China’s melamine incident has strengthened brand loyalty, according to a study out today (15 October).
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The Tainted Brands study by All Media Count found that milk consumers have had their confidence in milk brands “deeply shaken”, but that there is not likely to be a flight from milk consumption.
The incident has in fact made most milk consumers more loyal to brands that they trust, the study suggested.
The most important finding from the study according to AMC’s managing director, Mike Underhill, was the “immediate transformation” of loyalty behaviour.
“Most consumers who used to buy two or more brands of milk a month, now say they will stick with just one. That will mean a lot less brand switching, a lot less sensitivity to price.”
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By GlobalDataWith the major brands on a more or less equal playing field with regards to price, availability and exposure to tainting, the brands that benefit from this sharpened degree of loyalty will be those who find themselves with unexpected market openings and any of the smaller brands who, on their home turf, can pick up and hold onto spillover customers from the big brands, AMC said.
To do that, AMC believes smaller companies would need to quickly lift the volume and standard of marketing communications because it would be hard to make any fast changes to their product offerings or distribution.
In the longer term, AMC says the the melamine incident’s impact on loyalty is likely to benefit all milk brands that survive the industry consolidation that is expected. With consumers caring more about brands milk will become somewhat less of a commodity.
