Chennai, Nov 12: In the battle between conversion and commitment -- stick to the latter. For while it might be a brand-eat-brand world, can one really look for the conversion of a committed consumer, one who is really hooked on to a brand? According to Jan H. Hofmeyr of the University of Capetown, South Africa, retaining your committed consumers is more important because they spend seven to eight times more on the brand and are willing to pay a significant premium for the brand. Besides, they stay with the brand eight to ten times longer and their lifetime value to the brand is close to 100 times greater.Hofmeyr, who spoke at the CII Brand Summit '99 on the theme "Commitments of people to their current choices: Is conversion possible?" gave the example of gasoline users in the US. Nearly 88 per cent of the consumers spent their money on brands they were committed to, while only 12 per cent were unattached and convertible.
Moreover, the consumer is willing to pay a premium for the brand he is committed to. A Singapore cheese manufacturer retained 87 per cent of his customers even though competition had given a 21 per cent discount. "Price discounting is deadly when commitment is high," Hofmeyr said and pointed out that the competing cheese brand suffered a 37 per cent sales loss.
Pointing out that committed consumers do not convert-as in the case of beer brands in Canada and pharmaceuticals in the US-and generally committed consumers have only one brand in mind, he said conversion takes place very slowly.
The good news for launchers of new product is that in any market not everyone is committed. The low commitment in such consumers is because of low involvement and in some cases, not caring about which brand they use.
There are some who do care but are not able to make up their mind about using only a particular brand while others are plain dissatisfied.
Among the competing laundry detergents in India for example, Hofmeyr said International Surf Excel had stronger commitment levels from consumers as compared with other competing brands Ariel and Nirma. Although there was only one brand in their minds, some perceive the brands as not only weaker but also want different things. And it is in this segment that conversion is taking place.
Hofmeyr offered three simple commands to brand marketers: deliver the things that are important to people in that market; never forget the power of marketers to shape what people want; and there are always going to be people you should not be chasing.
On commitment around the world, he said in the beer market, 81 per cent of people are committed. Other categories are (all figures in percentages): cigarettes: 72, analgesics: 74, carbonated drinks: 68, clothing: 51, cat litter: 27, motor cars: 62, insurance: 57, credit cards: 54, and telecom companies: 27.
But perhaps Hofmeyr's most valuable lesson: The poorer people are, the more committed they are; and commitment comes from how seriously marketers take their brands and their customers. Hofmeyer explained this with a quip: ``If you've ever said `Oh, mine is a low involvement market', then you should be fired."
On the level of socio-economic development and commitment, he observed that the more educated the consumer, the less committed she is, as commitment is a function of the confidence in one's own judgement. The less educated consumer, on the other hand is more reliant on "authority opinion". And as education goes with wealth, poor people end up buying premium brands while rich people are the biggest buyers of store brands.
Hofmeyr says the mistake marketeers make is to treat consumers as if price is all that matters, and act as if it is the only thing that matters. Says he: ``Consumer equity is destroyed when consumers are not taken seriously and neglecting the consumer mind destroys involvement.'' And that indeed spells doom for the brand.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.