Can the beer industry learn about brand loyalty to strengthen its appeal?
The notion that the beer industry can learn a little from the fast food sector, where brand loyalty is back on track and regaining customer, has been identified as a top tip for success by leading strategy analysts. db finds out more.
The question of brand loyalty has been discussed as an “amazing about face” in terms of food chains and, according to recent dissections of the trend from fiscal analysts at Barron’s, many food brands are “revamping” their loyalty initiatives.
No stranger to recognising how when the market fluctuates, brand loyalty really shows up. For instance, the drinks business has already identified that as prices rise, US beer drinkers remain enormously brand loyal. Describing this loyalty, Bump Williams Consulting vice president of analytics and insights Dave Williams told db: “Consumers will always find a way to meet a beverage alcohol occasion that they want to meet” and revealed that recent survey work showed that people were at least maintaining their beer consumption, but just more inclined to buy in smaller package sizes, and cutting back on the number of trips they are making to the shops. What I think is happening is that that volume per occasion is being reduced. I think single serve has been a beneficiary of consumers doing that math…when looking for value and minimal spend for each trip to the store”.
Love the brand, not the deal
If the beer and brewing sector were to look to fast food chains such as Starbucks, McDonald’s, and Chipotle the analysts noted that they would be able to recognise the financial gain of focusing on customers who love the brand rather than those who love the deal.
According to the findings, the loyalty schemes now offer a wide range of experiential rewards and any meaningfulness gained from real loyalty has historically outperformed deal loyalty, especially when it comes to shareholder value.
As seen in The Wall Street Journal, the fact that McDonald’s is still looking to regain its place as the “value brand” by promoting US$3 items and a US$4 breakfast option, shows that previous deals may not have performed as expected. Plus, the belief that price and value are the same is a notion that the research has suggested seems to be embedded in the management mindset.
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For beer brand owners considering how brand loyalty is simply common sense, the researchers are quick to establish that this view would be incorrect. The analysts outlined that, if you were to read the transcripts of earnings reports, it is clear that CEOs, CFOs, CMOs, and other C-suite executives all tout the value of ongoing deals they offer that are set to increase immediate sales but have been considered as a route to diminishing the brand’s power.
Brand loyalty is not dead
In essence, the analysts at Branding Strategy Insider pointed out that “deal loyalty is brand-detrimental” and “all good strategies must emphasise a great brand at a great price” rather than “here is a great deal” for this brand.
According to the researchers, the immediacy of the digital age and the fact that everyone can have the latest technology, can mean that ignorance of brand principles has made brand managers incorrectly identify that brand loyalty is dead. This is because data show purchase frequencies, so marketers can see the declines, but from this information alone have a tendency to make incorrect assumptions.
Occasion-led loyalty
The analysts pointed out that in the 1970s, some said brand loyalty was on the decline because they had recognised that people bought different brands rather than a single brand. However, around the same time, it became recognised that brands can be occasion-led, meaning that some brands to which consumers are loyal to on one occasion may not be the brand that satisfies their needs during a raft of different occasions.
One example outlined was how consumers might be loyal to Blue Moon beer during a happy hour on an outdoor patio, but when entertaining their boss, they might be loyal to Heineken, and when sitting watching sport with their best friend, they might prefer a Budweiser.
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