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)

12. Managing Brand Continuity

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)