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Brand loyalty

Brand loyalty is where an individual buys products from Usage rate
the same manufacturer repeatedly rather than from other Most important is usually the 'rate' of usage, to which
suppliers.[1]
the Pareto 80-20 Rule applies. Kotler’s 'heavy users’
In a survey of nearly 200 senior marketing managers, 68 are likely to be disproportionately important to the brand
percent responded that they found the “loyalty” metric (typically, 20 percent of users accounting for 80 percent
of usage — and of suppliers’ profit). As a result, suppliers
very useful.[2]
True brand loyalty occurs when consumers are willing to often segment their customers into 'heavy', 'medium' and
pay higher prices for a certain brand, go out of their way 'light' users; as far as they can, they target 'heavy users’.
However, research shows that heavy users of a brand are
for the brand, or think highly of it.[3]
not always the most profitable for a company.[10]
Loyalty

1

Purpose

A second dimension, is whether the customer is committed to the brand. Philip Kotler, again, defines four patBrand loyalty, in marketing, consists of a consumer's terns of behaviour:
commitment to repurchase or otherwise continue using
the brand and can be demonstrated by repeated buying
1. Hard-core Loyals - who buy the brand all the time.
of a product or service, or other positive behaviors such
2. Split Loyals - loyal to two or three brands.
as word of mouth advocacy.[4]
Examples of brand loyalty promotions

3. Shifting Loyals - moving from one brand to another.

• My Coke Rewards

4. Switchers - with no loyalty (possibly 'deal prone',
constantly looking for bargains or 'vanity prone',
looking for something different). Again, research
shows that customer commitment is a more nuanced
a fine-grained construct than what was previously
thought. Specifically, customer commitment has
five dimensions, and some commitment dimensions
(forced commitment may even negatively impact
customer loyalty).[11]

• Pepsi Stuff
• Marriott Rewards

2

Construction

Brand loyalty is more than simple repurchasing. Customers may repurchase a brand due to situational constraints (such as vendor lock-in), a lack of viable alternatives, or out of convenience.[5] Such loyalty is referred to
as “spurious loyalty”. A recent study showed that customer loyalty is affected by customer satisfaction, but
the association differs based on customer switching costs
(procedural, relational, and financial)[6] True brand loyalty exists when customers have a high relative attitude
toward the brand which is then exhibited through repurchase behavior.[4][7] 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.[8][9] 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.
From the point of view of many marketers, loyalty to the
brand — in terms of consumer usage — is a key factor.
However, companies should ensure that they are not retaining loyal, but unprofitable customers.[10]

Factors influencing brand loyalty
It has been suggested that loyalty includes some degree
of pre-dispositional commitment toward a brand. Brand
loyalty is viewed as multidimensional construct. It is determined by several distinct psychological processes and
it entails multivariate measurements. Customers’ perceived value, brand trust, customers’ satisfaction, repeat
purchase behavior, and commitment are found to be the
key influencing factors of brand loyalty. Commitment
[11]
and repeated purchase behavior are considered as
necessary conditions for brand loyalty followed by perceived value, satisfaction, and brand trust.[12] Fred Reichheld,[13] One of the most influential writers on brand
loyalty, claimed that enhancing customer loyalty could
have dramatic effects on profitability. However, new research shows that that the association between customer
loyalty and financial outcomes such as firm profitability
and stock-market outcomes is not as straightforward as
1

