so-called minority consumers tend to be more
loyal or at least value a more personal approach to targeting
- Gay, lesbian, bisexual and transgender consumers are thought to be
extremely brand loyal
- Brand loyalty is often associated with Hispanics consumers in the US
- Hispanic consumers show the value of first-mover advantage
- Around 20% of loyal consumers demonstrate contingent loyalty based on
price
- Takeout: minorities form a viable segment if served well
- INSIGHT: Consumers only respond profitably to effective loyalty schemes
- Most consumers have a variety of loyalty cards but this is not a
strong indication of brand or store loyalty
- Consumer understanding and the innovative use of data is more
important than price promotions in garnering loyalty
- Brands need to capture data from willing consumers
- The penetration of private label continues to increase as consumers
are trusting it more and more
- Takeout: The rising power of retailers is undermining brand strength
- INSIGHT: Media clutter makes it difficult to develop a brand
relationship with consumers
- Profusion of media channels makes accurate selection and targeting
ever more important
- Brands that are created by campaigns have less durability than
consumer-created ones
- Consumer-generated content is one way of securing loyalty but it is
not without limitations
- Word-of-mouth advertising has a powerful impact on brand, especially
in securing initial brand custom
- Word-of-mouth influences consumer switching behavior
- Less brand loyal consumers can actually have a stronger
word-of-mouth impact
- Consumer trust risks being damaged when word-of-mouth is paid for,
or unsolicited
- Takeout: The development of ever more sophisticated media technology
is overwhelming consumers
- INSIGHT: Consumers are becoming more demanding in their expectations
- Consumers are still attracted to brands that deliver what they promise
- Consumers want brands that deliver on brand promises all the way
through the ' brand touchpoints'
- Consumers are increasingly conducting online product research which
increases expectations
- Quality is a vital attribute for securing consumer commitment and
brand loyalty
- Consumers' quality perceptions can be grouped under four main factors
- Ethically driven brands have carved out a differentiated niche
- Consumers judge ethical brands with greater scrutiny
- Starbucks is one example of a brand that has lost brand power as
consumers react to its ' corporate giant' status
- Innocent smoothies' core consumers have reacted badly to their trial
stock period in McDonald' s
- Conclusions: Developed consumer markets have reached maturity, making
retention of customers more vital than ever
- ACTIONS
- Create a feeling of brand community
- Use festivals as an opportunity to target core consumers and develop
positive brand associations
- Coordinate with opinion-forming consumers to guide brand direction
- Encourage consumers to firm up their allegiance through marketing
communications
- Challenge consumers to be more loyal
- Expand the core product to create a sense of brand ownership
- Diffuse branded artifacts to engender loyalty
- Explore the opportunities for branded spaces in key locations
- Engender loyalty simply by giving consumers what they want
- Ensure availability is a given
- Put the brand in places where consumers want it when experiencing a
specific and relevant need state
- APPENDIX
- Definitions
- Methodology
- Further reading and references
- Ask the analyst
- Datamonitor consulting
- Disclaimer
- List of Tables
- Table 1: Consumer survey: European and US attitudes to seeking out new
experiences, by country, 2004
- Table 2: Consumer survey: trends in European and US consumers'
variety-seeking behaviors, by country 2005-2006
- Table 3: Grocery sales through the Internet/home shopping channel, by
country (US$ m), 2001-2011
- Table 4: Private label by country (US$ m), US & Europe 2001-2011
- List of Figures
- Figure 1: Brands need to achieve higher involvement from their
customers to boost loyalty
- Figure 2: Brand Loyalty is hard to achieve as customer recruitment is
also essential for long-term growth
- Figure 3: Six key factors are creating the ' butterfly consumer'
- Figure 4: Consumers value brands that reflect their attitudes and
values on life
- Figure 5: Divorce rates have continued to rise in Europe (EU15),
1995-2005
- Figure 6: A feeling of ' choice paralysis' often influences shoppers
- Figure 7: Brand loyalty is characterized by deep and shallow
connections with the target consumer
- Figure 8: Taste/pleasure is non-negotiable in food and drink innovation
- Figure 9: Taste/pleasure is non-negotiable in food and drink innovation
- Figure 10: Nescafe is one of the latest major consumer brands to tune
into ethical positionings
- Figure 11: Swift growth from a niche brand raises consumer
expectations and the need to manage them
- Figure 12: Events marketing is a positive way to interact with
consumers
- Figure 13: Marmite' s polarizing positioning should do much to create
future brand loyalty
- Figure 14: Yorkie' s chunky appeal and masculine positioning encourages
a strong consumer reaction
- Figure 15: Gourmet brands are always likely to attract loyal followers
- Figure 16: Part of Ladybank Distillery' s approach could translate to
other luxury consumer goods
- Figure 17: Brands need to find ways to make themselves mores ' sticky'
even in the home
- Figure 18: Royal Unibrew demonstrates its presence at festivals in an
unmissable fashion
- Figure 19: All snack foods can balance indulgence and an increased
focus on health
- Figure 20: Putting products conveniently within consumers' grasp is
vital to gain loyalty
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