Brand loyalty

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Brand loyalty

  1. 1. Week 18 – Brand Loyalty
  2. 2.  In groups create a definition Aaker (1991)
  3. 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 companys 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. 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. 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. 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. 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. 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. 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. 10.  Dramatic effects on profitability Longer tenure as a customer Lower sensitivity to price increases.
  11. 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. 12. Managing Brand Continuity
  13. 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. 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
  15. 15.  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.
  16. 16.  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
  17. 17.  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?
  18. 18. Source: Sheth & Park (1974)
  19. 19.  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 brands utility to the consumer Value-expressive or ego-defensive ◦ Instrumental, utilitarian, attitudes - Katz (1960) ◦ Perceived instrumentality - Rosenberg (1956) /Howard and Sheth (1969)
  20. 20.  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
  21. 21.  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)
  22. 22. 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
  23. 23.  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)
  24. 24.  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)
  25. 25.  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)
  26. 26.  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)

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