How To Create Brand Loyalty Among Today's Consumers

Table of Contents

• DATAMONITOR VIEW
  • CATALYST
  • SUMMARY
• 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