Brand Loyalty

Brand loyalty entails commitment and repeated consumer purchase behavior following perceived value, satisfaction, and brand trust.

Learning Objective

Describe the conditions that must be met to achieve brand loyalty, and the consumer behaviors associated with brand loyalty

Key Points

Brand loyalty is not to be characterized exclusively by a consumer's ability to repurchase a brand.
Customers' perceived value, brand trust, satisfaction, repeat purchase behavior, and commitment are found to be the key influencing factors of brand loyalty.
The benefits of brand loyalty are longer tenure (or staying a customer for longer), and lower sensitivity to price.
True brand loyalty exists when: a) customers have a high relative attitude toward the brand, which is then exhibited through repurchase behavior; and b) whether the customer is committed to the brand.
The four patterns of behavior: a) Hardcore Loyals, who buy the brand all the time; b) Split Loyals, loyal to two or three brands; c) Shifting Loyals, moving from one brand to another; and d) Switchers, with no loyalty (possibly 'deal-prone' or 'vanity prone').
The benefits of brand loyalty are longer tenure (or staying a customer for longer), and lower sensitivity to price. Recent research found evidence that longer-term customers were indeed less sensitive to price increases.

Terms

Andrew Ehrenberg
A statistician and marketing scientist. For over half a century, he made contributions to the methodology of data collection, analysis and presentation, and to understanding buyer behavior and how advertising works.
Loyalty Program
Structured marketing efforts that reward, and therefore encourage, loyal buying behavior — behavior which is potentially beneficial to the firm.
Philip Kotler
An American academic focused on marketing. The author of Marketing Management, among dozens of other textbooks and books, and the S.C. Johnson & Son Distinguished Professor of International Marketing at the Kellogg School of Management at Northwestern University.

Example

Some fairly well-known examples of brand loyalty promotions include: My Coke Rewards, Pepsi Stuff, and the Marriott Rewards loyalty programs.

Full Text

Brand Loyalty

In marketing, brand loyalty refers to a consumer's commitment to repurchase or otherwise continue using a particular brand by repeatedly buying a product or service.

The American Marketing Association defines brand loyalty as: 1. ) "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" (sales promotion definition). 2. ) "The degree to which a consumer consistently purchases the same brand within a product class" (consumer behavior definition).

Aside from a consumer's ability to repurchase a brand, true brand loyalty exists when a. ) the customer is committed to the brand, and b. ) the customers have a high relative attitude toward the brand, which is then exhibited through repurchase behavior. For example, if Joe has brand loyalty to Company A, he will purchase Company A's products even if Company B's products are cheaper and/or of a higher quality.

Brand loyalty is viewed as a multidimensional construct, determined by several distinct psychological processes, such as the customers' perceived value, brand trust, satisfaction, repeat purchase behavior, and commitment. Commitment and repeated purchase behavior are considered as necessary conditions for brand loyalty, followed by perceived value, satisfaction, and brand trust.

Philip Kotler defines four customer-types that exhibit similar patterns of behavior:

a) Hardcore Loyals, who buy the brand all the time
b) Split Loyals, loyal to two or three brands
c) Shifting Loyals, moving from one brand to another
d) Switchers, with no loyalty (possibly "deal-prone," constantly looking for bargains, or "vanity prone," looking for something different).

Benefits of Brand Loyalty

The benefits of brand loyalty are longer tenure (or staying a customer for longer), and lower sensitivity to price. Recent research found evidence that longer-term customers were indeed less sensitive to price increases.

According to Andrew Ehrenberg, 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. It does not guarantee that they will stay loyal.

By creating promotions and loyalty programs that encourage the consumer to take some sort of action, companies are building brand loyalty by offering more than just an advertisement. Offering incentives like big prizes creates an environment in which customers see the advertiser as more than just the advertiser. Individuals are far more likely to come back to a company that uses interesting promotions or loyalty programs than a company with a static message of "buy our brand because we're the best. "

Popular Loyalty Programs

Below are some of the most popular Loyalty Programs that are currently being used by major companies as a means of engaging their customers beyond traditional advertising.

Sweepstakes and Advergames

Branded digital games that engage consumers with prize incentives

Contests

Skill tests and user-generated promotions such as video and photo contests

Social Media Applications and Management

Develop promotions and offers within social media channels
Ongoing management and maintenance of brand Facebook pages and other social media

Customer Rewards Programs

Online points programs – earn prizes for incremental purchase behavior (e.g., JetBlue's TrueBlue and American Airlines's AAdvantage frequet flyer programs)
My Coke Rewards, Pepsi Stuff, and the Marriott Rewards loyalty programs
Promotional auctions – bid for prizes with points earned from incremental purchase behavior

Email Clubs

Manage overall subscription databases – national and/or segmented by market
Design, develop, and publish email blasts
Develop templates specific offers and promotions / delivery

Text Messaging / Mobile Apps / Desktop Apps and Widgets

SMS Promotions
iPhone apps
Branded web apps

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