How many brands or products are you loyal to? Would you believe it’s in the hundreds? While you may only name a handful of brands that you feel loyal to, your buying behavior is at least as important as your feelings.
This article outlines how to analyze the competitive loyalty landscape before launching a new consumer product. The results indicate a strategy to win trial adoption and consumer loyalty.
If you like Starbucks, Ikea, and BMW, you have some degree of attitudinal loyalty towards those brands. You prefer them over alternatives for reasons other than cost or convenience. Brands work hard to build attitudinal loyalty for obvious reasons: it’s a powerful way to build repeat business, and a competitive advantage.
So why do you actually visit Dunkin’ Donuts, shop at Walmart, and drive a Toyota? Behavioral loyalty describes what people actually buy, which often involves cost and convenience considerations. While you may enjoy shopping at Ikea, they sadly don’t sell bread and milk, yet.
You can dislike a brand and still exhibit behavioral loyalty: you may not love your telecom provider, but you still pay the bills. You can also have attitudinal loyalty without buying anything: you like Tesla, but won’t buy one until the price drops to meet your budget.
How Loyalty Matters to New Brands and Products
Introducing a new product into a competitive category requires breaking, and then winning the loyalty of customers. To create a loyalty-winning plan, it’s important to understand what kind of loyalty customers have, why they have it, and exactly what it would take to break it and win it.
How to Assess Loyalty in Your Target Market
The best way to assess loyalty is by asking consumers using surveys. That’s because buying behavior can be seen in standard market research reports, but the reasons driving that behavior and how consumers might react to a new product can only be estimated by asking them. The techniques below were developed by HIT Laboratories to assess competition and loyalty for new health, beauty, and cosmetics products.
Step 1: Similar Product Usage
Loyalty is only an issue if your target market thinks your product competes with what they currently use. In the below example, 43 percent of respondents don’t use a product similar to the one tested. That reduces the marketer’s challenge for that large segment to conveying the product’s value, rather than breaking existing loyalty.
Step 2: Product Comparison
For the remaining 57 percent who already use a similar product, how does the new product compare? If it doesn’t appear to be at least slightly better, it has a slim chance at replacing it. In this example, a combined 57 percent thought the new product was better overall than what they already use.
Step 3: Know your Competition
What exactly is the target market currently buying? Below is an excerpt from hundreds of actual responses. Sometimes respondents will cite a product that doesn’t appear to be competition. But what we think is irrelevant; it’s competition if your market thinks it is.
Step 4: Competition-Loyalty
Now that the competition is known, how loyal is your target market to those competing products? Behavioral and Attitudinal loyalty can be separately assessed by asking respondents questions about their feelings and purchasing history.
Step 5: Loyalty Quadrant
Possible marketing strategies become apparent by plotting the attitudinal vs. behavioral loyalty. While this is a complex topic, we can generally say that if there is low behavioral loyalty, consumers are frequently trying alternatives, possibly swayed by new product offerings, discounts and coupons, or variety-seeking behavior. This suggests it may be easy to acquire trial purchases, and focus should be put on programs or features that drive loyalty to retain customers.
If there is low attitudinal loyalty for competing products, there may be an opportunity to create a brand with more personality or other likable attributes. This strategy has been clearly visible among North American telecom providers over the past decade, as they’ve attempted to infuse their brands with distinct personalities.
Other Product Marketing Considerations
After assessing the nature of loyalty among the target market, examine the specific ways a new product could gain and hold customers. This is beyond the scope of this article, so these considerations will only be summarized below.
Respondents who use a similar product are asked why they buy it rather than any other product. These reasons can help in designing a strategy to gain market share.
Respondents are assessed for how likely they are to switch to a new competing product for a trial duration. Even very loyal customers may be open to a free product trial, depending on the product type.
Respondents indicate what specific incentives would cause them to buy the new product over their current one on a long-term basis. This can indicate the best basis of competition.
The above Loyalty Analysis is a standard component of the Cosmetics Assessment Standard (CAS) study, which assesses the appeal of new health and beauty products and provides actionable product improvement and marketing insights.