While consumer packaged goods (CPG) brands strive for greater brand loyalty among shoppers, this objective is often very difficult and only a very few truly succeed, according to a report published by SymphonyIRI Group, which offers fresh insights into brand loyalty drivers as well as strategies to increase CPG loyalty.
In the latest Times & Trends Report report, entitled 'Brand Loyalty: How Understanding Brand Equity Impacts Brand Loyalty', the company observed that takes a lot more than good luck to achieve brand loyalty: it actually requires a great deal of skill on the part of the marketer to understand consumer needs and wants, and then to communicate how the product can provide for those needs.
The report defines 'brand loyal' as "greater than 50% of the buyer's total purchasing is of a single brand, not including private label", and provides a number of insights into what drives consumers to choose their preferred brands, and highlights several strategies for winning the hearts and minds of today's smarter shoppers.
An environment in which consumers are short of cash, combined with events such as the S&P downgrade of the US credit rating, make addressing brand loyalty even more complex than normal. Consumers have embraced more frugal ways and continue to make purchases deliberately and cautiously. But, despite this period of prolonged economic difficulty, brand loyalty remains strong and is growing across a number of CPG categories.
"While most retailers and manufacturers will instinctively compete on price, it's important to understand that consistently leading with price has significant negative impacts on brand equity," explained John McIndoe, senior vice president of marketing for SymphonyIRI. "Rather, CPG leaders should try to harness the power of value. The battle for the shopper's loyalty should not be dictated by low price, and winning CPG marketers are clearly getting this message."
In fact, brand loyalty increased across 45 of the top 100 CPG categories during the past three years. For example, brand loyalty is quite high (87.6%) in the Sports Drink category, having increased 6.5 points during that period despite poor economic conditions and conservative purchasing patterns.