Brand loyalty
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This document discusses the concept of brand loyalty. It provides definitions of brand loyalty from various sources that describe it as the consistent repurchase of the same brand over time due to positive attitudes and commitment toward the brand. The document also discusses factors that influence loyalty like perceived value, satisfaction, trust and usage patterns. It notes that loyalty provides benefits for companies like lower sensitivity to price increases. The summary concludes that brand loyalty is a multidimensional concept involving emotional, cognitive and behavioral dimensions.
Brand loyalty
- 1. Week 18 – Brand Loyalty
- 2. In groups create a definition Aaker (1991)
- 3. Brand ◦ A distinguishing symbol, mark, logo, name, word, sentence or a combination of these items that companies use to distinguish their product from others in the market. Brand Awareness ◦ The likelihood that consumers recognize the existence and availability of a company's product or service. Creating brand awareness is one of the key steps in promoting a product. Brand Equity ◦ The value premium that a company realizes from a product with a recognizable name as compared to its generic equivalent. Companies can create brand equity for their products by making
- 4. The American Marketing Association (2011) defines brand loyalty as: ◦ Consumer Behaviour Definition "The degree to which a consumer consistently purchases the same brand within a product class" ◦ AMA - Sales Promotion Definition "The situation in which a consumer generally buys the same manufacturer-originated product or service repeatedly over time rather than buying from multiple suppliers within the category"
- 5. Is Brand Loyalty more than simple repurchasing? ◦ Customers may repurchase a brand due to situational constraints; e.g. 1. Vendor lock-in 2. Lack of viable alternatives, Loyalty Cards 3. Convenience Is created loyalty true or spurious? Such loyalty is referred to as "spurious loyalty". Farris et al: (2010). Marketing Metrics
- 6. Exists when customers have: ◦ “a high relative attitude toward the brand which is then exhibited through repurchase behaviour” Dick and Kunal (1994) Great asset to a firm: ◦ Customers: Willing to pay higher prices, Cost less to serve, Bring new customers From marketers viewpoint ◦ Loyalty a key factor in terms of consumer usage
- 7. Usage Rate / Rate Of Usage ◦ Suppliers often segment into Heavy Medium Light Users ◦ Pareto 80-20 Rule applies. 'Heavy Users' - disproportionately important 20% of users accounting for 80% of usage / profit Key target = heavy users. Kotler (1991)
- 8. Loyalty - Is customer is committed to brand? Hard-core loyals Buy the brand all the time. Split loyals Loyal to two or three brands. Shifting loyals Moving from one brand to another. Switchers No loyalty Deal-prone - looking for bargain Vanity prone - looking for something different Philip Kotler (1991)
- 9. Other Factors ◦ Pre-dispositional commitment toward a brand BL a Multidimensional construct Entails multivariate measurements: e.g. Customers' perceived value Brand trust Customer satisfaction Repeat purchase behaviour Commitment Commitment and = necessary conditioRepeated Purchase Behaviour ns ◦ followed by Perceived Value, Satisfaction, And Brand Trust Reichheld (1996) /Punniyamoorthy & Raj (2007)
- 10. Dramatic effects on profitability Longer tenure as a customer Lower sensitivity to price increases.
- 11. Consumers Buy 'Portfolios of Brands ◦ Switch regularly between brands often because they simply want a change ◦ 'Brand Penetration' or 'Brand Share' A statistical chance that majority of customers will buy that brand next time as part of their portfolio of favoured brands ◦ Emphasises a need for managing brand continuity Ehrenberg, Uncles and Goodhardt (2004)
- 13. Most markets show overall stability ◦ Change slow - decades / centuries Two major implications 1. Clear brand leaders well placed re: competitors Still requires regular minor changes to stay abreast of changes in consumer taste 2. Someone wishing to change market (or position) Massive investment needed ◦ Despite normal stability -sudden changes can occur Environmental scanning
- 14. Brand Loyalty As A Hypothetical Construct Brand Loyalty As A Multidimensional Construct ◦ Measured by several distinct psychological processes ◦ Entails multivariate measurements. Sheth & Park (1974) - Advances in Consumer Research Volume 1, 1974, pp. 449-459
- 16. Brand Loyalty As A Hypothetical Construct ◦ positively biased emotive, evaluative and/ or behavioural response tendency toward a branded, labelled or graded alternative or choice by an individual in his capacity as the user, the choice maker, and/or the purchasing agent.
