Brand switching, also known as brand jumping, is the process of a consumer choosing to switch from the routine use of one product to a different but similar product from another brand. Note that brand switching is not the same as brand-agnosticism, where a consumer switches between different products in the same category with no allegiance to either. Brand switching occurs when a company loses long-term customers to another brand.
- Understanding brand switching
- What causes brand switching?
- How can businesses avoid brand switching?
- Key takeaways:
- Connected Business Concepts
Understanding brand switching
Convincing customers to switch brands is a difficult task, particularly in the case of loyal followers who have been purchasing the same brand for years. Nevertheless, many advertising and marketing campaigns encourage consumers to do so.
Organizations incorporate brand switching into their strategies because 33% of consumers are actively searching for new brands. What’s more, research suggests a further 61% switched brands in the last twelve months because other brands successfully attracted them.
What causes brand switching?
Consumers do not tend to switch brands for fun, but there are many reasons that may explain why it occurs.
Five of the most common reasons include:
While buyers are sensitive to price, brand-loyal followers tend to be less sensitive. The important thing here is value. If a business increases its prices and the customer cannot see a tangible increase in value, they may choose another brand with a more attractive price to value ratio.
Poor customer service
In the context of brand switching, poor customer service means the business fails to deal with dissatisfied customers appropriately. Argumentative customer service agents or those who fail to deliver support promptly tend to cause loyal customers to do business elsewhere.
Customers who become overexposed to a particular brand may experience brand fatigue. This is especially prevalent in the retail industry where businesses constantly release products to maintain market share. Ultimately, the business needs to provide frequent and relevant product innovations because consumers are always seeking novelty.
Related to brand fatigue is brand dilution, which occurs when a business enters too many new markets and neglects its core products. Inevitably, neglected products become uncompetitive as consumers switch to brands which better suit their needs.
Sometimes brand switching occurs because of convenience. If a supermarket discontinues the sale of a particular brand of milk, shoppers may simply purchase a different brand to avoid the hassle of having to visit another store.
How can businesses avoid brand switching?
Businesses that want to avoid the negative consequences of brand switching should focus on a few key areas. They should always strive to:
- Provide value – 92% of customers rank value as the primary motivation for choosing a brand. Value is driven by price, content, and engagement and can be defined in a unique value proposition (UVP). Product price increases should always be explained to avoid customers resenting the business.
- Improve customer retention – retaining customers is much easier than attracting them in the first instance. Customer retention increases revenue and allows the business to develop deep and long-lasting relationships with its target audience. These relationships can yield new insights which can then be incorporated into product development.
- Address criticism – negative customer feedback is inevitable, but it does not have to result in a customer switching brands. Complaints should be dealt with efficiently, with the customer offered a free return, discount, store credit, or some other incentive.
- Brand switching occurs when a company loses long-term customers to another brand
- Five of the most common reasons for a consumer switching brands include a price-value gap, poor customer service, brand fatigue, brand dilution, and convenience.
- To avoid brand switching, the business should identify why a customer has decided to shop elsewhere and seek to remedy the situation to prevent reoccurrence. Providing value is most important since the majority of consumers rank value as the main motivation for choosing another brand.
Main Free Guides:
- Business Models
- Business Strategy
- Business Development
- Digital Business Models
- Distribution Channels
- Marketing Strategy
- Platform Business Models
- Revenue Models
- Tech Business Models
- Blockchain Business Models Framework