The MSW TBSM tracking service measures brand preference as one component of the survey.  Using TBSM Auto Insurance category data, changes in brand preference results between 2021 and 2023 were computed for individual brands.  Our Chart of the Week displays these results for the three top players in the US Auto Insurance market: State Farm, Geico and Progressive.

In addition to this brand preference data, this week’s chart includes the change in market share (between 2021 and 2023) for each of the top competitors as computed from annual published data from the National Association of Insurance Commissioners.

• Between 2021 and 2023, State Farm realized gains in both brand preference and market share of over two percentage points.
• Similarly, Progressive also achieved increases in both brand preference and market share of around one and a half percentage points.
• For Geico, brand preference was flat while market share decreased close to two percentage points.
• Brand preference for State Farm and Progressive tracked market share very closely. This is expected given previous studies which demonstrate the close relationship between preference and market share. In fact, independent studies conducted by the Marketing Accountability Standards Board (MASB) have found that preference proved to be a better fit to sales and market share than any other standard research question examined.
• Geico experienced less favorable market share results than might be expected from the unchanged level of brand preference. There are two reasons for this: price and level of advertising spend.
• The MASB research also demonstrated that including price along with brand preference provides an even better prediction of market share. These studies demonstrated that an increase in brand preference can translate into either a gain in market share or the ability to charge a price premium at the same market share level.
• According to data from S&P Global, over the time period from 2018 through 2023, Geico’s rates increased substantially more than their competitors. And in 2022, the year where all insurers started making large increases in rates due to increased losses due to inflation and other post-pandemic factors, Geico increased rates much more than State Farm or Progressive:

• Due to the same profitability issues, automobile insurance companies also cut back on advertising spend starting in 2022. While 2023 figures are not yet available, a report from AM best showed that Geico cut back on advertising spend much more than did either State Farm or Geico:

• The combination of a much larger increase in rates and much larger cut back in advertising spend explain why Geico experienced a drop in market share between 2021 and 2023 despite an unchanged level of brand preference.

The MSW TBSM tracking service measures brand preference as one component of the survey.  Brand preference was collected quarterly for eleven major Online Pet Store brands during 2023 (among 500 respondents each quarter).  This week’s chart examines the changes in brand preference from the first half to the second half of 2023 for the three largest online pet store brands.

• For the entirety of 2023 two-thirds of the TBSM sample were pet owners.
• Over half of these pet owners indicated they buy pet supplies online at least some of the time; 38% buy both online and in-store, while 14% purchase exclusively online.
• The three largest online specialty pet stores, including Chewy.com and the online operations of PetSmart and Petco, realized at least marginal gains in brand preference over the course of 2023.
• Petsmart.com experienced by far the strongest gain in brand preference during 2023, with the 5.9% gain being statistically significant.
  • This is consistent with reporting from Grips Intelligence which shows Petsmart.com with a 6.8% increase in revenue in Q4 2023 alone.
  • The increase in preference for Petsmart.com was fairly consistent across age groups and genders.
  • However, the increased preference was largely driven by those with above median incomes and those with children under age 18 in the household.
• While the overall preference gain for Chewy.com was not statistically significant, the brand did realize significant increases in brand preference among those with above median income and those with a college education.
• Brand preference for Petco.com also did not see a statistically significant gain overall but did see preference among women increase significantly.
• All other brands experienced an aggregate decline in brand preference of -7.9%.
  • These options included both Amazon Pets and an array of other online specialty pet stores.

The airline industry has been going through a difficult time; COVID shutdowns, Staff shortages, Inflation, weather and FAA system outages.  Some airlines tried to recover from COVID too quickly and have then had to rollback planned/scheduled expansions.  The result is misery for passengers, who can expect long lines, packed flights, less space on board and much higher prices.  Delays and cancellations are rampant, as massive staffing shortages make domestic airlines unequipped to deal with disruptions such as weather events.

Some failures of note:

• December 26, 2022: Southwest disruption with 11,000 flights cancelled.

• January 11, 2023: FAA computer outage – 10,000 flights delayed or cancelled:
  • Southwest 49%
  • American 48%
  • United 40%
  • Delta 38%
  • JetBlue 33%

• June 24-27, 2023: 31,850 flights (a third of all flights nationwide) were delayed (of which 6,346 were cancelled outright) due to severe storm activity.

Additionally, there was the battle for Spirit Airlines between Frontier and JetBlue, which was eventually won by JetBlue. However, the DOJ then blocked the acquisition on March 7, 2023, leaving Spirit in limbo.  While JetBlue ended its alliance with American Airlines in July in a bid to protect the purchase of Spirit from legal challenges, the saga remains unresolved.

Commentators anticipated that airline preferences would change, in particular predicting Southwest would suffer due to the issues outlined above.

That is not what our data shows.  Southwest has gained preference among Americans! The following analysis is based on data collected through the MSW TBSM tracking service among 1000 consumers in early 2022 and another 1000 consumers in the first half of 2023.

