Brand loyalty must be new strategic goal, says Datamonitor
firms than attracting new consumers, claims a new report by
Datamonitor.
According to the market researcher, 90 percent of new consumer products fail, which means that long-term consumer commitment remains crucial to a company's sales. "Brand loyalty is a factor that has a strong influence on purchase decisions. Although product categories may vary slightly, it is widely accepted that it costs less to retain a customer than recruit a new one. According to some estimates it costs nine times more to attract a new consumer than retain an existing one," said Datamonitor. The report, 'How to create brand loyalty among today's consumers', defines brand loyalty as: "longer-term repeated buying because of brand commitment related to positive brand associations". Indeed, according to a 2006 survey by the Grocery Manufacturers Association (GMA) in the US, only 29 percent of brand loyal consumers would react to a 'stock-out' when shopping by buying a brand other than their usual preferred choice. Some 67 percent of US consumers would remain loyal to the brand, either by trying to find the brand in another store or foregoing the product until their next shopping trip, said GMA. According to Datamonitor's Matthew Adams, consumer market analyst and author of the new study, innovation - which is one way of attracting new consumers - comes hand in hand with the risk of alienating consumers with "change for change's sake". "Seeking new customers by increasing the pace of innovation (…) is inherently difficult as the pace of innovation must match consumers' expectations and perceptions," he said. "There is still some loyalty in consumer goods markets and marketers need to make it a strategic goal as the markets they serve in developed countries have reached maturity and retention takes precedence over acquisition of consumers." The new report also identifies that consumers value brands that reinforce their self-identity. Despite reports that consumers are abandoning brands, and instead turning to enriching experiences, Datamonitor states that consumption is determined, in part, by self-definition. "Consumers still attribute symbolic meaning to brands across many consumer goods categories, thanks to the branding efforts of leading manufacturers. Consumers are embracing brands that reflect their lifestyles and values as they search out identity-building products," it said. Datamonitor research reveals that just over half of Europeans and Americans appreciate brands that match their attitudes and outlook on life, while 56 percent value marketing that reflects their personal situation. "As consumers change, the brands they seek out and show loyalty to will similarly change." In the same vein, consumers are also increasingly seeking new, exotic products in a general climate of openness to new ideas and cultures. This "variety-seeking" behavior has been encouraged extensively by marketers and retailers in recent years, especially to encourage consumers to trade up to more expensive products, said the market researcher. According to results from a survey on consumer attitudes, Datamonitor reveals that 43 percent of European and 36 percent of US consumers reported trying "more" foods and drinks with new exotic flavors in 2006 than in 2005. "The changes in consumer behavior in Europe and the US between 2005-2006 demonstrate that 'seeking out the new' is very much on-trend," it said.
