Higher brand preference is the highway to growth

Modern consumers have incredibly high expectations of brands. At the same time, their purchasing behavior varies widely. 

In the past, brand preference was mainly the outcome of brand loyalty, advertising and smart promotions. It was seldom the ambition. Striking, given extensive research (including from Marketing Accountability Standard Board in the US) showing that brand preference correlates strongly with market share. Considering this, why are so few marketers focused on building preference with consumers? One reason is that not enough is known about brand preference as a strategic instrument. And even less about brand preference in today's digital age. Think of questions such as:

- What factors influence brand preference?

- What drives brand preference?

- Does this differ per industry, category or country?

- How do brands within a category compare to one other?

- And the most important of course: how do you increase the preference for a brand?

The 5 pillars which define brand preference

From our extensive research in countries around the world, including our home base in the Netherlands, we have identified 5 key drivers behind brand preference. 

The model identifies five factors that significantly influence brand preference growth. 

1. Mental market leadership.

These are brands that are considered "the leader" in their category. Leading top-of-mind awareness is therefore the most important indicator. These brands have often become synonymous with the category and earn the "leadership bonus" as a brand. The media pay the most attention to these brands and they perform best on earned media. Most of the time, the customer journey begins with these leading brands. However, that does not mean customer journeys always end with them.It is striking that mental market leadership does not automatically equate to commercial market leadership. For example, some older, well-known brands that perform well on mental market leadership and availability are being overtaken by younger, innovative players with strengths in price-value ratio, emotional brand connection and meaningful differentiation. Retail fashion giant C&A is a clear example of this. 

2. Availability

With availability, it has always been about distribution. Is the brand available at the time of the need? There are also other perspectives when looking at availability. For example, the financial angle: Louboutin can be your favorite shoe brand, but you need to be able to afford those expensive pieces of art. Another way to look at availability is switching costs – for example, it is difficult to switch phone providers. In addition, mental availability is also of great importance. Which beer brand comes to mind when you’re having a quiet night at home versus when you’re at the pub watching a game with your friends? All retailers understand that the customer journey has great influence on how well their brand performs on availability. In the example above, we can clearly see the difference between challenger Zalando and local hero Wehkamp. 

3. Price-Value ratio.

The definition of price-value ratio is quite clear: it is the value that consumers perceive receiving for the price they pay. It is the answer to the classic question: To what extent do people get value for money? In marketing, there is a tendency to overestimate the role of price compared to value. Is that due to lack of confidence in the product? In our research we see that strong brands score higher on price-value ratio than brands that focus solely on price. Apple, for example, scores considerably higher than the cheaper Chinese provider Huawei. This is despite the fact that the iPhone is almost double the price of a Huawei. Another advantage of a good price-value ratio is the increased effectiveness of price promotions. If a premium coffee brand offers the same promotional price as a conventional brand, consumers will find the premium brand more attractive. After all, the perceived value of a premium brand is higher than that of a conventional brand.

4. Meaningful distinction.

Brands with a high brand preference are marked by a clear customer advantage, inextricably linked to the brand. For years, the marketing mantra maintained that since no bad products were produced anymore, a meaningful distinction on a product level would not be feasible. The difference between the dried herbs in a pack of Knorr instant soup and a pack of Campbells is certainly difficult to explain. Yet it is precisely in the area of meaningful distinction that the consumer has become more critical and demanding. Across several categories, consumers believe that meaningful distinction is important – for example, in the beer case comparing Dutch market leader Heineken with local craft beer brand Hertog-Jan in the figure above. As a result, marketers need to focus more on continuously improving (and communicating) product benefits and performance. This is often self-evident in many product and innovation-driven tech companies. Many traditional companies have unfortunately fallen behind in this area and will need to accelerate to be able to (re)gain brand preference. In the FMCG categories researched we see that meaningful distinction is today one of the most important pillars of brand preference.

5. Emotional brand connection.

BA consumer’s emotional connection to the brand remains one of the key factors of brand preference across several categories. Advertising has been the main tool for creating emotional connection and preference in recent decades. Now, the importance of advertising is steadily decreasing. This is partly due to classic media’s declining reach and partly due to more critical consumer attitudes. The brands that fulfill their promises at the most important moments in the customer journey can count on a stronger emotional connection with their users. The opposite is also striking. For example, research in the fashion category shows that claims on "sustainability" and "organic" sometimes score negatively. It seems these claims are not credible enough (yet).

I hope we have piqued your interest in brand preference. At the same time, there is still much to learn and discover in this area. Our vision for the Brand Preference Center is to create a hub of thought leadership to inspire and connect marketeers, researchers, data specialists, consultants, writers, scientists, brand strategists and anyone else interested in brand preference. Reactions are therefore very welcome. We have brand preference research and insights across several categories including: online fashion retail, fashion, beer and smartphones. If you are interested, please send an email to [email protected] and we will gladly send you a detailed summary. We look forward connecting with you!