Advertising Age - Published Articles

The Real Reason for Brand-Switching

By S. Kent Stephan
and Barry Tannenholz
Advertising Age

The fortunes of established brands are driven by consumers’ fluctuating desires, not by changed perceptions. When a consumer switches around within a set of brands, it’s because his or her fluctuating desires temporarily alter how important it is that her or she receive the benefits of one brand vs. another. Once a product has been used, a consumer’s perception of it rarely changes, but desires for the perceived benefits of competing brands often fluctuate and it’s this that creates brand switching.

Conventional wisdom presents a very different view. Ever since the valid concept emerged that brands are positioned perceptually, marketers have taken it for granted that brand switching occurs because advertising has changed perceptions – or because of promotion or lack of product availability. They assume for advertising to succeed it can and must move consumers’ perceptions closer to their ideal.

However, when consumer brand perceptions are tracked for an established brand, one finds they are rarely any different during or after a campaign that increased market share than they were before. Because the share went up, these tracking results are usually dismissed as meaning only that perceptual changes were too subtle to measure or that some critical attribute was missed. Had this research been taken at face value, marketers would now be looking at their brands very differently, and established brands would be managed more profitably.

Here we present a general theory of consumer purchase behavior that has important implications to the management of established brands.

The Process Theory of Brand Choice

1. The experience a consumer receives from using a brand solidifies his or her perceptions of it. These fixed perceptions can rarely be changed through advertising alone.

2. How a consumer perceives each of the different brands in a category determines which ones are used and which ones are not. The consumer may perceive different brands to be superior on different desirable attributes and this results in his or her switching around within a set of brands rather than using a single brand.

3. When a consumer uses a set of brands, the consumer’s fluctuating wants and desires are what causes switching from one brand to another.

4. In many categories, brand use itself is what causes a consumer’s desires to fluctuate. The consumer may temporarily satisfy certain desires by using one brand but simultaneously deprive themselves of other satisfactions they could have received from a competing brand.

5. As consumers’ desires fluctuate relative to their fixed perceptions of brands, a consistent process of brand choice (brand switching) results over time.

6. Advertising and promotion intervene in the process of brand choice by temporarily changing the probability of a user purchasing the brand the next time the category is shopped.

a. Advertising intervenes by temporarily intensifying the consumer’s desire for some benefit the brand is already perceived to provide.

b. Price promotion intervenes by temporarily changing the perception of price/value.

7. New brands, line extensions, product improvements, disequilibrium price changes and restages of existing brands change consumers’ perceptions and permanently alter the process of brand choice (the probabilities of brands being selected) for some category users.

8. It is the fate of most brands that their own advertising will never improve users’ perceptions, but instead that new competitors will diminish these perceptions over time.

Currently, an advertising strategy that has successfully positioned a new brand is then expected to improve that position over time. Since this is rarely possible, most advertising for established brands produces relatively low persuasion scores, and the advertising on behalf of one brand tends to be offset by its competitors’.

New brands quickly settle into a market share pecking order with the competition and rarely move up as advertising is asked to accomplish the irrelevant goal of improving perceptions. Not only do established brands rarely improve their market share – unless the product is reformulated – the average brand actually loses about a third of a share point each year to new entries.

Advertising for an established brand, particularly a well-differentiated one, will be much more effective if it exploits the brand’s positioning. Specifically, advertising should exploit the important elements of position that differentiate the brand from competing brands in a set. For example, if consumers use a brand of toothpaste to prevent decay, and some of these consumers also use other brands for other reasons, advertising alone will not improve perceptions of the brand’s decay-fighting ability, but it can and should make decay prevention more important.

The key to more effective advertising is to understand exactly what it is about your brand that is both differentiating and important to current users. Often the driving elements of a brand’s positioning are not what marketers assume. However, there is a research technique that reveals what these elements are and if segments are using the brand for different reasons.

Six Categories That Hold Elusive Customers

By S. Kent Stephan
and Barry L. Tannenholz
Advertising Age, June 20, 1994

As consumers respond to promotional discounts, and as their desires fluctuate relative to their fixed perceptions of various brands, strategically important consumer segments emerge.

By identifying how large each of these segments is, it becomes much easier to understand what advertising and promotion can and cannot do for a brand. These segments are:

Sole Users: These individuals purchase only your brand, even when competitors are promoted, because your brand is always perceived to provide the greatest satisfaction. Intentionally promoting to them is foolish unless this can dramatically increase both their purchases and their use-up rates. Since Sole Users require relatively little advertising and no promotion, the more of them there are in a brand’s base, the more profitable the brand should be.

Semi-sole Users: These individuals are almost the same as Sole Users except they have at least one competitor positioned near your brand. They do not respond to competitive advertising, but they do respond when closely positioned competitors are promoted. If the competition is promoting, this can be a rationale for defensive promotion. Otherwise, treat them the same as Sole Users.

Discount Users: These are your competitor’s Semi-sole Users. They don’t buy your brand at full price, but it is well enough perceived that they do purchase it at a discount. If there are many discount users in the brand’s base, this is a rationale for offensive promotion. However, to get them to purchase at full price, you will almost always have to improve the product.

Aware Non-triers: These category users have not bought into your message and more GRPs behind that message or more frequent discounts won’t help. Right now, they don’t even consider your brand when they shop. Since they have not used your brand, their perceptions of it remain somewhat malleable, so a different message could help. Marketers often believe that by spending a little more money they can attract Aware Non-triers. Unless the product is a true innovation, these people rarely offer much potential.

Trier/Rejectors: They bought into your message, but not the product. More advertising and promotion will not change this. However, they can often be recycled back through a brand by reformulating the product to overcome its perceived weakness.

Repertoire Users: These individuals perceive different brands to be superior on different important attributes. They have two or more brands, yours included, that they purchase at full price, and some also have additional brands they purchase at a discount. Repertoire Users determine the success or failure of most marketing plans. They are the ones who switch brands in response to persuasive advertising and they switch within their repertoires in response to promotion. Most of a brand’s advertising dollars should be targeted against Repertoire Users.

From the data we have analyzed, it is clear that the vast majority of advertising influences only the upcoming purchase following effective exposure to the commercial. Successful advertising only temporarily tweaks a consumer’s desires. However, when a consumer purchases a brand at full price, the odds of purchasing it at full price the next time the category is shopped increase slightly.

Advertising can grow a brand long-term by generating incremental full-price purchases (or by persuading entry-level users), but its most dramatic impact usually comes from the sum of its short-term results.

Promotion, on the other hand, decreases the odds that the brand will be purchases at full price the next time the category is shopped and can erode a brand’s full-purchase business long term.

Advertising can also have a category impact. Each commercial generally influences how much consumers desire the generic attributes of the category. On average, a doubling of category GRPs results in a 9% increase in category volume. For large share brands in lightly advertised categories, this category impact alone can potentially yield higher profits.

For the last few decades, marketers have been trying to fit a new product model to brands people already use. Brand switching is often conceptualized as an on-going series of events where a product is repeatedly adopted and abandoned as perceptions are pulled this way and that by advertising in a competitive environment. But in reality, consumers aren’t actually switching, they’re just switching around. It’s the difference between marriage and divorce, and polygamy.