With retailers dangling the proverbial carrot in form of sales promotions to attract and retain customers’ loyalty, the power of brand loyalty is gradually waning, as consumers now choose what is on offer before their preferred brand. TONIA ‘DIYAN reports.
The survey is revealing. About 50 per cent of a brand’s ‘loyal’ users might not be with them the following year, according to Kantar Worldpanel’s United Kingdom (UK) Shopper Survey 2012. The survey states that shoppers are not quite keen when it comes to brand loyalty, which has been perpetuated by a retail environment increasingly driven by promotions. Price promotions have always been an important part of retail and brand 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.
As shoppers change so frequently, brands have to keep talking to loyal users while trying to recruit new customers. 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 brand in mind before they go shopping, leading to consumers buying at least two brands 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 brand disloyalty amongst consumers.
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 brand loyalty. If one retailer introduces a deal, 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 brand of consumable they are going to buy prior to going shopping. Some shoppers cannot afford to be loyal to a particular brand as they are always happy to buy across price tiers. So, the same shopper who will buy a brand ‘A’ today, for instance, is the same that will buy a brand ‘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 preferred brand. 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.
As the Chief Executive Officer (CEO) of Shoprite, Bassey noted: “Before now, marketers always asked if I introduced promotional offers. What does it do for my brand 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 brands and creating excitement for the shop where they have their brand.
Even in categories where consumers are found to be more loyal and the overall number of brands 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’ brand, the one that performs best in terms of keeping loyal customers regardless of promotions or support a weaker performing brand 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 brand.
Shoppers have different views on how loyal they are to their brands. For instance, Matthew Smith 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 brands. “My old brands are common and I like to explore new things,” he said.
However, Tomiwa Oladele, said she likes to remain loyal to her favourite brands 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.”