- 17. No restrictions of repeated overt behaviour ◦ Consumers may be brand loyal even though never bought the brand May arise by learning from information, imitative behaviour, generalization and consumption behaviour and not from buying behaviour experiences. Consumer may have no evaluative (cognitive / attitudinal) structure underlying loyalty ◦ Emotive tendencies (affect, fear, respect, compliance, etc.) Related to loyalty
- 18. Bl can exist at the non behavioural level ◦ Emotive or evaluative level - for products or services which same consumers never buy Biased non-behavioural (non purchase) tendencies – E.g. BL to cars, airplanes, boats, etc. ◦ Specific role consumer performs - loyal as: Consumer Buyer (purchasing agent) Decision-maker All three?
- 19. Source: Sheth & Park (1974)
- 20. Defined as a positively biased tendency that contains three distinct dimensions 1. Emotive tendency toward the brand 2. The affective (like-dislike) - fear, respect, compliance 3. Value-expressive or ego-defensive attitudes - Katz (1960) Emotive tendencies learned from ◦ Prior experiences with brand ◦ Non-experiential or informational services. Evaluative tendency ◦ Positively biased evaluation on a set of relevant criteria The brand's utility to the consumer Value-expressive or ego-defensive ◦ Instrumental, utilitarian, attitudes - Katz (1960) ◦ Perceived instrumentality - Rosenberg (1956) /Howard and Sheth (1969)
- 21. Learned by the consumer ◦ Prior experiences ◦ Non-experiential/informational sources. Behavioural tendency towards the brand. ◦ Positively biased responses Primarily from buying and consuming experiences Procurement, purchase and consumption activities Shopping, search, picking up from the shelf, paying, consuming
- 22. Social Media and Internet ◦ May be weakening influence of brand loyalty Despite importance of brand awareness, growth of search engines can reduce the influence of branding. Consumers influenced by products that rank highest in search engines, rather than by traditional brand awareness. ◦ Social networking having a similar effect User generated product reviews, etc Salem-Baskin (2011)
- 23. Kumar (2011) Power of "Advocacy". ◦ Consumer actively talks and listens to other „loyal‟ consumers Moves back and forth the traditional purchase funnel ◦ Forms a consideration set -“from listening” May change the consideration set Narrows choice to 1-2 brands
- 24. Preference ◦ If Families are Price Sensitive Then They will be So Regardless of the Product Two main factors -sensitivity to price and brand preference Consumers who are brand loyal tend to shop by brand rather than price in other categories. Consumers who shop by price will tend to look for bargains in all categories Peral (2011)
- 25. Reinforcement ◦ Raising brand awareness helps to reinforce brand loyalty „Tweens‟ 9 -12 year olds exposed to over 20,000 commercials annually difficult for brand messages to stand out. ◦ Repetition through regular advertising is important Reed (2011)
- 26. Habit ◦ Consumers make choices based on names and positive brand-associated images In retail outlets where consumers face choices for same type of product - strong brand has a clear competitive advantage Difficult to copy v. Copycat products??? Pekala (2008)
- 27. Emotional Attachment ◦ Likely to top whatever market research a consumer does before purchase Rely on 'rules of thumb' -leads to a persistent bias in how they think. Consumer cherry-picks to reinforce existing viewpoint, convincing themselves that they were right ◦ Smart companies use advocates to spread the word Brands with an emotional connection are placed in the purchase pathway Cunniffe & Sng (2012)