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Purpose This study aims to question the conventional wisdom that brands compete for customers, especially in mature industries such as soft drinks. Rather than engaging in price wars or promotion wars, brands coexist in the markets by focusing on their own brand loyal customers. Design/methodology/approach Consumer panel data of carbonated beverages are examined using Markov chains to measure switching between two brands: Coke and Pepsi. Switching rates are conducted for all Coke households (n = 10,474) and Pepsi households (n = 7,227). This is further examined with respect to heavy half (upper median) consumers of each brand who make up approximately 86 per cent of volume purchases. Findings Households that made a majority of their purchase volume in either Coke or Pepsi products stayed with their preferred brands in subsequent quarters: 85 to 97 per cent of households. These findings are validated at all levels of the brand architecture (family brands, product brands and modified brands), even though both brands engage in similar marketing mix tactics (advertising, price cuts, distribution, product offerings). Loyalty was even higher among the heavy user households. Research limitations/implications The research was conducted using two well-known brands in a mature industry. Services or non-mature markets may exhibit different loyalty patterns. Originality/value The study extends prior research on competition, loyalty and branded offerings to show that brand loyalty remains high despite marketing efforts to switch the brand buying behavior.

Purpose The purpose of this paper is to examine whether line extensions (modified brands) create their own loyalties or induce variety-seeking within the brand. Prior research has explored how the branded house strategy (i.e. multiple products bearing the same brand name) retains customers from competing brands. However, this research investigates loyalty within the brand by comparing loyalty and variety-seeking rates of modified brands. Design/methodology/approach Markov chains examine behavioral loyalty and switching rates of panel households in the USA over several quarters for two family brands of carbonated beverages. Emphasis is placed on the consumers who purchase the upper median of volume (heavy half) and constitute a disproportionate amount of brand’s sales (86 per cent of the volume). Findings Three propositions find that loyalty rates are high among modified brands with little switching to other lines within the brand. Further, loyalty and switch to rates are highest for the flagship branded product (the master modified brand). Practical implications Managers segment the market using the branded house strategy, yet loyalty rates vary for each product line. The switching rates can guide managers as to which products have established a loyal consumer base. Originality/value While brand switching is a considerable research stream, this research is believed to be the first to explore loyalty versus variety-seeking in the branded house strategy.

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