product and service

For many years, product and service marketers felt customers were there with them for life, and started taking brand loyalty for granted. However, there has been a transformation in the Indian market and consumers are now loyal to ‘perceived value’ and not necessarily to brands.

Due to intense competition and a wide choice of brands, every Indian consumer today is equipped with ‘an imaginary remote control’. With this imaginary remote control, the consumer explores various brands, only momentarily, and evaluates them according to the ‘perceived value’ he is getting. This is not to say that brand loyalty can no longer exist. However ‘perceived value loyalty’ will precede brand loyalty. Only after a thorough assessment would a consumer settle for a particular brand. Only brands that are able to give regular, sustainable and consistently high ‘perceived value’ can attract and retain customers.

How did this trend suddenly emerge? Well, the first reason is competition, followed by the rising standards and expectations of Indian consumers. Further, many brands never had brand loyalty; they had a mere monopoly in a particular category or consumers bought their products just out of habit. Thus consumers were not loyal to the brand out of choice, but because they had few other options. In the long run, price wars do not really work in the branded market.

Consumers look for “perceived value” and not at price alone. Value is a blend of quality and price. A consumer is willing to pay a certain price for a certain quality. Different segments of consumers look at different ‘perceived value’ points and not just price points. This is the tangible part. The intangible part of perception, which is a combination of image and emotional value, also contributes to consumers’ purchase and consumption decisions. The tangible value and the intangible perception make up the ‘perceived value’ of any brand in the minds and hearts of the consumers. Thus ultimately it is the ‘perceived value points’ that the consumer looks for and the wars that are actually won are “perceived value” wars and not ‘price’ wars. Since brands are different from commodities, non-price factors also play a role in adding to the perceived value. Therefore, reducing the price may give a wrong signal to the consumer about the product. Rash, thoughtless and desperate price-cutting measures, directly or through promotions, actually reduce and discount the perceived value of the brand in the minds and hearts of the consumers.

In recent times, Star TV’s Star Plus channel has shaken brand loyal TV consumers and has aggressively increased its market share. This again is the result of the Indian viewer taking out his ‘imaginary remote control’ and surfing channels in the search of ‘perceived value’. The viewer’s involvement with ‘perceived value’ is so high that he looks at programmes, and not channels, and evaluates each one before settling down to watch it. If a channel is able to provide a mix of good programmes that have higher ‘perceived value’, the consumer gives up his brand loyalty to that channel and moves towards greater enjoyment and satisfaction. Here too, brand loyalty has declined and ‘perceived value loyalty’ towards programmes and hence the channel has increased. If another channel comes with better programmes and gives higher ‘perceived value’ to viewers, they would not even hesitate for a second to switch the brand. Due to the changes in the consumer behaviour, Brand managers and marketing heads will have to clean up and polish their act because nothing stops the Indian customer from deciding not to continue with any brand that does not provide him with the desired ‘perceived value’.

There has been an acceleration of the concept of perceived value loyalty through the phenomenon of multi-brand purchasing. Most non-durable consumer product classes comprise several brands that are so similar in terms of their basic attributes that consumers find it difficult to distinguish one from the other. Thus it is hardly surprising that consumers do not, on the whole, show total loyalty to any one brand, but select from a small set of tried and tested brands that are close substitutes. This can be called the ‘Consideration Set’. Since all products tend towards parity, for Brand Switch one must create disparity. There is a great deal of evidence that consumers behave in the manner stated above. The markets for established non-durable products are characterised typically by more or less stable sales, at least in the short to medium term. The buying behaviour of individuals usually involves several brand choices, but the aggregate level of market sales and brand shares is stable and predictable.

Customers may change brands often – the vast majority frequently do make substitutions – but not in the sense of irrevocably switching brands; that is, never again buying that which is rejected. Buyers of a given product class typically choose several brands over a sequence of purchases. The original concept of brand loyalty (which was measured by the degree to which a consumer purchases a brand without considering alternatives) is fading away, making way for Perceived Value Loyalty.