Is there a loyalty 20 rupees off can’t buy?

Customer Loyalty is a complex subject in the best of times. Every marketer wants its own customers to stay loyal and buy repeatedly from it, while at the same time it wants to encourage experimentative behaviour in its rivals’ customers. This means a brand wants to stimulate fundamentally conflicting behaviour in people.

What is loyalty anyway?

The fact is, since brands live in a competitive world, loyalty is a relative and fluid term and its incidence can change from one category, customer segment and market to another. Except when people have little choice within a category [phone connections a few years ago or power supply at present, for example], some customers want to experiment with new brands and new variants, while others prefer to stay with a brand. Often, loyalty, which can be loosely defined as a customer’s willingness to choose a brand more often over a period than its rivals, is dependent on the price of the product, the level of involvement, the level of competitive marketing activity (including but not limited to advertising), and the number of brands available with similar perception of value delivery.

Often, as in the case of low choice categories, there may be natural barriers to brand switching, even where competition is stiff. In mobile telephony, for example, many post paid customers tolerate unsatisfactory service for fear of having to lose touch with people, if they were to switch their operator. This may give brands a false sense of loyalty, on classical metrics. Similarly, in packaged goods, given our retailing structure led by kirana stores and small, owner-operated super markets, customers are often loyal to the store, instead of to a brand. They move quite easily between brands within their basket, based on retailer push and often promotional offers. Modern format retailing encourages experimentative behaviour anyway and poses further threat to loyal behaviour.

What happens when times are tough?

As customers juggle to fulfil competing needs within limited resources during stressful times, their value consciousness scales new peaks. In fact, the definition of value shifts during challenging times. People prefer simple price offs over cross promotions, which they decode as attempts to get them to buy what they either don’t need or could easily buy at a later date. We found this and more fascinating behavioural changes when we conducted twin consumer researches earlier this year called SENTIMETER and SPENDRIFT, in partnership with specialist consumer diagnostic company - the key. Our ongoing research IntenTrack also gives us INTENT scores for brands within a category as a robust surrogate for loyalty.

It begins simply.

People talk more to each other and to ‘experts’ during stressful times. This means some people buy more of brands which they have got strong relationship with and actually recommend them to friends. Recommending a brand makes these customers appear to be ‘experts’. At the same time, deal seeking behaviour increases dramatically, and many actively look for promotional offers and ‘help friends’ by telling them about ‘the best deal in town’. ‘Deal seeker’ and ‘bargain hunter’ gain legitimacy as desirable labels and become badges to wear. Even well-to-do people compare prices vigorously. This results in faster movement within brand basket than usual and classical loyalty metrics suffer, as overall shopping activity drops. Result: brands which stand for value, both physical as well as emotional, enjoy strong loyalty and advocacy.

Strong company brands gain

In categories where the company is the brand [appliances, cars, services] or where the customer’s self perception of ‘native expertise’ is low, trust and therefore loyalty converges around the company. With a lower intensity, big and established packaged goods brand too hold their repeat purchase level. It may appear counter intuitive, but even small specialist brands see loyal behaviour, since their advocacy levels are usually high and a small group of people make an implicit decision ‘not to let my brand die’. In general, trust in the Government, PSUs, and big corporate groups rises and these see a loyalty shift towards them.

Net net, there is no one pattern loyalty flows during slowdown and resource crunch. It’s the same with brands as with human behaviour. Some think tough times are the best to cement relationships, while others think adversity is the license you need to flirt.

[Published in Financial Express BrandWagon Sep 1/2009]

Original article

A Brand is not a Thing; it's a Being
Branding for a Young India

Author and lecturer Winston Fletcher once commented that ‘branding is probably the most important concept that marketing has given to the world’.

Intriguing and complex

Yet the brand and branding has remained one of the most inconsistently understood marketing concepts. I learnt marketing and communications in an era, when most brand managers equated branding with the size of their logo in a magazine ad or the length of logo exposure in a TV commercial and naturally fought with agency art directors to increase the size or prolong the exposure.

In an interesting way, to a lot of marketing practitioners, the youth appear intriguing, puzzling, a bag of contradictions. They are fluid and defy strict definitions. They question authority, yet respect authoritarian figures such as parents. They are experimentative. They are individualistic, yet want to belong. These qualities often make marketing people read the youth as fickle, undecided, disloyal, and unsure of their identity and so on. This is why almost every year seminars and conferences are held on ‘Marketing to the Youth’, people present case studies and successful examples, and yet, few answers are found and we all wait for a similar seminar the next year.

So I find it very interesting that I am writing a guest piece on Branding for the Youth, combining two very powerful topics.

You are what you deliver

So what does branding need to be for the young? To answer that, perhaps we should ask what branding and the brand need to deliver to the young? While brands deliver many things to their customers – from reassurance to trust to aspirational fulfillment to a sense of identity, I would like us to explore what makes youth a special segment.

Do I like you?

Young people are all that we said in the second para of this piece – fluid, experimentative, individualistic, tribal. Plus they are technology friendly, suspicious of politicians, fearless and yet apprehensive, risk friendly, yet not foolhardy. But more than anything else, when I look at youth as a phase, a mindset and young people as a segment, I feel this is the time the search for and exploration of relationships is at its peak. At home, in the neighbourhood, in the school and the college, in their tuition classes, at workplace, at friend’s homes, at weekend outings, in weddings, in the night club, young people are evaluating other people and deciding who is a potential friend and who is not. While the search for relationships will never really end, it is during youth that it really begins and accelerates fast and for the first time, unsupervised.
I believe this is the context in which branding and the brand can effectively engage the young. Sure, brands are about aspiration and identity. But perhaps even more, they are about relationships. Whether physical brands or human beings, we decide to from relationships based on a simple thing – belief. Belief gives us reassurance, makes us proud to associate with someone. Think of the friend in school with whom you hung out, the one with whom you discussed mathematics or the one who came over home when you needed company. Whether in public or in private, it is our belief in people that decides how far we will go with them. I read somewhere that a belief means that there is an internal and external faith in a particular set of values, a trust that the person will deliver that set of values. With trust comes a relationship, as people remain loyal to their friends.

Connecting as people do

It is no different between brands and people. We like people who are a bit like us, whose hobbies, interests, passions match ours. When brands behave like humans, rather than just a name on a pack, and tell us they have the same passions as ours, they begin to become our friends, someone we can hang out with, someone in whose company we can be proud of being seen. Nowhere is this more pronounced than in the case of youth. Think of brands such as Nike, Coke, Apple and the relationships they have built with their predominantly young and young-at –heart customers. A resolve to build relationships makes you do a certain kind of things. Again, think of the college days or the first job. You develop a taste in music, movies, books, sports, chocolates, disco’s and all the other things similar to that of the person you are building a relationship with. Brands need to do the same. Seen in this context, why Nokia and Pepsi involve themselves with music, Red Bull goes after alternative sports, AXE does naughty things, become explainable and seem appropriate.

I keep looking for Indian examples and alas, none comes to my mind as well as these global brands. Are home grown brands such as Red Tape, Action shoes, or Killer jeans missing the point? I happen to see it as a great opportunity for them.

Brands and branding are more than the size of the logo. That’s too simplistic a view. A brand to me is no different from a human being, and need to connect with people as people do.

Thank you for your attention.

[Published in the USP Age December 08 Special Issue]