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Habits are hard to break, but not impossible. A change occurs after every market disruption. But where changes take place, what changes take place, how many changes take place, and whether changes are small, large or far-reaching, depends on the quality of the experience that consumers make of what is new and different. The asymmetry principle is the way to clarify this.

It's much easier to get consumers to try something new than to get them to stick to it. It is even more difficult when consumers are forced to do something else or out of necessity instead of being incentivized or compensated for it. Consumers will revert to old routines unless the change effort is rewarded with a higher quality experience. This is the essence of asymmetry.

The basic pattern of asymmetry applies in every category, but the concept stems from examining the performance of private label food products (FMCG / CPG) during the economic downturn. Studies have documented a pattern of asymmetrical stock gains. That is, the stock gains that private labels make when consumers want to save money are not sustained once a downturn is over. When consumers no longer just have to shop at price, they return to branded products. However, trademarks don't give up all of the stock gains made during the downturn. You keep some of these gains, hence the idea of ​​asymmetry.

Private label and recessions

One of the most comprehensive studies on private label brands during recessions was written by Lien Lamey for her award-winning doctoral thesis at the Catholic University in Leuven, Belgium, under the supervision of the renowned marketing scientist Jan-Benedict E.M. Steenkamp carried out. Lamey worked with a transaction database for Belgium (1983-2004), Great Britain (1980-2003), the United States (1971-2003) and West Germany (1975-2002) and found this both in the short and long term – The gradual growth, the private label achieved during an economic downturn is more than four times the growth slowdown that occurs during the subsequent expansion. In other words, if profits and losses are factored out, there is an asymmetry that works to the benefit of private labels. In absolute terms, these growth gains and losses are small, but the net impact is a gradual and permanent shift in the relative market position of private labels, which increases over time and builds on itself over successive recessions.

A follow-up study that Lamey also carried out with Steenkamp, ​​in which she analyzed 92 food categories in the United States over a period of 20 years from 1985 to 2005, shows what is behind these asymmetrical equity gains. Purpose of this study The research was to find the best way for branded products to reduce private equity gains during a downturn. She assessed the impact of six different types of innovation, as well as advertising, promotion, and pricing. She confirmed what other studies have found about the value of advertising in recessions and the ineffectiveness and often negative effects of branded product discounts. Most importantly, the best way for branded products to win the fight against private labels is to introduce significant, distinctive innovations that are really different and noticeably better.

The price versus quality errors

The value equation has two sides. The most well-known side is the price-performance ratio or saving money. The other side is quality / value or improvement of the product or experience. Brands can deliver more value in one or both ways. The trap that most brands fall into during a downturn is to focus only on value for money. The assumption is that this is the only side of the value equation that is important during a recession, i.e. H. It's only about the price and not about quality at all. Lamey's research shows that this is not true.

Lamey found that quality-enhancing innovations keep customers from giving up branded products. Improving the quality of the experience shifts the value equation so that a cheaper price cannot keep up or equalize. Consumers will try to save money elsewhere to stay loyal to quality-enhancing brands. The key to success is the overriding importance of quality in the value equation. The price is important, but the quality is just as important and often more important.

Why name brands benefit from quality

Private labels peel off customers who find that the quality is just as good for them as that of branded products. These customers change because both sides of the value equation work in favor of private labels. Only through innovation can branded products maintain the perception of quality in their favor or swing it back if it slips. This is the main lesson from Lamey's research – the struggle during the downturn is not a struggle for price; It is a struggle for quality. Branded products choose the wrong fight if they try to compete in price. You have to compete for quality because private labels make permanent stock gains based on quality, not price.

This is what asymmetry is about. Asymmetry is a question of quality. When consumers are forced to act on something else, most will find that this is a poorer quality experience. But some will find it good enough and maybe even better. When the economy recovers, most consumers will go back to what they did before, but many will stick to what they switched to because they find it better and cheaper. This is a greater threat to branded products than ever before as private labels are constantly improving quality. When financial circumstances require a switch to save money, consumers are increasingly discovering a private label product of sufficient quality to earn their long-term loyalty.

Asymmetry is a general principle for changes after disorders. For the most part, this is what people are forced to do at a time of disruption, not a quality product or experience worth continuing or maintaining after the disruption is over. But for some people, it will be good enough and even better that they will change forever. Such a change assumes that the new activity or the new product or behavior matches a good cultural match. If not, it does not matter whether the quality is higher, as the new cola principle makes clear. But if it's a good cultural match, then the quality of experience comes into play as the dominant operational dynamic.

Many people will return to what they did before, no matter what. Therefore, most of what shifts during a downturn is temporary and conditional. The extent of the shifts during a disturbance should not be extrapolated literally. What is permanent is never what is seen during a disturbance. Asymmetry means that much that changes, and generally most, goes back to what it was before. However, larger asymmetrical gains are achieved when the quality of new and different is better.

When downturns and disruptions occur, large parts of consumers are pushed into a mass experiment with something new. Many of the consumers who were forced to do something new would never have done it differently, or at least not so quickly. Some consumers will take it up because they find out that they like it better. Others will return as soon as possible. This difference in long-term consumer decisions is the asymmetry observed in the market. In situations where all things are equal in terms of cultural resonance, it is the quality that predicts whether this asymmetry will be small, large, or far-reaching.

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