How brand loyal shoppers respond to three different brand discontinuation scenarios

Purpose – Retailers may respond to a manufacturer discontinuing a brand or product range in three ways: not offering an alternative, thus reducing the assortment size; replacing it with a substitute; or introducing a rebranded product by the same manufacturer, if such an option is available. Herein we study all three scenarios and assess the extent to which total category sales are affected; how these discontinuations affect alternative offerings within the product category; and whether usage levels moderate within category switching behaviour. Shoppers did not have the option of switching stores to acquire the discontinued brand – their preferred brand/product range ceased to exist.

Design/methodology/approach – All three studies are quasi-experiments using scanner panel data. The product discontinuations examined are real events that took place within the major supermarket chain in New Zealand.

Findings – In all three scenarios average category sales decreased for the three-month period following the discontinuation. In Study 1 where a preferred brand of milk was discontinued with no replacement overall category sales decreased but competing brands gained sales; introducing a replacement corn chip range (Study 2) successfully captured the spend on the discontinued range, but other brands lost sales; and rebranding a cereal (Study 3) decreased both brand sales and category sales. With the exception of Study 1, near substitute product offerings did not capture a greater proportion of the spend from the discontinued brand compared to less similar substitutes. Expectations were that heavy users would have a greater propensity to shift to near alternatives than would medium/light users, however, none of the studies lend support.

Originality/value - This is the first research effort to use scanner panel data to explore the reactions by brand loyal customers to three different brand discontinuation scenarios initiated by the manufacturer.