Markets

Is Brand Loyalty Dead?

Published

7 years ago

October 9, 2017

Jeff Desjardins

In the Madmen era, the marketing playbook was to use mass media, strong ads, and a powerful brand to add customers.

And if you did it right? A customer would be loyal for life, always showing a preference for your brand above all others. This brand loyalty was a recipe for increased customer lifetime value (CLV), as well as a massive boost to the market share and profits of consumer goods companies.

The New Ad Era

In today’s world, the playbook has changed.

In most situations, there are no longer two brands competing head-to-head on grocery shelves, battling it out to win the minds and hearts of consumers. Instead, customer transactions are increasingly digital – and it is there that things can be tracked, compared, analyzed, and personalized. As a result, a new competitive landscape has emerged where the concept of brand loyalty is under siege.

Today’s infographic comes to us from RaveReviews and it asks the question: is brand loyalty “dead”?

If brand loyalty is not dead, it may be on its last legs. Today, only 23% of people say they have a relationship with a brand – a percentage that has been shrinking for years.

With a connected world and so many options at our fingertips, sticking with a single brand probably seems like an antiquated concept to many consumers. After all, if one can buy the same product from a vendor with better reviews or for a lower price, then why not?

Consumer Upside

While some people may yearn for an era where they could trust the brand they loved through the thick and thin, a decreased reliance on brand loyalty creates other potential benefits for consumers:

It levels the playing field
Brands are no longer entrenched in their positions as market leaders, allowing new and upcoming competitors to also vie for the hearts and minds of consumers. This ultimately means better products and more experimentation, and less blind loyalty to the brands of the old guard.

It motivates brands to listen
Brands can use the power of big data to monitor consumer preferences, and to react accordingly. Further, with the emergence of social media, consumers can be heard – and brands can respond to these concerns directly.

It encourages healthy competition
Product quality is more important than gaining emotional affinity. As a result, substandard products will not last long on the shelves.

Related Topics:Millennials marketing brands advertising brand loyalty

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Markets

The European Stock Market: Attractive Valuations Offer Opportunities

On average, the European stock market has valuations that are nearly 50% lower than U.S. valuations. But how can you access the market?

Graphics & Design

Alejandra Dander

An infographic showing that compared to North American and Asian stocks, the European stock market has lower or comparable valuations and low-to-moderate correlation.

European Stock Market: Attractive Valuations Offer Opportunities

Europe is known for some established brands, from L’Oréal to Louis Vuitton. However, the European stock market offers additional opportunities that may be lesser known.

The above infographic, sponsored by STOXX, outlines why investors may want to consider European stocks.

Attractive Valuations

Compared to most North American and Asian markets, European stocks offer lower or comparable valuations.

Index	Price-to-Earnings Ratio	Price-to-Book Ratio
EURO STOXX 50	14.9	2.2
STOXX Europe 600	14.4	2
U.S.	25.9	4.7
Canada	16.1	1.8
Japan	15.4	1.6
Asia Pacific ex. China	17.1	1.8

Data as of February 29, 2024. See graphic for full index names. Ratios based on trailing 12 month financials. The price to earnings ratio excludes companies with negative earnings.

On average, European valuations are nearly 50% lower than U.S. valuations, potentially offering an affordable entry point for investors.

Research also shows that lower price ratios have historically led to higher long-term returns.

Market Movements Not Closely Connected

Over the last decade, the European stock market had low-to-moderate correlation with North American and Asian equities.

The below chart shows correlations from February 2014 to February 2024. A value closer to zero indicates low correlation, while a value of one would indicate that two regions are moving in perfect unison.

	EURO STOXX 50	STOXX EUROPE 600	U.S.	Canada	Japan	Asia Pacific ex. China
EURO STOXX 50	1.00	0.97	0.55	0.67	0.24	0.43
STOXX EUROPE 600		1.00	0.56	0.71	0.28	0.48
U.S.			1.00	0.73	0.12	0.25
Canada				1.00	0.22	0.40
Japan					1.00	0.88
Asia Pacific ex. China						1.00

Data is based on daily USD returns.

European equities had relatively independent market movements from North American and Asian markets. One contributing factor could be the differing sector weights in each market. For instance, technology makes up a quarter of the U.S. market, but health care and industrials dominate the broader European market.

Ultimately, European equities can enhance portfolio diversification and have the potential to mitigate risk for investors.

Tracking the Market

For investors interested in European equities, STOXX offers a variety of flagship indices:

Index	Description	Market Cap
STOXX Europe 600	Pan-regional, broad market	€10.5T
STOXX Developed Europe	Pan-regional, broad-market	€9.9T
STOXX Europe 600 ESG-X	Pan-regional, broad market, sustainability focus	€9.7T
STOXX Europe 50	Pan-regional, blue-chip	€5.1T
EURO STOXX 50	Eurozone, blue-chip	€3.5T

Data is as of February 29, 2024. Market cap is free float, which represents the shares that are readily available for public trading on stock exchanges.

The EURO STOXX 50 tracks the Eurozone’s biggest and most traded companies. It also underlies one of the world’s largest ranges of ETFs and mutual funds. As of November 2023, there were €27.3 billion in ETFs and €23.5B in mutual fund assets under management tracking the index.

“For the past 25 years, the EURO STOXX 50 has served as an accurate, reliable and tradable representation of the Eurozone equity market.”
— Axel Lomholt, General Manager at STOXX

Partnering with STOXX to Track the European Stock Market

Are you interested in European equities? STOXX can be a valuable partner:

Comprehensive, liquid and investable ecosystem
European heritage, global reach
Highly sophisticated customization capabilities
Open architecture approach to using data
Close partnerships with clients
Part of ISS STOXX and Deutsche Börse Group

With a full suite of indices, STOXX can help you benchmark against the European stock market.

Learn how STOXX’s European indices offer liquid and effective market access.

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