Chinese customers' lack of loyalty puts pressure on brands

Top consumer brands in the mainland market have to constantly recruit new customers because of low customer loyalty, according to a study by research firm Bain & Company.

"The more [mainland consumers] buy a category, the more brands they buy. It's the exact opposite of what marketers want to hear. There's an enormous pressure to re-recruit new shoppers every single year," Bain partner James Root said.

The joint study released yesterday by Bain and Kantar Worldpanel analysed the behaviour of 40,000 mainland households from 373 cities over two years. It looked at shopping behaviour covering 26 consumer staples from milk, confectionery, baby products to shampoo.

It found that brands, with the exception of baby milk formula, demonstrated a high rate of "churn". A look at the top five brands in each space saw that anywhere from 40 to 80 per cent of customers were new.

For example, shampoo brand Head & Shoulders' top-line customer base numbers seemed stable, increasing 3 per cent from 2011 to 2012. However, 45 per cent of the brand's buyers in 2011 did not return the following year.

The study also concluded that penetration is the ultimate driver of repurchase rates and thus market share. The leading brands always correlated with the highest penetration. For example, instant noodle brand Master Kong's penetration was seven times that of 20 competitors.