With warnings of the fallout from the Eurozone crisis, and predictions that austerity measures taken at home are yet to fully show their teeth, the era of belt-tightening and penny-counting looks set to continue.

That could be bad news for companies competing against a larger rival in the market, as brand loyalty comes under attack from the financial necessities of the age. Figures from the USA show that in 2008 54% of consumers bought the product they wanted most while in 2010 that figure had dropped to 43% with cost ranking higher in buying decisions.

Private Label

One very noticeable pattern in recent years has been the rise of ‘Private Label’ goods and services. These are products manufactured by a third party and branded by another, most obviously supermarket chains, which sells them for less and make higher margins at the same time, pressuring companies in the same sector. Not only have hard financial times triggered a rapid rise in popularity for store brands and such like, they have also brought about a change in attitude, with 90% of respondents in an American survey saying they will continue to buy ‘Private Label’ brands when the financial crisis has passed.

Economy is In

The financial crisis and rise of ‘Private Label’ products has caused many of the most established brands like to focus on economy more. Price wars are bad news for smaller companies with lower economies of scale as their scope to drop prices is comparatively very limited. While the risk is greater for companies operating in markets where price is a key factor in buying decisions, the fact that luxury brands have begun using daily deal sites such as Groupon indicates the pre-eminence of cost considerations across almost all sectors.


Cost cutting is really only a short-term solution for companies competing against larger rivals with bigger margins to cut into. While there is naturally a pressure on cost at the moment, companies should look to their marketing activities as a way of retaining and indeed growing brand loyalty. Looking at relationship management and working out the most efficient use of channel marketing [1] are sound strategies for all businesses, while there are a host of sector-specific strategies to enact, from retail to luxury brand loyalty [www.iclployalty.com/what-we-do/industry-sectors/luxury.aspx]. Even before the fall of Lehman Brothers sparked the economic crisis, consumers were becoming more resistant to marketing and advertising ploys. Nowadays customers require intelligent, useful interaction with brands. Companies like ICLP Loyalty can help implement that.

Seek Feedback

The key jumping off point for any company looking to retain brand loyalty in these toughened times is to be sure of its existing customers’ opinions of its products and services. Speaking to customers provides an insight into what the company does well, and does poorly, and thus gives a platform for improving services, reducing customer loss, and focusing marketing and customer acquisition. Acting fast to remedy issues raised by customers also shows a responsiveness and customer care that can be critical when clients and consumers alike decide where to buy, whether they want bread or to insure their fleet of cars.

[1] http://www.iclployalty.com/glossary/channel-marketing.aspx

Supermarket shelves by Nevinho

Supermarket shelves by Nevinho

By Nevinho (Own work) [CC-BY-SA-3.0 (www.creativecommons.org/licenses/by-sa/3.0) or GFDL (www.gnu.org/copyleft/fdl.html)], via Wikimedia Commons

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