New brand switching trends for the recession

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By: Wise Marketer Staff |

Posted on July 13, 2009

New brand switching trends for the recession

Thanks to the recession, many consumers have already abandoned their favourite national brands when it comes to food, household goods, health products, and personal care, according to Epsilon's targeted marketing arm ICOM, which also noted that child care and pet related brands appear largely immune to this trend.

The company's survey of 1,530 American consumers revealed how the threat of mass defection to store brands varies by category. While, during the past six months, 59% claimed to have switched brands for food and household products, 48% had switched health products and personal care products, while only 23% had defected from a pet care brand and only 12% from a child care products.

This "less risk means more switching" trend also revealed itself in the over-the-counter (OTC) medicinal healthcare category. In fact, the survey responses showed a direct correlation between the severity and specificity of the ailment and the consumer's openness to switch brands. While 42.2% had switched pain relievers, only 30.8% had switched allergy remedies and 21.5% switched heartburn medications.

"Perceived risk is what is driving these consumer decisions," commented ICOM's marketing director, Warren Storey. "This is the kind of insight that brands can use to reach customers with promotions that meet their needs, and bring them back. Understanding customer psychology, and tailoring promotions accordingly, is a more effective win-back strategy than one-size-fits-all offers."

  Coupon usageGrocery stores 86.5%

Restaurants 46.5%

Dept. stores 41.3%

Mass merchants 41.3%

Drug stores 34.9%

A separate ICOM survey earlier this year established the grocery store as the main centre of the American consumer's coupon redemption activity, with 86.5% of respondents saying they had used coupons in a grocery store during the past month.

While some consumers have previously felt stigmatised by coupon usage at the checkout, the recession may have changed that sentiment. Some 86.8% of respondents in survey said that they are now using the same number of coupons or more than they used one year before, with one in three consumers reporting a significant increase.

"There is an opportunity for brands to win back customers who have switched to cheaper alternatives," said Storey. "Some marketers were worried they'll never return, but the win-back depends on knowing who is switching and why, and responding with targeted incentives based on that information."

When it comes to customer loyalty, respondents also made it clear that rewards supporting basic household spending (i.e. groceries at 70.0% and fuel at 60.7%) are the most appealing. The next most popular reward categories were retail stores at 41.2%, household products at 40.3%, and travel at 29.3%.

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