Thus. is that someone who wishes to overturn this stability and change the market (or significantly change one’s position in it). often because they simply want a change. varied for different customer groups. is a very different role for a brand manager. Upper Saddle River. and then do not reap the intended benefits. Bendle. Paul W. however. The second. '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. Phillip E. However. . ISBN 013-705829-2.[16] Byron Sharp showed empirically that behaviour affects attitudinal response not the other way round. Longer term customers are less sensitive because it is harder for them to completely stop using the brand. still demands a continuing pattern of minor changes to keep up with the marginal REFERENCES changes in consumer taste (which may be minor to the theorist but will still be crucial in terms of those consumers’ purchasing patterns as markets do not favour the over-complacent). the relationship was not very strong. and more important. Recent research[15] found evidence that longer-term customers were indeed less sensitive to price increases. The Marketing Accountability Standards Board (MASB) endorses this definition as part of its ongoing Common Language: Marketing Activities and Metrics Project. Even though stability is the natural state of markets. Marketing Metrics: The Definitive Guide to Measuring Marketing Performance. The Marketing Accountability Standards Board (MASB) endorses the definitions. [3] “What is brand loyalty?". This stability has two very important implications. Thus. This. They switch regularly between brands. 4 See also • Brand architecture • Brand aversion • Brand equity • Brand management • Brand language • Brand tribalism • Customer engagement • Employer branding • Evangelism marketing • Visual brand language 5 References [1] American Marketing Association Dictionary. Neil T.. longer tenure or staying as a customer for longer — was said to be lower sensitivity to price. Inc. compared with the — much simpler — one traditionally described of recruiting and holding dedicated customers.[7] Industrial markets In industrial markets. David J. sudden changes can still occur. showed non-linear patterns for different groups. It does not guarantee that they will stay loyal. The first is that those who are clear brand leaders are especially well placed in relation to their competitors and should want to further the inertia which lies behind that stable position. Pfeifer. Reibstein (2010). This claim had not been empirically tested until recently. in their essential characteristics they change very slowly. organizations regard the 'heavy users’ as 'major accounts’ to be handled by senior sales personnel and even managers. The concept also emphasises the need for managing continuity. Portfolios of brands Andrew Ehrenberg.2 5 was once believed. 99-113.[17] In another study Mittal and Kamakura showed that though satisfied customers were more likely to repurchase their previous brand of car.” Journal of the Academy of Marketing Science. and the environment must be constantly scanned for signs of these. New Jersey: Pearson Education. and Kunal Basu (1994). These minor investments are a small price to pay for the long term profits which brand leaders usually enjoy. whereas the 'light users’ may be handled by the general salesforce or by a dealer. massive investments must be expected to be made in order to succeed.[14] Many firms may overspend on customer loyalty. Influencing the statistical probabilities facing a consumer choosing from a portfolio of preferred brands. “Customer Loyalty: Toward an Integrated Conceptual Framework. [2] Farris. and was virtually non-existent for some customer groups. Market Business News. 3 Cautions One of the most prominent features of many markets is their overall stability — or marketing inertia. then of the London Business School said that consumers buy 'portfolios of brands’. 22 (2). often over decades — sometimes centuries — rather than over months. July 2015. purposes. the claims of Reichheld have been empirically tested by Tim Keiningham and not found to hold. [4] Dick. Alan S. Among the benefits from brand loyalty — specifically. Retrieved 2011-07-09. and constructs of classes of measures that appear in Marketing Metrics as part of its ongoing Common Language: Marketing Activities and Metrics Project. which is required in this context.

Carly and Aksoy. 64-73. A.” Journal of marketing 67. Volume 15. David L.. “The mismanagement of customer loyalty. September 2007 . How Procedural.. 55.com/abstract=2593914 [12] Punniyamoorthy. Available at SSRN: http://ssrn. N. W. Kumar. Brand Loyalty: Measurement Management (John Wiley & Sons.” Harvard business review 80. and Vita Kumar. I. Journal of Marketing Research. “Why Customers Stay: Measuring the Underlying Dimensions of Services Switching Costs and Managing Their Differential Strategic Outcomes. 2009. Number 4. 2015). 105-11.” Harvard Business Review. and V. 'Marketing Management ' (Prentice-Hall. Measurement and Analysis for Marketing. Werner. J. “Loyalty-Based Management. Journal of Service Research. [6] Blut. • P. Repurchase Intent. Journal of Service Research. R. [11] Keiningham. 7th edn. 1978.7 (2002): 86-95. 1991) • Jacoby. Available at SSRN: http://ssrn. A FiveComponent Customer Commitment Model: Implications for Repurchase Intentions in Goods and Services Industries (2015). 2015 . . Werner J. “Zero Defections: Quality Comes to Services. and Frennea. Carly and Mittal. Markus and Frennea.W. July 2007. “An empirical model for brand loyalty measurement”. 71 (2). 38(1): 131-142. Financial and Relational Switching Costs Affect Customer Satisfaction. Timothy L.. and Repurchase Behavior: A Meta-Analysis (January 20. pp. How Brands Grow.. David L.3 [5] Jones.” Harvard Business Review (September–October). H. “The impact of customer relationship characteristics on profitable lifetime duration. J. Journal of Targeting. Kotler. [17] Byron Sharp. Journal of Marketing 71. F. and Chestnut. N. Earl Jr. Frederick F. “The Effect of Service Price Increases on Customer Retention: The Moderating Role of Customer Tenure and Relationship Breadth”. Vol 11. 222-233(12) [13] Reichheld. Frederick F. [10] Reinartz. M and Prasanna Mohan Raj.” Journal of Business Research. and W. and Repurchase Behavior: Investigating the Moderating Effect of Customer Characteristics”. A. Forthcoming. Lerzan and Alexander and Mittal. Sasser (1990). International Journal of Research in Marketing.com/abstract=2344925 [8] Reichheld. and Sharon E. (1993). The Loyalty Effect 1996 [14] Reinartz. S. Beatty (2002). (2001) “Satisfaction. T. A. Michael A.1 (2003): 77-99. Vikas. 441-50. Mothersbaugh. [16] “A longitudinal examination of Net Promoter and Firm Revenue Growth” (PDF). Vikas and Mothersbaugh. 1-18. [9] Reichheld. New York). Available at SSRN: http://ssrn. [15] Dawes.com/abstract=2553402 [7] Vikas Mittal and Wagner Kamakura. Repurchase Intentions.

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