Brand Loyalty Drops During a Recession: Study

Market tracking firm comScore released a new study on Tuesday. The March 2010 results from their brand loyalty study among consumer goods showed a significant decline during the past two years of the "Great Recession."

comScore chairman Gian Fulgoni revealed the results at the Festival of Media conference in Valencia, Spain. Fulgoni said, “A decline in loyalty to consumer goods brands is typically one of the byproducts of a recession as consumers give greater consideration to price. Research we’ve conducted at comScore ARS has quantified the impact of the ‘trading down’ effect within a number of different product categories, highlighting consumers’ increasing willingness to switch brands in the face of pocketbook constraints.”

Simply put, the recession encouraged consumers to move away from brands they were once loyal to, to store and generic brands instead. These moves were made as cost-savings measures.

When comparing March 2010 vs. March 2009 vs. March 2008, every category of product showed a reduction in brand loyalty. The categories are Health & Beauty Aids, OTC medication, Apparel, Food, Household Products, and Housewares.

When comparing, for example, Toothpaste out of the Health & Beauty Aids category, comScore saw a drop of 10 percent between March '08 and March '10. OTC medication loyalty dropped 15 percent in that timespan.

However, Fulgoni added that clever marketing could give the brands an edge in bounce-back, once a recession ends. “Despite these shifting consumer dynamics, research has repeatedly shown that premium brands which invest in marketing and promotion activities aimed at maintaining buying at ‘preferred’ levels are able to minimize short-term erosion of share to less expensive brands and position themselves for a bounce-back when the economy improves.”

Written by Michael Santo
HULIQ.com

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