Part of Southwest’s Brand Preference gain can be explained by higher awareness.  Southwest gained about 1.5 percentage-points, rising from 93.6% in 2022 to 95.0% in 2023.  The second reason is due to performance: Southwest had a very low level of complaints across 2022, very few lengthy tarmac delays or mishandled baggage. And the third reason is Inflation. American incomes have been squeezed, which is why we also see an increase in Brand Preference for Spirit Airlines.

 

Domestic Airlines Brand Preference: 2022 vs 2023

Specifically, Spirit improved its Brand Preference from 3.4% to 3.9% on the back of higher awareness, also up about 1.5 percentage-points from 85.6% to 87.2%.  Proving yet again that no publicity is bad publicity as long as the name is spelled correctly.

In addition, consumers have changed what they are looking for.  Ticket prices have always been an important factor affecting flight choice.  This was mentioned by 42% in 2022 and increased significantly to 54% in 2023, reflecting the impact of inflation and tighter household budgets. Fully 29% say it is the most important factor; up 5 percentage-points from 2022.

 

Important Factors/Primary Factor in Choosing Airline: 2022 versus 2023

Price can only go so far.  TBSM also recorded significant increases in the number of people looking for convenience and choosing flights because they trust the airline based on its safety record.  Notably, people attach much less importance to the availability of first class and an airline club/lounge.  The last two are substantially more important to frequent travelers.

There is a strong correlation between airline preference and passenger numbers, as reported by the Bureau of Transportation.

 

Brand Preference vs Actual Passenger Numbers

However, for a variety of reasons people do not always fly on their preferred airline.

Nearly three-quarters of people who say that they prefer Southwest or American flew on that airline the last time they took a flight, while less than 60% of those that prefer JetBlue or United flew their preferred airline on their last trip.  Across the entire industry only 60% of flights were accommodated on people’s preferred airline.

 

Percentage of Those Who Prefer Each Airline Flying It Last Time

People who flew an airline other than their preferred carrier said they did so for different reasons, but one-third of those who switched did so because of price.

 

Reasons For Switching from Your Preferred Airline

41% switched because they didn’t like the schedule or their preferred seat choice was not available.

18% were influenced to try a different airline.

The three legacy carriers face similar reasons why people didn’t fly them last time.  But the legacy carriers have some differences versus Southwest.

 

Reasons for Switching: Legacy vs. Southwest

While pricing pressure is real across the entire industry, it is more so the case with the legacy carriers versus Southwest, with the legacy carriers losing business for being too expensive at almost double the rate of Southwest.

On the other hand, scheduling limitations are much more a concern for Southwest than for the legacy carriers.  “Didn’t fly to destination” was the most often cited reason why those who prefer Southwest used a different airline.  This is much less of an issue with legacy carriers, which have associated regional carriers which allow them to reach many more markets.

Those who prefer legacy carriers are more likely to want to try a different experience; while those who prefer Southwest are more likely to be influenced by a companion into using a different airline (perhaps because the companion doesn’t want to fly with a discount carrier).

Loyalty differs across the different airlines. We previously viewed behavioral loyalty, i.e., did people who prefer the airline fly it last time (Southwest and American led on this metric).  The alternative approach is to examine the Brand Relationship and attitudinal loyalty.  Delta has more people who feel attitudinally loyal to it.

 

Delta Airlines: Brand Relationships

 

One in seven flyers (14%) say that they feel attitudinally loyal to Delta.  This means that these people will choose Delta if all else is equal – schedule, equipment, prices.  Delta has the BEST on time delivery record of any US airline; 82% of flights arrive on time.  Plus, it has fewer cancelled flights or involuntary bumps between classes than any other airline.

 

Attitudinal Loyalty Toward Domestic Airlines

Nearly half of all flyers in the USA do not feel loyal to any airline.

United is the weakest of the three legacy carriers. Only 7% of Americans feel loyal to it, and this is an improvement on its 2022 performance when 6% were loyal.

Delta’s loyal group has increased from 12% in 2022 to 14% in 2023.

American’s loyal group increased from 10% to 11%, and Southwest, even with the massive system outage, managed to creep up from 11% to 12%. JetBlue held steady at 5%.

Across the industry, the number of flyers who feel loyal to one carrier or another has increased from 53% to 56%.

 

Brand Relationship Profiles for Select Domestic Airlines

 

Delta and American have the strongest brand relationships in the US:

• Delta and American lead in trial, with 66% of those aware of each airline having flown on it.
• American leads in terms of retention, with 68% of those with experience with the airline continuing to fly with it.
• Delta leads in terms of loyalty, with 35% of those who currently fly Delta saying that they are loyal. Southwest is a strong second, with 32% of current users being loyal.

The logic for JetBlue’s attempted purchase of Spirit Airlines is very clear.

For more information about the airline industry or your brand’s category contact MSW.