My best friend’s chang­ing!

Is un­flinch­ing loy­alty pos­si­ble in a dog-eat-dog world?

Progressive Grocer (India) - - Memory Lane -

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.

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