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Mobile can restore diminished brand loyalty caused by recession: Study

There has been a clear willingness to “trade down” to lower-priced brands over the past two years. According to research by comScore a decline in loyalty to consumer goods brands is typically one of the byproducts of a recession as consumers give greater consideration to price.

“While every brand is different, some of the potential uses of mobile might be special offers and discounts sent via mobile, games and mobile apps,” said Andrew Lipsman, senior director of industry analysis at comScore, Reston, VA. “There is also significant potential to leverage location-based services for highly targeted communications that could reach the consumer at or near the point of purchase.”

The comScore study evaluated the change in brand loyalty within a number of consumer goods categories, including health and beauty aids, over-the-counter medications, apparel, food, household products and house wares.

As the economic downturn has continued, the percentage of shoppers who typically buy the brands they want most has steadily declined across the categories examined.

In March, less than 50 percent of shoppers reported purchasing the brand they want most.

In some categories, particularly CPG household products and house wares, consumers were already more likely to buy a brand they did not “want most” at the start of the recession.

Some categories, such as paper towels and facial tissue, have not seen increased trading down from a brand perspective, possibly because such categories have led the way in tiering, allowing consumers to stick with their preferred brand at a more attractive price point.

As the economic downturn has persisted, this trading down behavior appears to be spreading to categories that were previously immune.

The increases in trading down in these categories have largely occurred in the last year.

Higher ticket items have seen large increases in trading down possibly due to larger absolute savings on a single purchase.

For most categories, the drop in likelihood to shop for the brand wanted most is not restricted to buying other brands on sale.

Rather, a sizeable percentage of the change in shopping approach is being driven by a decision to convert to less expensive brands to save money.

Despite these shifting consumer dynamics, research has repeatedly shown that premium brands that invest in marketing and promotion activities aimed at maintaining buying at preferred levels are able to minimize short-term erosion of share to less expensive brands and position themselves for a bounce-back when the economy improves, per the research.

“It’s important that brands continue to advertise and maintain share of voice during a recession in order to better position themselves for success as the economy rebounds,” Mr. Lipsman said. “They should be wise about how they spend their marketing dollars, but ‘going dark’ in a recession is generally a bad idea because it will hurt the brand’s market share in the long run.

“We are already seeing the success of services like Foursquare and Gowalla that encourage loyalty to local venues and businesses,” he said. “It is easy to imagine an extension of these types of services that will encourage interacting with certain brands.

“I think we’ve only scratched the surface of what’s possible in using the mobile channel to drive increased consumer engagement and long term brand loyalty.”