Post-Recession Brand Loyalty Drop

Brand loyalty has long been one of the key forces in driving revenue. When two companies have the same product, and one has a recognizable brand, most consumers will get the product they know over the product they do not know, simply because they “can assume” that the product is of higher quality. Of course, we know that’s not always the case.

Take two separate containers of cinnamon. Chances are they are exactly the same, but one is a lot cheaper because it doesn’t have the marketing or brand behind it. It makes little sense to spend on the brand when the product is identical, but people do it anyway, because one brand has trust and the other does not.

It does, however, seem that more and more buyers are starting to ignore brand in favor of price. According to an article published by ABC News, Brand Loyalty is at an all-time low, with as many as 80% paying more attention to how much they’re spending on a product than the brand. According to the article, the recession is to blame.

More consumers are becoming penny pinchers. It’s possible that price is becoming a part of a brand as well. A company that expects consumers to pay double the price when a store brand product with identical taste can be had for cheaper is going to be turning people off to its brand.

In a sense, the individual is “brand loyal,” to avoid purchasing the brand that is regularly too expensive.

This doesn’t mean that brand loyalty doesn’t exist. It simply means that brand loyalty isn’t just based on logo and marketing alone. Competitive pricing is becoming a part of a company’s brand.

Consumers are likely to still purchase based on brand if the price difference isn’t substantial. But as “big brands” start to become overpriced compared to store brands – especially for items that have little taste difference, like cinnamons – consumers are associating those high prices with the brand and are becoming turned off by them. Similarly, store brands are developing their own brand loyalty because of their affordable prices.

Many consumers walk into Target and immediately look for the Up and Up Target store brand because they are affordably priced and high quality. Even if a few feet away there is a similar product for a similar price, the Up and Up brand has attracted loyal consumers. So branding is still important, and the more your products are actually different – for example the taste difference between Corn Flakes and some generic flake – you can justify a slightly higher cost for higher quality.

But pouring all of your money into marketing and passing that costs onto the consumer may not be the best strategy anymore. If your costs cause your products to be significantly overpriced compared to near identical products elsewhere, all of your branding efforts may be in vain.