Customer loyalty suffers in recession

Posted Jun 22nd 2009 3:20PM by Tom Barlow
Filed under: Consumer Experience, PepsiCo (PEP)

A study just released by the CMO Council and Pointer Media Network concludes that brand loyalty in the consumer packaged goods sector is taking a severe hit during this recession. Among its conclusions- 52% of customers who were considered highly loyal to a brand in 2007 either cut back or quit buying the brand in 2008. Less than half of the brands kept 50% or more of their highly loyal customers during that interval.

A full third of loyal customers of the average brand abandoned that brand altogether in 2008. One might say today's customers are fickle as well as frugal! The recession is also impeding the ability of leading brands to recruit new customers, meaning that the overall customer base of many contracted in 2008.

The study certainly has the breadth to be credible; it claims to have studied 32 million customer and 685 brands.

Who suffered the greatest abandonment? Benadryl lost 46% of its formerly loyal customers, Del Monte (NYSE:DLM) 35%, Di Giorno 41%, Ruffles 36%, Aquafina (Pepsico, NYSE:PEP), 41%. Among those whose customers remained most loyal were Heinz (NYSE:HNZ), 81%, Brummel & Brown, 81%, Land O Lakes, 82%, and Scrubbing Bubbles, 63%.

Such numbers reinforce my perception that customers are turning to house-brand items and those on sale, regardless of brand. In an age where branding is the holy grail, these finding should be of concern to those name brands.

Tags: brand loyalty, brand marketing, BrandLoyalty, BrandMarketing, cpg loyalty, CpgLoyalty, dlm, hnz, inthenews, pep

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Reader Comments (Page 1 of 1)

6-22-2009 @ 7:16PM

al coholic said...

This isn't due entirely to the recession. When generics first popped up years ago they were very inferior to the brand products. Nowadays that's changed. Stores like Publix and others offer good substitutes for many high priced brand products. People have wised up and no longer blindly stick to brand name products unless they are truly better, which they seldom are.