Now in order to create or further fortify these percieved conceptions one needs to nullify poinst of parity with the competition and more importantly create points of differentiation in the mind of the consumer.
Some of the oft held thoughts on the Brand perceptions have been:
- Brands signify better quality (Hence adverts on "New and Improved" and "Better")
- Brand Loyalty is price inelastic (I can charge higher because my Brand is percieved upscale and I have better quality or vice versa)
- All Brand rules (like above) will be back in vogue once the recession ends
It’s not doom and gloom for all companies, of course. Value retailers and discounters such as Wal-Mart are one segment of companies that have been performing well over the past 18 months.
If anything, the crisis has accelerated a shift in the demographics of the shoppers at these stores. While in the early days mostly low or middle-income customers shopped there, the Wal-Marts, ALDIs and Lidls of this world are increasingly attracting high-income consumers too.
Our first insight was not surprising but informative nevertheless. Habitual shoppers value brands significantly more than experimental shoppers. In other words, for a significant segment of the population, brands are a convenient mechanism to support habitual shopping.
This is in principle good news for an established brand franchise. But it can easily turn into bad news if consumers, due to personal economic circumstances, are forced into choosing a different and less expensive brand.
Once consumers are familiar with such a less expensive brand, it will be as effective in supporting habitual shopping as the original, more expensive, brand. Thus there is little incentive for habitual shoppers to switch back to the original brand once economic conditions improve.
Our second finding was outright shocking. It is generally argued that strong brands signal quality. Yet we found that consumers who place a high value on quality, valued their favorite brands no higher than consumers who are satisfied with “good enough”.
Hence brands in the FMCG realm do not serve as signals of quality. Consumers who have abandoned national brands for economic reasons will in all likelihood see no reason to return to these brands because “they stand for quality”. They do not stand for quality in consumers’ minds. Our final insight underscores the importance of differentiation. Consumers who perceive there to be a difference between brands also value their favorite brands higher than consumers who perceive little difference among them.
This is perhaps not a very surprising finding, but it does offer tangible guidance for brand managers. It reinforces the old mantra “Differentiate! Differentiate! Differentiate!”
