Brand Loyalty: Price isn’t Always Right

It should come as no surprise that consumers are shopping around for the best price.  And price is, more often than not, trumping brand loyalty in everything from cars to toothpaste.  A new study from Catalina Marketing and the CMO Council reveals that for the “average brand,”  52% of consumers who were very loyal to package-goods brands in 2007 were more apt to switch brands in 2008. Imagine what those numbers will be for 2009. Just today, the New York Times reported that smaller car brands are gaining significant market share over the big guys as consumers from Detroit to Dayton are saying yes to Kia and no to GM, and the smaller car makers (such as Hyundai which owns Kia) can make a respectable profit by selling less inventory.

These same consumers do go to work and are inclined to react the same way to “business brands” unless marketers and PR pros focus attention away from price. Buying Dove over Irish Spring is a less risky proposition than switching to PR Firm B because PR Firm A’s prices are too high. Or by cancelling a vendor contract and going the DIY route because you’ve got nothing but time and hair to pull out, right? What every communicator should be doing now is telling the unique story of their brands and what their brands can do for their customers.  If you sell on price alone, then when the economy recovers (and it will), what’s your real story? That your prices are lower? That might work at Wal-Mart, but when a client is choosing a PR Firm to manage a crisis or choosing a vendor to measure its PR, quality of work and brand reputation are the real currency.

— Diane Schwartz

  • Marco

    It’s interesting to note the relative performances of the major CPG brands vis-a-vis their advertising spending. As reported today in Advertising Age, a number of major consumer brands have lost significant brand loyalty at the same time they’ve cut back on their advertising. More at