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How Top Beverage Companies Attained Brand Loyalty in Nigeria

How Top Beverage Companies Attained Brand Loyalty in Nigeria

Did you know that acquiring a new customer may cost a business 5 to 25 times more than the cost of retaining an old one?[1] Attracting new customers is not only expensive, but time-consuming. Loyalty is extremely beneficial to businesses as it leads to repeated purchases, higher revenues, and referrals by satisfied customers who serve as brand ambassadors.[2] Considering the effort put into marketing and advertising, most new customers will only give a product a one-time trial. Whereas, research has shown that a 5% increase in repeat customers who buy a product over time, results in an increased profit of about 25 – 95%.[3]

In today’s market, a solid brand is very crucial in retaining a customer as it improves customer recognition, creates trust, supports advertising, serves as motivation and improves competitive advantage.[4] Especially in the beverage industry (alcoholic and non-alcoholic), where competition among players is so high that competing brands cannot afford to take their eyes off the ball for a second. Hence, the need to always stand out and earn customer loyalty. This is particularly difficult as brand loyalty in the beverage industry begins with the consistent perception of value associated with the product itself.[5]

Furthermore, there are other factors that affect customer loyalty to any brand, commonly referred to as the five pillars of brand loyalty – Trust, Price, Perceived Value and Quality, Customer Satisfaction and Reliability. 5 To gain insights into the role these pillars play in determining the brand Nigerian beverage consumers are loyal to, a survey was conducted and the results showed that Customer Satisfaction is the major factor that influenced brand loyalty to beverage brands. This insight further proved the reality of the global beverage industry where brand loyalty is particularly difficult due to a very significant dependence on the product itself, rather than other intangible factors like advertising and quality of service delivery.

Before measuring the impact of these five pillars, one needs to gain a clear understanding of what brand loyalty is. Brand loyalty can generally be defined as the tendency of consumers to continuously purchase a particular brand’s products over other like brands;[6] the positive association consumers attach to a particular product or brand. Customers that exhibit brand loyalty are said to be devoted to a particular product or service,4 which is demonstrated by their repeated purchases fueled by their perception that the particular brand has the qualities that will meet their expectations and identifies with them on a personal level. It is generally an emotionally charged decision for them.

Loyal customers are known to be those who will purchase the same brand regardless of convenience or price. These loyal customers have found a product that meets their needs, and they are not actually interested in experimenting with other brand(s).[7] For these kinds of customers, they continue to purchase from your company, not because you are the only option, but because they trust your company.

Trust is a major determinant of consumer behavior in the purchasing process; and is established as a result of the overall customer experience with a product and the company. In cases where trust is successfully developed, positive attitudes and customer loyalty are generated.[8] Consumers’ trust in a brand significantly reduces their hesitation in the purchasing process, and is therefore considered an essential factor that leads to long-term customer retention.[9]

Customer satisfaction is an essential factor of consumers’ loyalty to a brand, and can be defined as the expression of satisfaction or disappointment that arises as a result of the comparison of service/product delivery and the expectation of value.9 Assessing customer satisfaction in the beverage industry is primarily based on a comparison of the customer’s expectations and post-consumption perceptions.

Numerous studies have shown that perceived quality and value are important determinants of customer loyalty.8 This influence can be assessed through the consumers’ degree of satisfaction with a product, and other tangible and intangible attributes which are often based on personal opinions.9

Price is the revenue-generating element in every business; it is the value assigned to the products and services offered by brands to customers. The price of a product plays a crucial role in the purchasing process; affects the significance of a brand in the eyes of customers; and can also be used to point out brand quality.9 All these factors culminate to determine the loyalty of customers to a brand.

