Brand Switching
Helen Strong
Brand Switching: Purpose
In some markets, brand loyalty is almost nonexistent. If the product is a commodity in the eyes of the consumer, or if there is very little differentiation between brands, then there is no reason to remain true to one brand or another. In this case, the marketer will probably spend minimal resources on building and maintaining a brand image.
Sometimes it is worth the effort to investigate how to prevent consumers leaving your brand to purchase another. In the markets that are highly competitive, perhaps margins are attractive and consumers can and do build loyal buying habits. All these are indicators to complete the investigation as to why and how switching behavior occurs.
Brand Switching: Structure and Description
The theory behind brand switching is that consumers are attracted to brands that endorse their view of themselves and whose benefits meet their preferences. As circumstances change, so do consumer needs and preferences. Available brands in the market space are the limiting factor for consumer choice (Figure 9.1).
Two factors are evident. With availability of Internet shopping, consumer selection is not limited to the physical marketplace in which you operate. Second, perceptions are the guiding force for choice, even sometimes when affordability and suitability of the function of the product are in question. Indeed, today’s consumers are spoilt for choice. Every product has a direct or indirect competitor for the consumers’ hard-earned money.
Hence it is crucial for marketing people to understand the dynamics behind brand switching. However, before one can consider brand switching one has to examine how consumers decide that they will use
Figure 9.1 Brand switching
Table 9.1 Factors generating dissatisfaction in banking clients
a particular product, and how they form their portfolio of acceptable brands. This model should therefore be read in conjunction with:
- Brand resonance ladderBRI for a discussion of building brand loyalty
- Customer growth rateCGR, which looks at the growth of the total consuming units in a market, and
- Consumer switching driversCSD, which identify classes of factors influencing service provider swaps
A model on its own can never provide a ready-made formula for establishing switching factors—the researcher must realize that information about the product class and brands active in a particular market informs the analysis of change dynamics within an industry. For example, some unexpected results emerged in Asian markets regarding bank selection and switching. Research by the Pulse Group (2009) indicated that in the banking sector, the top five triggers for shopping around for an alternative provider were as in Table 9.1.
Pulse Group also found that:
“For customers evaluating and ultimately selecting a new bank, the most important factors driving their decision are advertising, branch convenience, products and services, promotional offers, customer experiences, past personal interactions, recommendations and bank reputation.
Surprisingly, pricing—fees and interest rates—carried relatively little weight in influencing customer purchase decisions, despite recent heavy media coverage of changes to fees for bank accounts and credit cards.”
From the above research, we note that the push factors to leave a bank are not related to the factors that attract people to consider joining an alternative. As an aside it also suggests to marketers that they should stop before they start offering expensive discounts. The impact of such giveaways should be calculated in terms of immediate and sustainable business.
Brand Switching: Strategic Considerations
Overall sales or turnover can be dramatically impacted through brand switching. Hence the number, strength, and positioning of all the brands in a market should be established and their impact on choice be taken into account in the marketing strategies adopted by the marketer. These strategies need to address the factors that lead a consumer to choose or defect from a particular brand.
Brand Switching: Implementation
To apply the brand switching model, we need to have information from consumer researchG about:
- The product function and possible role in the consumers’ life
- Attitudes and values of the target market(s)
- Consumption behavior
- Brand selection factors
Beyond that, information is required about:
- Available pool of brands that are consumed
- Market dynamics when making a choice
Regardless of whether they are heavy, medium, or light consumers of a product, (classification will differ by product class), consumers can be categorized into people who are:
- Exclusive consumers who only ever use a particular brand, and refuse to substitute another brand or product when their only choice is not available
- Select consumers who have a range of brands from which they regularly choose to consume
- Indifferent consumers who lack involvement in the product and associated brands, and will easily move from one brand to another
- Uninformed consumers who lack awareness of the product class and its associated brands, and have probably little or no consumption experience
To establish the size of these groups, the researcher will conduct quantitative research amongst a randomly selected sample from the population of the target market. This research will establish the first divide: that is, those who do not know about the brand or product. Naturally, the research will look at the stumbling factors for product or brand consumption amongst this section of the target market.
Brand choice and substitution behavior of consumers is the basis of this model. To form a picture of the relationships between choice variables, the researcher would use techniques such as conjoint analysis and statistical modeling.
In conjoint analysis, respondents are required to make a series of choices between product concepts in which the features are manipulated by the
Figure 9.2 Example of conjoint selection stimulus
Source: Sawtooth Software
researcher. (For a simple explanation of conjoint analysis, see Jarvis n.d.) Conjoint analysis offers a realistic situation for respondents (Figure 9.2).
The technique forces consumers to make trade-off decisions similar to those in real life. They are required to indicate a preference when faced with different combinations of product configurations. The research tool combines the decision factors that are present when making product feature and brand choices.
The subsequent analysis results in an understanding of the drivers of choice. The complexity of the choices will depend on the number of variables being tested and the levels to be investigated.
Another technique looks at the probability of selection of brands other than the consumer’s first choice. This information is gathered by requiring the consumer to nominate an alternative brand for purchase if the consumer’s first brand is not available. It is possible in this way to calculate the probability of losses and gains by any particular brand.
If a brand experiences a net loss in this exercise, it is an indication that in the longer term it is going to be in trouble. Even if new consumers come into the market, it will only be a matter of time before its consumer base is eroded.
To prevent such a calamity, the marketer needs to look at the switching factors and if possible take corrective action within the marketing mix to regain lost consumers.
An alternative approach could be considered using multivariate analysis or by developing an index of propensity to migrate using such factors as:
- Customer category: exclusive, select, or indifferent
- Importance of the brand or product in the consumer’s life
- Appeal of the functionality
- Distance between the brand values and the consumer’s values
- Presence or absence of brand selection factors (taste and price are leading factors for selection of food products)
- Financial factors such as general state of the economy and disposable income, which affect a consumer’s willingness to spend
- Frequency of purchase relative to other brands (share of spend)
- Ease of purchase (for example, location, finance, delivery, or all these)
- Availability of substitutes
- Attractiveness of deals at the time of purchase
Brand Switching: Conclusions
Given the pace of life today, it is imperative for marketers to be in touch with changes in the marketplace, tracking the key factors that influence customers to leave their brand, and monitoring which brands offer similar benefits. Product use trends and potential substitutes should always be on the radar. For all of these reasons, in marketing one looks for sustainable advantages and embarks on or at the very least keeps up with innovations that are relevant to the target market.
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