There is a big difference between a customer who always chooses your brand because they genuinely love it, and one who may prefer it as one of a group of acceptable products, but picks you just because of a good deal.
A truly loyal customer will choose your brand without thinking twice.
They come back because they trust your quality, your service, their emotional connection for one reason or another, and what your brand stands for. Price becomes irrelevant.
Working from home, good coffee is a crucial part of my morning routine.
I usually buy a specific brand to feed the habit, but only when it is on special.
The ‘standard’ shelf price is close to $40 per kilo, but on special, you can find it around $22. I tend to buy ‘pantry stock’ when it is on special to ensure I do not run out. On occasions I have run out, I switch to other brands, usually ones I am familiar with, on special at around that ‘special floor price’ of $22-25.
If asked in a research group to name my Favorite brand, it would be XXXX. Asked which I most often used, the answer would be the same. As a result, I would be classed as a ‘Loyal’ user. However, this is less the behaviour of a ‘Loyal’ user than one who simply has a preference and shops accordingly. The aggressive price discounting has established my perception of what it costs per kilo for a quality coffee I will enjoy. It is up to $25, not the $40 that is the nominated ‘usual’ shelf price.
The choice is driven by availability and price rather than loyalty, although I would be classed as ‘loyal’.
The power of the retail gorillas, and relative weakness of their suppliers have served over time to drive this gap between ‘normal’ shelf price and a promotional price that has become a category floor.
In the process it has killed brand loyalty. Dead.
Retailers make their money from the ‘rent’ suppliers pay in many forms for the shelf space, and thus access to consumers. The cash from the tills is the cream.
Suppliers over the last 30 years have made a rod for their own backs that is only getting heavier. They have forgotten the difference between brand loyalty and brand preference. They allowed retailers to dictate the split of available investment in their revenue generation activities.
There is a huge difference strategically between brand building activity, driving a consumer to take a product off the retail shelf because it best fills their personal requirements, and in store sales activation.
Suppliers to FMCG have forgotten that key driver of long term success. They have collectively taken the easy way out, and kicked the can down the road.
