Is Brand Loyalty Dying?

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“On the whole, for an estimated 25,000 people across all 34 markets, brand loyalty accounted for just under 40% as a determining factor in making a buying decision. But that number dropped to just 25% in US markets,” – Steve Olenski

Brand loyalty is one of the defining features of consumer behaviour wherein, customers and consumers consistently direct their shopping dollars to a certain brand or a business that offers them a steady value proposition. This phenomenon was observed across multiple markets and embraced a wide range of goods and products that included automobiles, toothpaste, packaged food, detergents, perfumes, household cleaning materials, and garments, among others. The centrality of the concept of brand loyalty to commercial fortunes and corporate performance stemmed from the fact that brands and businesses could rely on this aspect of consumer behaviour to boost their sales and profits across huge timeframes. However, market observers have noted that brand loyalty has been diluted in modern times and consumers no longer offer their custom to a certain brand or product.

One of the prime reasons behind the erosion of brand loyalty lies in the flood of competing brands and products that have saturated modern markets. In the modern world, commerce has access to deep pools of capital and executive talent; this has enabled commercial enterprises to launch vast ranges of products that fuel the surging consumer-led economies prevalent in most countries. Cross-border trade has risen to unprecedented levels in the wake of economic globalization which is designed to promote the seamless movement of products and services across national borders. Multiple brands of products are positioned in the racks of any popular supermarket, designed to boost the concept of consumer choice and this has hastened the demise of brand loyalty in modern times.

Technology plays a defining factor in the advance of human civilizations. This maxim has held true for thousands of millennia in all aspects of human endeavour. Modern electronic and connectivity technologies have both reinforced and degraded the concept of a ‘brand’ thereby creating serious ambiguity that threatens to rend asunder the traditional concepts of brand loyalty. For instance, a consumer that preferred using a certain brand of detergent can be offered competing products from rival brands using the technologies of the global Internet. The persuasive marketing techniques can be adorned with powerful bells and whistles that can sway the minds of the most steadfast consumers, thereby threatening brand loyalty. Similarly, consumers that prefer a certain brand of automobile can be targeted with marketing campaigns that promote new products geared with the latest technologies and price reduction mechanisms. In light of the above tactics, we may state that brand loyalty faces an existential threat from modern customer behaviour.

Commerce can be perceived as a double-edged weapon that can promote and destroy products and brands. The ceaseless quest for new consumer markets and the relentless focus on profit margins have forced corporate captains and business managers to fashion new products and services that populate the markets. The quest for refining existing products has led to diversification of product categories, resulting in endless varieties of commercial offerings that invade the mass consumer markets. This contributes heavily to the demise of brand loyalty because the consumer always faces new choices in his or her daily lives. For instance, commercially available mobile phones were introduced two decades back in the form of rudimentary, push-button wireless handsets. The market subsequently expanded as technology advanced and commercial appetites were whetted. In the modern world, smartphones dominate the landscape and are packaged as (literally) endless varieties of consumer gadgets. In light of the above, we may state that the eventual commodification of a technology leads to erosion of any notions of brand loyalty and hence, transforms consumer mind-sets.

Widespread access to consumer finance and growing disposable incomes, have contributed in equal measures to the erosion of brand loyalty in modern times. This is evident from the fact that the banking industry and the financial services sector have created huge access to liquid capital that can be availed by the modern consumer in his or her quest of all things material. Increasingly, banks stand ready to offer consumer loans and large personal loans that can be leveraged by customers and consumers to fulfil their material desires. This kind of behaviour has gained mass acceptance in sharp contrast to earlier times, wherein access to capital was severely restricted for the common person. Consequently, mass markets have thrived and now offer an endless variety of all manner of goods and services to thriving consumer-led spending behaviour. In a similar vein, high volumes of disposable incomes have encouraged the modern consumer to spend and invest, thereby attacking the fundamental tenets that powered the concept of brand loyalty. We must note that these modern developments have managed to demolish the very ideas that underlie the concepts of brand lineage and loyalty.

The quest for better prices is one of the fundamental drivers of change that erodes the mechanisms of brand loyalty. Competitive markets and competing products and services hinge on mechanisms of price competitiveness that are designed to lure customers from their traditional spending habits. For instance, a premium perfume product may carry a hallowed tradition that a certain brand aura cultivated over many years. The said brand may enjoy a steady following among consumers, but upstart brands and competing products may choose to offer similar products at lower prices. This is clearly an outcome of business competition and the commercial imperative of garnering profits by cannibalising the sales of legacy brands and products. In addition, new entrants in a certain market can choose to expand consumer choice by leveraging marketing tactics that include two pieces of merchandise for the price of one. Heavy marketing budgets can be designed to raise consumer awareness and attract the consumers that favour legacy brands. Guerrilla marketing tactics can also be employed to attract and retain the customer’s attention, thereby destroying the idea of brand loyalty.

Peer recommendations and customer feedback represent crucial market drivers that may have the effect of curtailing traditional notions of brand loyalty. We must note that consumers value the feedback from other consumers and their peers that have extensive brand experiences. This widens the scope of experimentation in the minds of most consumers and leads to situations wherein, steady brand advocates find themselves tempted to sample the offerings of rival brands and products. This is encouraged by modern social media platforms that enable a single consumer to broadcast his or her preferences (and brand experiences) to huge numbers of peers. This action can set in motion multiple streams of thought and may result in sabotaging brand loyalty. Subsequently, the positive experiences of many other customers can coalesce to engineer mass defections from a legacy brand to upstart products and services of recent vintage.

In the preceding paragraphs, we have examined some of the processes and causations that degrade traditional consumer concepts of brand loyalty. We have to acknowledge the fact that brand loyalty does continue to hold its own in certain markets, but the concept faces heavy odds and serious challenges in modern markets where customers and consumers continue to evolve. In addition, changing perceptions in terms of assessing a core value proposition have contributed to said challenges. Therefore, modern brands and businesses must evolve new concepts of marketing in a bid to retain their existing customers and must continue to pursue traditional business objectives that include expanding the customer base and presenting new products reinforced by solid value propositions.

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