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Encyclopedia > Brand loyalty

Brand loyalty has been proclaimed by some to be the ultimate goal of marketing.[1] In marketing, brand loyalty consists of a consumer's commitment to repurchase the brand and can be demonstrated by repeated buying of a product or service or other positive behaviors such as word of mouth advocacy.[2] True brand loyalty implies that the consumer is willing, at least on occasion, to put aside their own desires in the interest of the brand.[3] Wikibooks has more about this subject: Marketing Look up marketing in Wiktionary, the free dictionary. ... A brand is a name, logo, slogan, and/or design scheme associated with a product or service. ...


Brand loyalty is more than simple repurchasing, however. Customers may repurchase a brand due to situational constraints, a lack of viable alternatives, or out of convenience.[4] Such loyalty is referred to as "spurious loyalty". True brand loyalty exists when customers have a high relative attitude toward the brand which is then exhibited through repurchase behavior.[2] This type of loyalty can be a great asset to the firm: customers are willing to pay higher prices, they may cost less to serve, and can bring new customers to the firm.[1][5] For example, if Joe has brand loyalty to Company A he will purchase Company A's products even if Company B's are cheaper and/or of a higher quality.


An example of a major brand loyalty program that extended for several years and spread worldwide is Pepsi Stuff. Perhaps the most significant contemporary example of brand loyalty is the fervent devotion of many Mac users to the Apple company and its products. Pepsi Stuff catalog cover Pepsi Stuff catalog page featuring Cindy Crawford Pepsi Stuff refers to a landmark marketing strategy and global integrated campaign launched by Pepsi, first in North America and then around the world, in the 1990s and continuing into the 2000s featuring merchandise that could be purchased with... The Macintosh 128K, the first Macintosh computer The iMac, a current Mac computer Macintosh is a brand name which covers several lines of personal computers designed, developed, and marketed by Apple Inc. ... Apple Inc. ...


From the point of view of many marketers, loyalty to the brand - in terms of consumer usage - is a key factor:

Contents

Usage rate

Most important of all, in this context, is usually the 'rate ' of usage, to which the Pareto 80:20 Rule applies. Kotler's `heavy users' are likely to be disproportionately important to the brand (typically, 20 per cent of users accounting for 80 per cent of usage -- and of suppliers' profit). As a result, suppliers often segment their customers into `heavy', `medium' and `light' users; as far as they can, they target `heavy users'.


Loyalty

A second dimension, however, is whether the customer is committed to the brand. Philip Kotler, again, defines four patterns of behaviour:


Hard Core Loyals - who buy the brand all the time.


Soft Core Loyals - loyal to two or three brands.


Shifting Loyals - moving from one brand to another.


Switchers - with no loyalty (possibly `deal-prone', constantly looking for bargains or `vanity prone', looking for something different).


Industrial Markets

In industrial markets, organizations will regard the `heavy users' as `major accounts', to be handled by senior sales personnel and even managers; whereas the `light users' may be handled by the general salesforce or by a dealer.


Portfolios of Brands

Once more, though, life may be much more complex. For example, Andrew Ehrenberg, then of the London Business School said that consumers buy 'portfolios of brands'. They switch regularly between brands, often because they simply want a change. Thus, 'brand penetration' or 'brand share' reflects only a statistical chance that the majority of customers will buy that brand next time as part of a portfolio of brands they favour. It does not guarantee that they will stay loyal.


Influencing the statistical probabilities facing a consumer choosing from a portfolio of preferred brands, which is required in this context, is a very different role for a brand manager; compared with the - much simpler - one traditionally described, of recruiting and holding dedicated customers. The concept also emphasises the need for managing continuity.


Market Inertia

On the other hand, one of the most prominent features of many markets is their overall stability - or inertia. Thus, in their essential characteristics they change very slowly, often over decades - sometimes centuries - rather than over months. This stability has two very important implications. The first is that if you are a clear brand leader you are especially well placed in relation to your competitors, and should want to further the inertia which lies behind that stable position. This will, however, still demand a continuing pattern of minor changes, to keep up with the marginal changes in consumer taste (which may be minor to the theorist, but will still be crucial in terms of those consumers' purchasing patterns - markets do not favour the over-complacent.). But these minor investments are a small price to pay for the long term profits which brand leaders usually enjoy. Only farm-hands make a career out of milking cows, and only fools jeopardise the investment contained in an established brand leader.


The second, and more important is that if you want to overturn this stability, and change the market (or significantly change your position in it), then you must expect to make massive investments to succeed. Even though stability is the natural state of markets, however, sudden changes can still occur and the environment must be constantly scanned for signs of these.


Examples of Brand Loyalty Promotions

Pepsi Stuff catalog cover Pepsi Stuff catalog page featuring Cindy Crawford Pepsi Stuff refers to a landmark marketing strategy and global integrated campaign launched by Pepsi, first in North America and then around the world, in the 1990s and continuing into the 2000s featuring merchandise that could be purchased with...

See also

Brand architecture is the structure of brands within an organizational entity. ... Brand equity is the value built-up in a brand. ... The discipline of brand management was started at Procter & Gamble PLC as a result of a famous memo by Neil H. McElroy. ... Customer Engagement (CE) refers to the engagement of customers with one another, with a company or a brand. ... An organisation with a superior employer brand is one whose people brand matches their corporate brand. ... Evangelism marketing is an advanced form of word of mouth marketing (WOMM) in which companies develop customers who believe so strongly in a particular product or service that they freely try to convince others to buy and use it. ...

References

  1. ^ a b Reichheld, Frederick F. and W. Earl Jr. Sasser (1990), "Zero Defections: Quality Comes to Services," Harvard Business Review (September-October), 105-11.
  2. ^ a b Dick, Alan S. and Kunal Basu (1994), "Customer Loyalty: Toward an Integrated Conceptual Framework," Journal of the Academy of Marketing Science, 22 (2), 99-113.
  3. ^ Oliver, Richard L. (1999), "Whence Customer Loyalty?," Journal of Marketing, 63 (3), 33-44.
  4. ^ Jones, Michael A., David L. Mothersbaugh, and Sharon E. Beatty (2002), "Why Customers Stay: Measuring the Underlying Dimensions of Services Switching Costs and Managing Their Differential Strategic Outcomes," Journal of Business Research, 55, 441-50.
  5. ^ Reichheld, Frederick F. (1993), "Loyalty-Based Management," Harvard Business Review, 71 (2), 64-73.
  • P. Kotler, 'Marketing Management ' (Prentice-Hall, 7th edn, 1991)
  • D. Mercer, ‘Marketing’ (Blackwell, 1996)
  • Jacoby, J. and Chestnut, R.W., 1978, Brand Loyalty: Measurement Management (John Wiley & Sons, New York).Arindam ghosh(MBA ,iipm)

Fred Reichheld (undated photograph) Frederick F. Reichheld (born 1952, Cleveland) is an United States business author and business strategist best known for his research and writing on the loyalty business model and Loyalty Marketing. ...

External links

  • D. Mercer, ‘Marketing’ (Blackwell, 1996)

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