In its survey – Why Indian consumers are switching to a brand? – market research firm Market Xcel Data Matrix reveals that Sony scores highest on consumer loyalty. Further, the research extensively tries to uncover the riddle of shifting consumer loyalty and understand consumer satisfaction levels across multitude of products and brands in the Consumer Durables industry, which eventually has implications on future purchase intent.
Charles Darwin theorised that it is neither the strongest of the species that survives, nor the most intelligent, but the one most responsive to change. True that stands for brands today as they scamper for customer loyalty. “Today’s consumer is spoilt for choice, it is very difficult to build loyalty, however if the brand features in positive, it surely commands high net promoter value helping it gain new users by commanding loyalty from its existing users. The challenge for the brands is to always innovate, not only coming with new offerings, but by connecting with the audience and sounding relevant all the time,” explains, Ashwani Arora, Head of Research, Market Xcel Data Matrix.
Craving for more
In addition, it is the aspirations of consumers that changes with time. And according to the firm these aspirational brands are those that are perceived to be niche and slightly expensive .The first buying is affordability led, thereon it is towards buying aspirational brands.
Arora elaborates, “More than boredom it is seen that people’s aspirations change with time, certain brands hold high equity for certain categories. The phenomenon of some people dissatisfied is omnipresent hence one brand gains at the expense of the other. Nobody wants all eggs in same baskets phenomena holds true here as well. The brands that offer us maximum satisfaction do not guarantee ‘all buying’ from the same brand. Certain brands resonate high with certain product categories and consumers go for the same, though change of version is entailed.”
Hence, the firm conducted a research among key decision makers of consumer durables among Indian households. Elaborating on the dynamics of the replacement market for consumer durables in India, Arora shares, “We Indians stick on to our durables till the time it fails to deliver on core functional aspects. The average life of a refrigerator which is around 6-7 years is retained for over 15 years by us. However, with change in guard, the propensity to consume is increasing, with people increasingly wanting to have the latest products; the replacement market will turn huge. One of our recent study shows if certain incentives are offered, in the form of rebates close to 20 percent of people would participate in exchange programs that may offer them benefits like power saving. (ref: BEE star Labels).”
The survey, thus, covered various aspects and preferences of consumer towards the brand where leading brands like Sony, LG, Samsung, Whirlpool, Voltas are the clear winners in segments such as LCD TV, Colour TV , refrigerator, AC, washing machines, microwave oven. The research was targeted at category audience drawn from an online panel of respondents spread across India. The TG included owners of at least one product from the category list and decision makers and influencers with respect to purchase of household appliances / durables, covering men/women in the age group of 18-45 years, accounting to a total of 713 respondents.
In the race
In terms of consumer loyalty, the research found out that Sony users were the most loyal. Moreover, Sony emerged as the most owned brand in terms LCD TVs, followed by Samsung and LG. Others in line included Videocon, Panasonic and Onida. Samsung took the first spot in the Colour TV segment. In the refrigerator, washing machines, microwave and air conditioner (AC) business, LG led the categories. It seems LG has comparatively higher penetration across consumer durable segments. Arora thinks that consumer choice for the segment is driven by technology that means simplicity and offers visible benefits is most appreciated by consumers.
According to the research, overall quality contributed the most to the satisfaction levels of consumers. While performance of product was the differentiating factor for LG, brand value stood out for Sony and Samsung. Other key findings reported that microwave is the one product category where some brands Videocon and Kenstar have received negative satisfaction levels. This implies that brands have failed to upgrade with time. LG is the clear winner in term of ownership in most of the consumer durable products. Sony is an aspirational brand for Televisions. IFB is top in washing machines. Samsung has a significant share in all the product categories but failed to claim as winner in any of the product categories. Since, LG is a market leader there is a lot of possibility of losing share despite showing good satisfaction levels. Other brands have shown scope of capturing the market share in one or two product categories. Hence, the market can show inclination for moving from one market leader for all product categories (LG) to multiple market leaders (Sony in Television, LG in Microwaves and Refrigerators, IFB in washing machines).
Arora feels that consumers not only focus on functional attributes but are driven by aesthetics added to the product quality. He says, “Emotional bonding with a brand is very important for the users to give them a place of prominence, be it consideration, purchase or re-purchase. Not many products would be different from each other in terms of core functionality; it is the emotional binding that takes over. The brands that solve consumer anxiety and address them well fare well.” Plus, word of mouth assurance from family and friends play a crucial role on their purchase, apart from brand communication.
The big switch
The firm also conducted a survey to find out how many respondents would switch to a new brand over their current ownership, if given the choice of buying the same product. The feedback was rated on a scale of 10. Where people who gave a score of 9 or 10 were rated as promoters, those who gave a score of 7 or 8 were rated as fence sitters and those who gave a score or 1 to 5 were called detractors. The NPS (Net Promoter Score) was based on number of promoters minus number of detractors. (Please see Table for the results: Views are expressed by members of an online panel representing SEC A & B. The NPS is based on the penetration level based on the equal number of responses received, which is reflective of market scenario).
The three brands that seem to be gaining on account of future brand purchase and brand switch happen to be Sony, LG and Panasonic, whereas the losing brands happen to be Videocon, Akai and other local brand. For those who wish to have next brand not the same as current cite reasons such as advanced features and technology, style and brand reputation as core reasons to shift.
So does brand name affect consumer trust in that brand? Arora opines that brand name is testimony to quality, consistency and all hygiene factors built over years. More than brand name it is the reputation of the brand that matters most to consumers.
“Brand reputation largely resonates with brand equity. They are two sides of the same coin. Experience and performance makes any brand strong. Consumers often cite brand name as key parameter of consideration. Brand name in itself does not resonate with anything; it is actually a sum of tangible and intangibles,” he adds.
In terms of brand switch, some of the findings are as follows:
- 4 per cent of the LG LCD owners wanted to shift to Samsung whereas 5.1 per cent of Samsung users wanted to shift to LG
- In case of Color Television, more than 50 per cent of the brand switchers are moving to Sony from other brands
- Inflow of consumers in LG is higher as compared to outflow whereas in Voltas and Samsung it’s the opposite
- Hitachi is one brand that finds more favour as a ‘preferred brand’
- For the Microwave Category – Almost equal number of people moving in (33.3 per cent) and out (27.1 per cent) of LG; the percentage of people joining
Samsung than those moving out of the brand is relatively higher (14.6 per cent vs. 6.3 per cent). The report concludes that Microwave is one category where LG is fairly above the competition in terms of product penetration with the target group though the brand scores slightly lower than Samsung on brand recommendation, loyalty and NPS (recommendation) however LG users are more satisfied; Samsung happens to score more on ‘Recommendation’ because of its prompt ‘After Sales Service’, where LG certainly needs to pay more attention.