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Study shows brand loyalty dwindles as economy tumbles

BY Anna Mcgrath

NEW YORK Consumers tend to be more fickle than devoted in a failing economy, according to a new study.

In conjunction with the CMO Council, Catalina Marketing analyzed the household consumer shopping behavior of 32 million consumers across 685 leading consumer packaged goods brands and found that only 4-out-of-10 brands retained 50% or more of their highly loyal customers. Less than half of loyal consumers (48%) showed brand loyalty from 2007 to 2008.

“The common belief is that loyalty stays high in an economic downturn. The fact is that loyalty is fleeting and it’s up for grabs,” said Todd Morris, SVP at Catalina Marketing.

For brands, the cost of dwindling loyalty can be high. Tide’s loyal shoppers spent 6% less on the brand, costing Tide 5% of its revenue. If anything, the Catalina study may serve as a wake-up call to marketers to think beyond the quick sale. 

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Report: Kimberly-Clark to cut 1,600 jobs

BY DSN STAFF

CHICAGO Kimberly-Clark said on Thursday that it would cut about 1,600 salaried jobs, or roughly 3% of its workforce, as it tries to trim costs and respond faster to rivals and store brands.

The latest move comes four years after the maker of Kleenex tissues kicked off a three-and-a-half year cost-cutting plan that included slashing about 6,000 jobs and closing about 20 manufacturing plants.

The plan announced on Thursday does not include closing any facilities. Kimberly-Clark had said in April that it expected to cut jobs in the second and third quarters as it tries to squeeze more costs out of the organization.

Its household products, such as Kleenex and Huggies diapers, have faced stiff competition from lower-cost store brands sold by such retailers as Walmart as consumers cut back. At the same time, its K-C Professional division has been pressured because the restaurants and other businesses it serves have been hit hard by the recession.

The move is “likely a necessary step” to allow Kimberly-Clark to invest in such areas as advertising and promotion as it tries to protect its market share, Sanford Bernstein analyst Ali Dibadj said.

Procter & Gamble in particular, has stepped up its push to grab cash-strapped consumers with lower-priced versions of Bounty paper towels and Charmin toilet paper, as well as a lower-cost line of diapers, Luvs. Kimberly-Clark competes directly with P&G in those categories.

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Pepsi Bottling Group taps Mexico market with energy drink

BY Allison Cerra

SOMERS, N.Y. The Pepsi Bottling Group announced a multi-year agreement to distribute ROCKSTAR Energy Drink in Mexico, part of PBG’s strategy to strengthen and diversify its global brand portfolio by expanding into high-growth segments.

Under the terms of the agreement, PBG will have exclusive rights to distribute ROCKSTAR products throughout all of its Mexico territories. PBG already distributes the brand in the United States and Canada.

PBG will begin distributing ROCKSTAR in Mexico in July. Financial terms of the agreement were not disclosed.

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