Discounts Could Erode Brand Loyalty Among CPG Customers

85% would consider switching brands if offered product for free or at a markdown

Author: Monica Melton

September 8, 2017

Consumers have long been thought to be deeply loyal to their consumer packaged goods (CPG) brand of choice. But new research shows that when offered a cheaper or equal quality alternative to their normal brand, consumers can be enticed to spend their money elsewhere.

In fact, promotional marketing service provider YA found that 85% of US internet users would try a new CPG brand if offered the product for free or at a discount.

However, discounts seemed to hold little sway over consumers when it came to food. In fact, just 9% said they made a food purchase decision primarily based on an offer or discount on the product.

Taste and quality trumped all other considerations, with 45% of respondents naming it as the primary driver of a purchase. Price was the most important influencing factor among 30% of respondents.

If CPG brands want to lock in their customers, they may want to consider launching loyalty programs. The survey found that nearly three-quarters (74%) of those polled would participate in a program that rewarded points accumulation with free goods.

A separate survey conducted by KPMG and industry network The Consumer Goods Forum in April 2017 found that 38% of consumer products executives worldwide considered declining brand loyalty to be a major disruptor to their business in the next two years. Other factors found to be significant areas of concern to the group included the rise of ecommerce, demands for more immediate service and a desire for more personalization.