My best friend’s changing!
Is unflinching loyalty possible in a dog-eat-dog world?
Consumer commitment in the form of brand loyalty is arguably the final frontier of every marketer. In India, where modern retailing has just begun to make inroads, this concept seems still too good to be sought after. The question remains, what would be the face of the Indian consumer if he has to choose between a bargain deal and, a brand?
A report by global consulting firm Mckinsey & Co. on India’s consumer market states that, “If India continues on its current growth path, over the next two decades the Indian market would undergo a major transformation. Income levels will almost triple and India will climb from its current position as the 12th largest consumer market to become the world’s 5th largest consumer market by 2025.”
The report further states that the Indian middle class would swell by over ten times from the current size of 50 million to 583 million people. By 2025, according to Mckinsey, over 23 million Indians – more than the population of Australia today – would number among the country’s wealthiest citizens. Three important trends that would emerge, according to the report, are: rising income levels broadly affecting India’s income distribution leading to creation of a large middle class and increased per-capita spending, a growing population and a youthful demographic profile would further contribute to spending, and, a combination of factors will cause India’s household savings rate to plateau and then gradually decline. All this would contribute to a major shift in consumption patterns. While consumption would increase almost across all categories, there would be a considerable shift in spending from necessities to discretionary items. This would be the time when ‘Brands’ in India, would get their loyals.
Mala Morris, senior analyst, IGD points out the differences
in the behaviour of the Indian consumer when it comes to price loyalty versus brand loyalty. She states, “In the Indian market, for commoditised categories such as edible oil, price can be a key driver. However, a consumer who is apparently loyal to a brand can switch when provided with a strong incentive at the point-of-sale. Conversely, in a category such as confectionery, brand loyalty is likely to play a bigger role.”
Susan Fournier in her study “Consumer and their brands: developing relationship theory in consumer research” speaks of a need for cultivating ‘brand relationships’. The factors contributing to a strong brand relationship, according to Fournier, are: Love and passion, self-connection, Interdependence, Commitment, Intimacy, and Brand Partner Quality.
Love and passion, according to Fournier, are at the core of all strong brand relationships. She states that the ‘affect’ supporting brand relationship endurance and depth is much greater than that implied in simple notions of brand preference. She found that strongly-held brands were characterised as irreplaceable and unique to the extent that ‘separation anxiety’ was anticipated on withdrawal among her subjects. Self-connection, an important facet of brand relationship quality, reflects the degree to which the brands deliver on important ‘identity’ concerns, tasks or themes, thereby expressing a significant aspect of the ‘self’.
Strong brand relationships were also distinguished by a high degree of ‘Interdependence’ between the consumer and his brand. It involved frequent brand interactions and an increased scope and diversity of brand-related activities.
Finally, Intimacy is the factor which comprised elaborate knowledge structures that develop around strongly held brands. Thus richer layers of meaning reflected deeper levels of intimacy, and more durable relationship bonds. Fournier also studied 30 terminated brand relationships and developed two models of ‘relationship deterioration’. In the ‘Entropy Model’ the relationship falls apart unless actively maintained. In the stress model, relationships are forcefully destroyed by the intrusion of personal, dyadic, or environmental stress factors.
Brand loyalty in its real sense comes close to ‘brand equity’ and far from spurious loyalty. A true marketing approach towards building brand loyalty may thus take Susan Fournier’s study into consideration.
In the Indian context, as the organised retail industry continues to consolidate and promises to boom, it would potentially play a critical role in driving brand loyalties. “There are really two kinds of bargain hunters: those who look for discounts within a specific brand, and then those who are purely driven by bargains and hop between brands,” says Vikram Thaploo, VP of Big Apple.
The key in creating effective brand loyalty programs is to discover the most persuasive loyalty drivers for each customer. Loyalty drivers generally fall into two categories: product attributes (e.g. performance, quality and reliability) or price/ promotion sensitivity. On being asked about the possibility of a bargain-hunting customer ever becoming loyal to a brand, Morris replies, “As retailers gain scale and momentum, and implement a low-price strategy consistently, consumers will tend to constantly get good value (and bargains) in the store for the brands they are ‘normally’ loyal to. So, over time a brand will encourage the shopper to stick with a particular retailer and a bargain-hunting consumer can be loyal to the retailer brand and FMCG brand as well!”
Given that the cost of acquiring new customers is approximately four times as expensive as the cost of retaining and preserving the ones we have already, developing brand loyalty becomes an obvious phenomenon. But what is more essential is the sustenance of brand loyalty. In a market scenario where consumers are bombarded with ‘choice’, there is an increasing need for the retailers to remain on their toes of constant innovation in terms of the products and services they offer. Or as Mala Morris concludes, “The secret of success for the international retailers is in recognising that different shoppers see value in different ways, and that they can capitalise by offering a great range of shoppers what they want.”
The key to creating effective brand loyalty programs is to discover the most persuasive loyalty drivers for each customer. Loyalty drivers generally fall into two categories: product attributes (e.g. performance, quality and reliability) or price/promotion sensitivity.