Brand loyalty falls by half in US

23 June 2009

ST PETERSBURG, Florida: The number of US consumers who were "highly loyal" to specific brands in the consumer packaged goods category fell by an average of 52% between 2007 and 2008, reports a study by the CMO Council and the Pointer Media Network

The two organisations assessed the purchase behaviour of "highly loyal" American shoppers, who were identified as being those consumers who made "70% of their category purchases with a single brand during a 12-month period."

Statistics were drawn from 32 million loyalty card holders across 24,000 grocery and pharmacy stores, and were relevant to 685 individual products.

Overall, the data showed that "for the average brand, approximately one-third of all highly loyal consumers in 2007 completely defected to another brand in the same category in 2008."

Furthermore, 19% of this group displayed falling levels of brand loyalty over this period, while 48% "of highly loyal consumers in 2007 remained highly loyal in 2008."

With regard to specific brands, 75% of consumers that were regarded as "highly loyal" to Coca-Cola Classic in 2007 still met this criteria in 2008, while 17% had fallen below the 70% purchase level, and 8% had stopped buying the brand altogether.

Cheerios, the breakfast cereal owned by General Mills, posted more mixed results, with 35% of its core audience staying loyal, while 37% evinced declining levels of attachment, and 28% "defected."

Procter & Gamble's toothpaste brand Crest saw 41% of consumers maintain their previous spending patterns, while 37% chose to buy rival goods, and 22% were showing a diminished level of commitment.

The study, entitled Losing Loyalty: The Consumer Defection Dilemma, also estimated that Cheer, one of P&G's detergent assets, saw its revenues decline by 19% as a result of "loyalty erosion," with Tide's sales down by 5% as a result of a similar trend.

However, both of these brands performed better than rival detergent Wisk, owned by Sun Products, sales of which fell 25% as a result of increasing numbers of consumers changing their purchase habits.

Folgers coffee, which was sold by Procter & Gamble to JM Smuckers last year, reported a 61% loyalty retention rate, with only 19% of former "brand loyals" having shifted their funds elsewhere.

By contrast, Tylenol, Johnson & Johnson's pain relief brand, Hunt's canned tomatoes, owned by ConAgra Foods, and Pine Sol cleaner, owned by Cl

Data sourced from Financial Times/AdAge; additional content by WARC staff