In measuring the brand value of top global beverage companies, PepsiCo Inc., Anheuser-Bush InBev (BUD) and Coca Cola Co., are ranked as the top three beverage companies in the world in 2020, as measured by their revenue, profit, assets and market value.[10] This is after Coca Cola was ranked as one of the top 5 most valuable brands in the world in 2019 – alongside tech giants such as Apple, Microsoft, Amazon and Google – with a brand value of US $63.37 billion.[11]

Rank Brand Brand Value (in billion U.S dollars)
1. Apple 234.24
2. Google 167.71
3. Amazon 124.26
4. Microsoft 108.85
5. Coca Cola 63.37
6. Samsung 61.1
7. Toyota 56.25
8. Mercedes-Benz 50.83
9. McDonald’s 45.36
10. Disney 44.35

The World’s Most Valuable Brands, 2019

Source: Statista

The brand value of companies recognized on this ranking is measured on the basis of financial information, the role the brand played in determining consumer choice (independent of other factors such as price and convenience), and a qualitative assessment of the brand’s overall strength.11

To gain insights into the beverage brands consumers are loyal to, and the factors influencing their loyalty, a web-based survey conducted by Ciuci Consulting featured a randomized sample of 449 respondents from the six geopolitical zones in Nigeria. Of the 449 respondents, there were 61.9% female respondents and 38.1% male respondents. Their geographic and age distributions are graphically illustrated below:

As a prelude to measuring the impact of the five pillars on brand loyalty, the survey sought to discover the beverage category that respondents consumed most.

The top three most consumed beverage categories were Soft drinks & Malt; Juices, Smoothies & Yoghurts; and Bottled water categories.

  • Soft drinks & Malt accounted for 44.26% and 38.93% of respondents aging from 15-24 years old and 25-34 years old, respectively.
  • Juices, Smoothies & Yoghurt were preferred by 48.68% of 15-24-year-olds and 34.21% of 25-34-year-olds.
  • Water, being essential for good health was preferred by 27% of the 15-24-year-old respondents and 40% of the 25-34-year-old respondents.

Sequel to discovering the most consumed beverage categories of our respondents, we aimed to find out the exact brands in each of the beverage categories which our respondents are loyal to. Our findings are illustrated in the following charts.

Some notable mentions by our respondents across the categories included: Habib yoghurt, RC soft drink, Smirnoff ice, Guinness stout, Notre dame water and CWAY bottled water.

Digging deeper into the degree to which the five pillars of brand loyalty shaped and/or determined our respondents’ loyalties to their favourite brands, our survey proved the aforementioned notion at the beginning of this piece that brand loyalty in the beverage industry starts with the actual product.5 Customer satisfaction predominantly determined our respondents’ loyalty to their beverage brands, followed by Trust, Perceived Quality & Value, Reliability, and Price.

Trying to understand the ‘why’ of brand loyalty from our respondents, we found that Quality, Price and Taste of the product are the three major factors that influenced our respondents’ loyalty to their most consumed brands. Composition, Availability, Packaging of the product and others also had significant impact on their loyalty.

As seen in the case of Coca Cola and Bigi where the former increased the price of its 50cl PET bottle, and created an opportunity for the otherwise unknown Bigi to garner a significant market share in the Nigerian soft drinks market by adopting the ‘more for less’ pricing strategy, brand loyalty can end as abruptly as it began. To discover what could make our respondents turn their backs on their favourite beverage brands, we found that change in taste – with 286 responses – was the predominant reason that could cause discontinued brand loyalty. Other reasons are illustrated below.

Other insights gotten from the survey responses regarding what customers would recommend to brands to boost their customer loyalty include:

  • Improvement in the composition of the ingredient especially the reduction of sugar due to the high rate of diabetes;
  • Improvement in the quality, taste, packaging and branding of the beverage; and
  • Ensuring that the beverage is always available.

As was the intention for carrying out this study, brands which are aiming to become market contenders in the Nigerian beverage market can learn a thing or two from the current top brands in their respective categories and make deliberate efforts to inculcate the themes generated from this random sample of Nigerian beverage consumers in their product development process. These top brands are doing something worth noting, and using the data presented in this piece to better understand consumer behavior is paramount in the highly competitive beverage market.

While advert jingles and packaging are great, Nigerian beverage consumers are looking for something unique in the actual beverage; healthy, organic, low sugar drinks at pocket-friendly prices, and specially-picked ingredients for great-tasting and quality beverages.

[1] (Gallo, 2014)

[2] (Skyword, 2014)

[3] (Reichheld, 2001)

[4] (Deluxe, 2015)

[5] (Nwiepe & Grend, 2019)

[6] (Skyword, 2014)

[7] (Kopp, 2019)

[8] (Moreira & Silva, 2015)

[9] (Lepojevic & Dukic, 2018)

[10] (Reiff, 2020)

[11] (Guttmann, 2019)

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