brand-switching

Brand Switching In A Nutshell

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

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:

Price-value gap

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. 

Brand fatigue

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. 

Brand dilution

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.

Convenience

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 value92% 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.

Key takeaways:

  • 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.

Read also: Brand Hierarchy, Brand PyramidBrand EssenceBrand Building.

Main Free Guides:

Connected Business Concepts

Unique Selling Proposition

unique-selling-proposition
A unique selling proposition (USP) enables a business to differentiate itself from its competitors. Importantly, a USP enables a business to stand for something that they, in turn, become known among consumers. A strong and recognizable USP is crucial to operating successfully in competitive markets.

Value Proposition

value-proposition
value proposition is about how you create value for customers. While many entrepreneurial theories draw from customers’ problems and pain points, value can also be created via demand generation, which is about enabling people to identify with your brand, thus generating demand for your products and services.

Competitive Advantage

competitive-advantage
According to Michael Porter, a competitive advantage, in a given industry could be pursued in two key ways: low cost (cost leadership), or differentiation. A third generic strategy is focus. According to Porter a failure to do so would end up stuck in the middle scenario, where the company will not retain a long-term competitive advantage.

Economic Moat

moat
Economic or market moats represent the long-term business defensibility. Or how long a business can retain its competitive advantage in the marketplace over the years. Warren Buffet who popularized the term “moat” referred to it as a share of mind, opposite to market share, as such it is the characteristic that all valuable brands have.

Brand Promise

brand-promise
brand promise is usually one or two sentences that accurately communicates what a consumer should expect when interacting with a brand. When a business creates a brand promise, it is making a declaration of assurance. Brand promises are often seen as extensions of brand positioning statements that explain why a business exists. A brand promise then tells the consumer how a product is service is better than those of a competitor.

Brand Voice

brand-voice
The brand voice describes how a brand communicates with its target audience. The exact style of communication is based on the brand persona or the collection of personality traits and values that a brand embodies regularly, and it needs to communicate the brand’s essence to the desired target audience.

Mission Statement

how-to-write-a-mission-statement
mission statement helps an organization to define its purpose in the now and communicate it to its stakeholders. That is why a good mission statement has to be concise, clear to able to articulate what’s unique about an organization, thus building trust and rapport with an audience.

Published by

Gennaro Cuofano

Gennaro is the creator of FourWeekMBA which reached over a million business students, executives, and aspiring entrepreneurs in 2020 alone | He is also Head of Business Development for a high-tech startup, which he helped grow at double-digit rate | Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy | Visit The FourWeekMBA BizSchool | Or Get The FourWeekMBA Flagship Book "100+ Business Models"