Brand Loyalty Is Declining. Total Product Experience Chains Can Help.

Product strategists in many industries (from CPG to consumer electronics to financial services) share a challenge with their marketing colleagues: how to leverage the power of brand. Product strategists have a number of strategic tools in their toolboxes for differentiating their products from competitors’ offerings: features (a different taste, a new technical capability, or a higher interest rate, for instance); channel, price, or brand (or based on some combination of these factors). For the moment, let’s think about brand, because some product strategists design and build their products based largely on the promise implied by their brand name.

Forrester’s new research report – leveraging a multi-year analysis of Consumer Technographics® data – shows that while brand is important, brand loyalty (defined as the propensity to repurchase a brand) has been waning. The new report, entitled “Brand Loyalty Isn’t Enough For Products Anymore,” reveals that:

·         Brand loyalty is on the decline. Brand loyalty dropped in the U.S. from 2006 to 2010, our data shows. One reason? The Great Recession. Another? The strength of brands themselves: competing brands in the marketplace entice consumers to try new brands.

·         Technology optimism correlates with lower brand loyalty. Among consumers who are enthusiastic about technology, brand loyalty is suppressed. Technology use itself can erode loyalty: Think of a smartphone app like ShopSavvy, which literally creates price pressure on the spot and offers alternative products (along with peer reviews) at a buyer’s fingertips.

If brand loyalty is declining, and it’s an acute problem among technology-positive consumers, what should product strategists do?

The basic answer lies in building what Forrester calls a total product experience (TPE), a phrase coined by my colleague James McQuivey. With a TPE, a product strategist takes advantage of digital technologies and devices to build holistic experiences around products – from pre-purchase discovery and marketing all the way through to post-purchase support. With TPE, simulating the product experience creates a sense of anticipation for owning and using the product among buyers.  

In our latest report, we lay out what we call TPE chains, which link together brand + simulation + product to reinforce the value of brands (and to hopefully drive brand loyalty). What does this look like in practice? Imagine this TPE chain:

·         Brand – A product strategist at a clothier (say, Gap) links up with the producers of Project Runway (a second brand).

·         Simulation – Together, they design a game for the Xbox Kinect. This game allows Xbox Live users to design their own clothing in a contest format, then have all game participants vote on the best outfits.

·         Product – Leveraging mass customization, Gap could then manufacture build-to-order clothing designs (made during the game) and sell them to participants.

This is merely one example of total product experience chains. We invite clients to read the entire report here – and we welcome your feedback! (Please feel free to rate the report and add your comments, right on Forrester.com, as you read the report).