Brand Loyalty: Product and Retailer

Discussions around ecommerce still deliberate over the distinction between a customer's loyalty to a product brand (I will by my preferred brand from any retailer) and their loyalty to a retail brand (I will buy whatever brand my preferred retailer carries), and there still seems to be no clear answer. It seems that with so many people thinking about the topic, it would have been sorted by now ... but it seems to always end in a shrug, and the sense that it depends on the customer. Some people are this way, some people are that way, and there's nothing for it.

I've no easy answer - and my sense is it's not a dilemma that can have a universal solution: it depends on what the customer values, and not everyone values the same things, but it's still worthwhile to consider the issues as they may apply to each specific instance to have a better understanding of what might be suitable in a given situation ... given the strength of the brand, the strength of the retailer, and the factors that influence customers to decide, if only implicitly, which to grant their loyalty.

No Loyalty

Mental Model: I just want a product, don't care what brand or where I buy it.

There are products for which most customers have no loyal to to brand or retailer. It's generally accepted that customers buy whatever brand is on offer from wherever it is offered, and it's generally a matter of convenience or price. There is some argument that people tend to buy the same brands from the same retailers - but the counterargument is that this is done without any consideration of brand, they happen to behave in a way that suggests loyalty, but no emotional or intellectual attachment exists.

A common example of this kind of product was once table salt - but in the present day gourmands have spun up the issue, there are many types and brands, and there are diehard salt nerds out there who have strong loyalty to a given brand ... so that doesn't work anymore. I expect the same is true for any product in the present environment.

With this in mind, it's necessary to focus on the customer rather than the product. For some customers, the brand of salt doesn't matter - they buy whatever is cheapest. not seeking out a specific brand, and do not plan a trip to a specific retailer to purchase the item.

This is not universal, but is likely true of most consumers, and marketers struggle over what to do with this sort of customer. Some see him as a good opportunity to create loyalty where none exists, others despair he is a customer in whom loyalty will not take root.

Product Over Retailer

Mental Model: I want a specific brand of product, and will buy it from whomever offers it (most conveniently or cheaply).

For other purchases, customers have a strong desire to obtain a specific brand of product, but are indifferent to the retailer from whom they obtain it. This is presumed to be the mentality of most customers for most product categories - though, again, it is not always so for all people and all products.

A common example of this kind of product is perfume. There are many possible examples, but loyalty is especially pronounced in items that are used close to the body or is tied to a person's identity or esteem - and "how I smell" is an area in which, in the US at least, people are particular to the point of being neurotic.

As such, the customer seeks out a specific product brand when a purchase is made. He will go to a retailer he knows to carry the brand, will not consider alternatives if the brand is temporarily out of stock, and will change his patterns to shop at a different retailer if he gets the sense the brand he wants is no longer carried.

The retail strategy in this instance is to stock the brand customers want, and where it is a common item, to offer it at a price below what other retailers charge if it is a destination item ... or perhaps, "as it is a destination item" in some shopping excursions.

Retailer Over Product

Mental Model: I want to go shopping at a specific store, and will buy whatever brand of product they offer.

Another category is the one in which a customer seeks to shop a specific retailer to see the items they have on offer. That is, when they have a need for a given kind of product, they go to a store to find it, and consider what is on offer there.

A common example of this kind of product is automotive tires. While some customers are loyal to brand (people who seek out a specific brand of tire), the general tendency remains that a customer will go to buy tires at a specific retailer, and make their selections from whatever brands are on offer, based on whatever item strikes their fancy.

As such, the customer goes to a specific destination, but does not generally seek out a specific brand. The fact that the store he usually goes to no longer stocks the brand of tire he purchased the last time is of no importance ... he will buy whatever brand is on offer.

The retailer is strongly empowered in this situation to drive decisions of the brands of merchandise he will offer, and has a great deal of flexibility in pricing his merchandise within a broad range of consumer tolerances. The store is the destination, not the item.

Conflicted Loyalties

Mental Model: I go to a specific store and feel confused or disappointed if they don't carry the brand I want.

The last category is particularly troublesome for customers and retailers alike: the customer wishes to obtain a very specific brand of item at a very specific retailer.

A common example of this kind of product is clothing, specifically men's suits. The customer is habituated to going to a specific retailer for "clothes shopping" and, at the same time, has a very specific sense of the brand he wishes to purchase.

If the shop he frequents does not carry the brand he wants, there is some deliberation over whether to purchase a different brand or go to a different store. It is ultimately resolved one way or the other, but not without at least some level of angst.

There is also some question as to the degree of power that a retailer has in this situation: so long as he can stock the brand customers want, he has firm command over their loyalty but is in a weak negotiating position with his own suppliers.

Where is this going?

I had started out with the intention to contrast strategies for serving customers in the electronic channel, and instead ended up doing a "basic overview" piece on customer loyalty. And it's gone on quite long enough - so I'll change the title to some thing more generic and come back to the original notion when time and energy permit.