2% of Indians loyal to brands; discounts don't keep them hooked: Experts

Amita Deshpande, a young urban professional was on the hunt for a wearable device. After some research and a lot of time spent weighing the options, she picked one. Purchase done, all seemed well. But when it was time for her next buy, did she go for the brand she had chosen the first time? No, because as is the norm with bargain hunters, she found herself a better deal, from another brand. 

Deshpande’s story is the story of the average buyer. Consumers show no loyalty to brands they purchase in most categories, says a new study by market research agency Nielsen. And Indians exhibit the strongest tendency to flirt with brands, says Patrick Dodd, global president and chief commercial officer, Nielsen, with just two per cent sticking with their choices against the global average of eight per cent.

While experts argue that the plethora of choices fosters disloyalty, reality is that building brand-consumer connections is getting difficult. “The whole e-commerce and retail wave in the last few years has pushed the culture of discounts to a new level,” says Arvind Singhal, chairman, Technopak. “Loyalty today exists only for discounts and consumers wait when they can get the best buys whether online or offline,” he says.

Nielsen, on the other hand, says that ‘newism’ is the new normal. “A lot of people like trying out new products and they look forward to it. So brand disloyalty should be viewed against this backdrop,” Dodd says. The study reveals that nearly 42 per cent consumers in the world actively search for the latest brands and products as they seek newer experiences in life. And 49 per cent, though conventional in their brand choices, can still be moved to experiment with new products.

What’s more? The fear of the unknown has vanished. The report showed that 46 per cent of global consumers, including in India, are not afraid to try out new brands, 24 per cent are on the cusp, making choices, but opting to stick with brands they have selected or consumed earlier. So the pressure, say experts, is growing on brand managers because the band of disloyalists is growing. While retailers have no option but to turn to discounts as a default option to maximise sales, manufacturers have to walk a tight rope. How do you manage the dichotomy of loyalty and disloyalty?  

“The challenge of having to balance the need for brand loyalty, at the same time accept the reality of disloyalty is tough on companies,” says Singhal. But manufacturers have no choice – dialling down on offers and price-offs could help reduce fickleness, he says.

The report holds out a ray of hope though. While price is still key to the purchase decision, a strong brand promise could improve stickiness it found. Because it said, if 32 per cent of global consumers switch brands to make the most of discounts, there is a still a sizeable chunk that is not swayed by price-offs alone. 
 

Marketers can take advantage of these gaps. Electronic brands such as LG and Samsung, for instance, have over the last few years say trade sources, cut down on discounts, pushing consumers instead to focus on the quality of their products. Eric Braganza, president, Haier Appliances India, says his company too has been moving away from discounts. “If you are seeking a long-term play in the market, then brand-building is the only route. The emphasis has to be on value creation rather than discounts,” he says.

Experts say the challenge is greater for digital-only brands. “Digital has allowed brands to save costs, but those savings have to be passed on to consumers. So price-offs become central to the brand promise,” says Y V Verma, a consumer durables expert, who has worked at LG and Onida.

Apart from consumer electronics, categories such as beauty and fashion too have migrated online, putting huge pressure on brand owners to discount. Some brands are changing tack though. Executives at platforms such as Nykaa and Myntra-Jabong say they are working on customised strategies for brands including a hybrid online-offline retail model and events and tutorials to rack up consumer interest and sales.