Cheaper bargains, rather than product ‘loyalty’ is now the ‘in-thing’ for shoppers, who, are becoming more conscious of their spending powers, especially in the face of a harsh economy. Retailers, conscious of this development, are cashing in on the lure of sales promotions to attract and retain customers’ patronage, writes TONIA ‘DIYAN.
For some common and popular commodity brands, these are not the best of times. With rising competition from other lesser brands- offering lesser cost, and competing for the same disposable income of the consumer, bigger and more popular brands are gradually losing their market dominance. And with this comes the waning ideology of product or brand loyalty.
Several housewives, obviously out to save cost on purchases, say they now look for alternatives that still offer the same quality on the popular brands they are used to. For instance, a housewife, Mrs. Adeola Tijani, revealed that owing to the high cost of buying a particularly popular dish washing liquid soap, she has found an alternative in an obscure but highly effectively alternative liquid soap to do her dishes. In the process, she said she has been able to save over N250 on the product. Similarly, another housewife, Hajia Adijat Kareem, explained that her choice for a particularly popular beverage has been jettisoned owing to its rising cost; she has since settled for a less popular brand of beverage, with she claims, offers the same taste and satisfaction for her at a cheaper price. The reality now staring both manufacturers and retailers in the face is that the era of product loyalty is long gone.
Available data from a 2012 shoppers’ survey conducted by United Kingdom’s Kantar Worldpanel, testifies to this reality. According to the survey, about 50 per cent of a product’s ‘loyal’ users might dump the product for another brand following year. And the reasons for this trend though appear minute, yet very significant.
The Worldpanel survey revealed that shoppers were no longer keen when it comes to product loyalty. Reason for this, the survey revealed, is that the market has been saturated with a retail environment increasingly driven by promotions. “Price promotions have always been an important part of retail and product loyalty, but have become more of a concern to retailers recently as the number of products sold on discounts continues to climb and retailers seem not to make much profit. Generally, promotions now account for 40 per cent of branded product sales, which has to be influencing the way people shop,” the Worldpanel survey revealed.
Another survey also shows that over 5,500 shoppers bought more than 450 brands online and offline across 17 categories in the past quarter of the year. Observations across the Lagos metropolis also show that an average of 42 per cent of consumers have a particular product in mind before they go shopping, leading to consumers buying at least two different products in the majority of categories. Experts believe that the high level of transparency among major grocers and the fact that consumers can easily compare prices when products are on the shelf led to more price-matching, which has had a major effect on the promotional landscape, thereby resulting to product disloyalty amongst consumers.
Now, realising the effect of promotions, retailers now strive to outdo one another on promotional strategies in certain highly promoted categories that can mean a continuing increase in their level of promotions to encourage product loyalty. If one retailer introduces a promotional package, others copy it and even add a new idea. For instance, the food category is a sector where purchase behaviour is influenced by what is on offer as at the time of purchase. According to findings within Lagos, only 21 per cent of shoppers plan which type of consumable they are going to buy prior to going shopping. Some shoppers cannot afford to be loyal to a particular product as they are always happy to buy across price tiers. So, the same shopper who will buy a product ‘A’ today, for instance, is the same that will buy a product ‘B’ tomorrow, depending on what is on offer/discount.
A manufacturer of a cosmetic product in Lagos said his brand is highly promoted, but that the majority of sales he makes are from the promotions he offers from time to time. The manufacturer, who declined to be mentioned, said he finds relatively little loyalty, as consumers choose what is on offer before their favourite item. This behaviour is reinforced by the layout of products in store with both brands stocked on the same shelf and in similar packaging, blurring the lines between the different price tiers.
The Chief Executive Officer (CEO) of Shoprite, Whitney Bassey noted: “Before now, marketers always asked if I introduced promotional offers. What does it do for my business in the long-term? But now it’s more about how much profit and how much a promotion can deliver in the short-term.” He said it’s more tactical in nature rather than a strategic long-term view. He added that manufacturers are investing more in building their businesses and creating excitement for the shop where they have their products displayed.
Even in categories where shoppers are found to be more loyal and the overall number of products purchased small, David Botha, a Manager at ‘Mr. Price’ says there is still need for a high level of promotion. Citing example with beverage, he said 51 per cent of shoppers pre-plan which brand they are going to buy prior to setting foot in a shop, while 30 per cent change their mind while in the shop and an average shopper buys the cheapest items on the shelf.
However, experts have advised that retailers should pay close attention to the types of deal they offer because a higher level of discount does not mean higher return on investment. They should also consider whether they discount their ‘hero’ product, the one that performs best in terms of keeping loyal customers regardless of promotions or support a weaker performing product with the hope of increasing sales. Sometimes, during a one week-long promotion it will be possible for the hero product to perform more than three times better than the smaller product.
Shoppers have different views on how loyal they are to their brands. For instance, Matthew Smith, a retailer thinks consumers have become more ruthless in their hunt for value. “Consumers are being much savvier in their shopping habits, they rather do one big shopping from a large retailer; they shop across the discounters and premium retailers. This trend will only continue,” he said. Omoba Adeyinka said he likes trying out new products. “My old products are common and I like to explore new things,” he said.
However, Kaymu Public Relations Officer, Tomiwa Oladele, said she likes to remain loyal to her favourite product especially online. Same for Mrs. Aderinola Abiola, a legal practitioner, who said she prefers staying glued to her favourite brand. She said her favourite brands are trustworthy and have never failed her. “I don’t see any reason why I shouldn’t be loyal to my brands. As the saying goes, the devil you know is better than the angel you just met,” she said.
A brand analyst, Mr. Ayodeji Ayopo, agrees with her. He said he remains a brand loyalist and does not switch brands. His words: “I don’t switch brands easily. I am a brand loyalist. I remain committed to my brands even to tea, toothpaste and toiletries. I don’t switch.”
