Customers are turning their backs on some of the world’s biggest brands as they seek out cheaper alternatives in the recession, according to a new study from the CMO Council.
Big brands’ best customers have been defecting in droves since the beginning of the recession and by this year, more than half of a typical brand’s most loyal shoppers in 2007 had switched to rival products.
A two-year analysis of 685 grocery and pharmacy-stocked brands, using data from 32 million consumers’ supermarket loyalty cards, found that in 2008 the average brand lost a third of its formerly highly loyal customers.
The new study counters a recent report from Opinium Research that found that despite the recession, Brits were sticking with their favourite brands.
It said that while two thirds of customers were swapping to cheaper products to beat the crunch, there are some brands they will never substitute.
Among the big household names that shoppers are staying loyal to amid the economic gloom were Heinz Beans, Marmite, Kellogg's cereals, Coca-Cola, HP sauce, Cadbury's chocolate, Walkers crisps, Colgate and Warburton's bread.
The CMO’s research reveals that the most loyal customers, those choosing one brand for more than 70 per cent of their purchases in a category, should also be a brand’s most lucrative.
Past recessions have seen similar defections from top-tier brands to stores’ private-label goods, according to the Financial Times.
Additionally, academic research showed that customers could be quickly persuaded to switch by a cheaper price but took far longer to switch back.
The study comes as marketers are leaning more heavily on research and on targeted advertising, as they seek to improve on the “spray and pray” approach of mass media marketing formats, such as 30-second television spots.
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