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Frugal American consumers have forsaken their favorite national brands in the case of many food and household, health, and personal-care products, but they are reluctant to switch to store brands on purchases for children and pets, according to recent research from ICOM.

The threat of exodus from national brands toward store brands varies by category, ICOM's survey (in May) of 1,530 US consumers finds.

The following percentages, by product category, refer to consumers who say they have switched to store brands and away from national brands in the past six months:

  • 59%, food and household products
  • 48%, health products
  • 48%, personal care products
  • 23%, pet care products
  • 12%, child care products

"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."

The less-risk-means-more-switch trend also revealed itself in the category of over-the-counter OTC medicines and healthcare items. The findings show a direct correlation between severity and specificity of ailment and openness to switch, ICOM said.

The following percentages refer to consumers who say they have switched to less-expensive store brands of OTC medicines and healthcare items in the past six months:

  • 42.2%, general pain relievers
  • 31.7%, cold and cough medicines
  • 30.8%, allergy remedies
  • 21.5%, heartburn medication

Coupons and Rewards

An earlier (April) ICOM survey found the grocery store to be the epicenter of American consumers' coupon activity. In that survey of 1,827 Americans, 86.5% of respondents who said they had used coupons in the previous month identified the grocery store as the place of redemption.

The grocery far outpaced its closest competitors, including 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, but 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 earlier.
  • One out of three said 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 [to store brands]. 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.

Survey respondents also made clear that customer-loyalty rewards that support basic household purchasing are the most appealing:

  • 70% of respondents said they're interested in getting rewards at the grocery story, and 60.7% cited the gas pump.
  • The next closest categories were retail stores at 41.2%, household products at 40.3%, and travel at 29.3%.

About the findings: ICOM's April and May surveys were sent to 70,000 households nationwide. The 1,827 survey participants in April represent a 2.61% response rate. The 1,530 survey participants in May represent a 2.19% response rate. Targeted-marketing firm ICOM is a division of Dallas-based Epsilon Targeting, which is the new data division of Epsilon and combines the resources of Epsilon Data Services, ICOM, and Abacus.

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