Posted in Marketing & Strategy Articles, Total Reads: 1408
, Published on 19 October 2014
Brand Loyalty is a concept which has both attitudinal and behavioural components. Marketers are very concerned about brand loyalty. It is not simply about repurchasing. It consists of customer’s commitment towards the brand and consumption repeatedly whenever the need arises. In addition to that, customers might also act as advocates for the brand. Hence both the entities form a long lasting relationship. The success of any brand is dependent on its capability to attract customers. It is very critical for a brand to have a loyal set of customers who will stick with the brand always. Loyal customers are more likely to buy a brand than a customer who is not. This helps in generating a stable source of revenue. Sometimes brand loyalists engage in evangelism marketing which is a type of word-of-mouth marketing. Brand loyalty doesn’t arise because of price or convenience; it arises because of the emotional connect with people. People who identify themselves with a brand are more likely to be loyal to that brand. Brand Loyalty is about “living the brand” rather than just mere consumption of the brand. Brand loyalty is not influenced by discounts and promotive offers of other brands. Loyalists looks beyond price and seek a distinct and unique value which in a way will satisfy their needs or reflect their personalities.
According to Jacoby and Chestnut, brand loyalty is “The biased behavioural response expressed over time by some decision making unit with respect to one or more alternative brands out of a set of such brands and is a function of psychological processes”. The above definition implies that brand loyalty is a polarised behaviour of an individual towards a brand. The consumer has more affinity with the brand which is due to the fact that he/she was satisfaction with its products/services. Brand loyalists are actually consumers of the brand. It is not that someone who admires the brand but doesn’t purchase it can be termed as a “brand loyalist”. The process of repurchasing a brand is not zero order because previous purchase experiences influence the next purchase. Brand loyalty as a phenomenon is expressed over time. In some instances customers may stick to one particular brand which has a distinct value proposition but the reality is that customers are actually loyal to more than one brands at a time. So for an individual there is a basket of brands (i.e. x brands out of n number of brands in a particular category) and that consumer always prefers brands from that handful of those. Also the point of “alternatives” mentioned in the definition is very crucial because if there is no option to choose from i.e. if one doesn’t have the flexibility of choosing from a handful of brands then the fact that he/ she is purchasing a brand all the time out of compulsion.
Image Courtesy: freedigitalphotos.net, David Castillo Dominici
FACTORS LEADING TO BRAND LOYALTY:
There is an interaction in terms of personality traits of the individual and the characteristics of a brand and when both are in sync, the customer displays loyalty for the brand.
According to Peter Clark, the following are the factors which influence loyalty of customers:
• Core Offering:
This is the main reason behind loyalty. Loyalty that generates from card loyalty programs are fleeting; those sway with the wind. What sticks is the genuine product offering complemented with desirable service levels.
The level of satisfaction is not a very good measure of loyalty. People do get satisfied after consumption of a number of brands and satisfaction is one of the essential criterion of generating brand loyalty.
• Elasticity Level:
It expresses the vitality of a buying decision- whether someone is serious about it or reluctant. If it’s a high involvement purchase then the customer has evaluative component of judging the purchase decision but in the case of habitual or low involvement purchase, it is difficult to wield the concept of loyalty.
• Market Place:
If the opportunity of switching is higher, then greater efforts are required to create as well as sustain relationships between the two parties but in certain situations where switching costs are high, the cases where customers stick to a brand cannot be termed as an instance of loyalty but is a case of lack of flexibility.
It is less likely for higher end consumers to stick to any brand. They will be the first one to flee when another brand comes up with another niche offering. They don’t generally develop an emotional appeal with the brand. Also considering the case of educated consumers, it is very difficult to build brand loyalty as they seek value rather than anything else.
• Share of wallet:
As markets becoming perfectly competitive with so much competition leading to a number of choices from, share of wallet becomes increasingly important. It is cheaper and more profitable to increase what customers spend for a brand than to acquire new customers.
CHALLENGES FOR MARKETERS:
Marketers face this challenge of people who are not hard core loyal but are repeat/ non repeat purchases of a brand. There are levels of efforts on the part of marketers for customer retention as well as acquisition. Sometimes there are instances of names of products/ services which become generic in nature. The challenge for that is customers forget the true identity of brand and take anything without much thought. It generally happens in the case of low involvement categories. For example, Band-Aid’s name has become generic in nature. There are instances of marketers facing problems with brand extension because the brand stands for something which is embedded in the minds of the consumer. For example, Pepsi Blue was a failure as Pepsi is traditionally a black colored drink and customers didn’t relate with the blue colour with soda. Pond’s toothpaste also failed in the market as customer associated the element of softness to its toothpaste as well. But it is quite irrelevant while it comes to toothpaste. Harley Davidson’s perfume couldn’t create a resonance in customer’s minds. FritoLay brought out a lemonade in the market but the crunchy and crispy attachment with the drink made the association bogus.
THREATS TO BRAND LOYALTY:
Brand loyalty depends on varied factors in different categories. In this section, the various threats to brand loyalty are to be discussed. Internet technology forms a major threat to brand loyalty. It is because consumers now-a-days are getting more aware about brands given the vast amount of information that they are exposed to. If a brand is accused of some environmental, legal, social, quality issues then the image of the brand gets tainted. This affects the perception of brand loyal consumers. Hence consumer loyalty fluctuates on a continuum of change. Social media also plays a key role in shaping up perceptions about a brand. Also in present times, there is a large number of value seeking customers and private label poses a threat to loyalty. The growth of private label with providing value, price competitiveness, good quality and increased innovation threatens the existence of brands which satisfy similar needs but at a higher price. Also brand loyalty differs to a great extent across various categories of brands. In case of electronics, innovation is the key to manage brand loyalty while in case of luxury brands in-store experiences matter. In case of food and drinks market, service and ambience matters. In case of low involvement categories, it is very difficult to sustain brand loyalty. Also in the case of companies which offer top notch customer services, high end consumers will be the first to flee when another firm will start providing better services. While it comes to e-commerce, certain category brands are affected. Given the wide array of brands, consumer behaviour is influenced by offers from competing brands to what they intend to buy. This is actually a symptom of value seeking customers but later it also acts as an ego-defensive function justifying the purchase.
The importance of customer retention to brand managers are important because of the pareto rule (80-20 rule) which says that 20% of customers will account for 80% of consumption. Hence brand loyalty is very relevant for brand managers as building brand equity will help building loyalty and thus is a sustainable, profitable, strategic approach for a brand.
This article has been authored by Arindam Debbarma from IIM Calcutta
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