June 13, 2009

Frugal American consumers have jilted their favorite national brands for food, household, health and personal care products but are far more reluctant to switch to store brands on purchases for children and pets, according to the latest research from ICOM, a division of Dallas-based Epsilon Targeting.

ICOM’s May survey of 1,530 American consumers reveals how the threat of exodus to store brands varies by category. The following data shows the percentage of consumers in each category who have switched to store brands and away from national brands in the past six months:

* 59% for food and household products;

* 48% for health products;

* 48% for personal care products;

* 23% for pet care products;

* 12% for child care products.

The less-risk-means-more-switch trend revealed itself as well in the category of over-the-counter medicinal healthcare items. ICOM survey responses show a direct correlation between severity and specificity of ailment and openness to switch. The following data depicts the percentage of consumers in each category who have switched to less expensive store brands and away from national brands in the past six months:

* 42.2% for general pain relievers;

* 31.7% for cold and cough medicines;

* 30.8% for allergy remedies;

* 21.5% for heartburn medication.

“Perceived risk, that’s what is driving these key consumer decisions. This is the kind of insight that national brands can use to reach customers with promotions that meet their needs and bring them back,” said ICOM Marketing Director Warren Storey. “These results highlight that understanding customer psychology, and tailoring promotions accordingly, is a significantly more effective win-back strategy than scatter-shot, one-size-fits-all offers.”

A separate ICOM survey in April firmly established the grocery store as the epicenter of the American consumer’s coupon activity. In that survey of 1,827 Americans, 86.5% of respondents who said they had used coupons in the last month identified the grocery store as the place of redemption. The grocery far outpaced its closest competitors, which included restaurants at 46.5%, department stores and mass merchants such as Wal-Mart at 41.3%, and drug stores at 34.9%.

Not that long ago some consumers felt stigmatized by coupon usage. The recession may have changed that. Fully 86.8% of respondents in the April survey said they are using the same amount or more coupons than they used a year ago. One out of three said unequivocally they’re using more coupons than a year ago.

“The good news for national brands is that there is, in fact, an opportunity to win back customers who have switched. Some marketers were worried they’ll never return. But the win-back depends on knowing who is switching and why, and responding with targeted incentives based on that strategic information,” Storey said.

In another sign of the times, survey respondents made it clear that customer loyalty rewards supporting basic household purchasing are the most appealing. That means groceries and gasoline. 70% of respondents said they’re interested in getting rewards at the grocery, 60.7% said gasoline. The next closest categories were retail stores at 41.2%, household products at 40.3% and travel at 29.3%.

For more information at http://www.epsilon.com

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