The document discusses brand loyalty, defined as consumer commitment to purchasing a specific brand regardless of competitive pressures, and its effects on consumer behavior and purchasing decisions. It explores the effectiveness of loyalty programs, such as rewards and incentives, in fostering brand loyalty and highlights the relationship between brand loyalty and product involvement. The paper uses examples from supermarket chains in Australia, such as Coles and Woolworths, to demonstrate the successful application of these strategies in enhancing consumer loyalty and increasing sales.

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Brand Loyalty

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Introduction
Brand loyalty refers to the extent by which consumers become faithful to a particular brand. This
is expressed by their repeated purchases, regardless of the marketing pressure brought by other
competing brands. In this case the customers will stick to that particular brand irrespective of the
prices even if there are similar brands in the market. Brand loyalty is a consumer behavior
depicted by loyal customers and will therefore be affected by personal preferences. In this regard
therefore, brand loyalty will have an effect on purchases made of the product. It may also affect
the customer’s ability to decide whether or not to buy that particular product. This essay
therefore, is based on the influence brand loyalty has on the customer behavior and the product.
The relationship between brand loyalty and customer preference has made companies to use
different strategies to cultivate and get the attention of loyal customers. Some of these strategies
include: the use of loyalty programs (e.g. rewards) or trials and incentives. The main argument in
this paper is therefore, geared towards answering the question: Is the use of rewards and loyalty
cards an effective way to build brand loyalty?
Theoretical concepts of brand loyalty
The principle behind loyalty programs believe that if certain behaviors are rewarded chances are
very high that they will be repeated. Loyalty programs have therefore been used a tools to
promote marketing by encouraging repeated purchase of certain products. Such programs have
evolved externally and operate independently of the traditional strategies of store, pricing, and
quality decisions. Two types of rewards offered by loyalty programs can be distinguished based
on whether they have hard or soft benefits. Hard rewards are generally tangible e.g. discounts
while soft rewards include special communication and good treatment. Soft benefits are in most

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cases emotion based. A lot of research has been done to emphasize on the use of the right choice
of rewards for a loyalty program (Bridson, Evans, & Hickman, 2008).
Store satisfaction refers to the consumer’s fulfillment response. It is a personal judgment of
whether a product or service provides a certain level of fulfillment to the consumer. Therefore,
the consumer maybe under fulfilled or over fulfilled by the product or service. Store loyalty is a
biased behavioral response by some customers towards one store out of a number of stores. This
is usually a function of certain psychological processes e.g. decision making that makes a
customer be committed to a certain brand. It refers to more than just the commitment to a store
but rather brings in some extent of preference and dedication (Chaudhuri, 1995). Loyalty was
mainly measured by the number if times a customer makes repeated purchases to a given
product. Therefore it mainly incorporated the behavioral aspect if the customer. Loyalty if
directly linked to sales which is the main goal of most business organizations. However, the
concept of loyalty has evolved, with people recognizing the fact that loyalty is more than just
behavior alone. Loyalty consists of both behavioral and attitudinal aspects. In this regard loyalty
has been linked to repeated purchase and positive word of mouth by the customers (Jain &
Srinivasan, 1990).
Brand loyalty can also be used to imply both the consistent pattern of purchase of a certain brand
and a favorable attitude towards that particular brand. This results in two approaches to develop
brand loyalty. One is related to creating consistence purchase of the brand while the other
develops a favorable attitude towards the brand in the consumer. Brand loyalty is therefore, a
personal attachment between the consumer and the brand (Quester & Lim, 2003)

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Brand loyalty and product involvement are two important concepts that can be use to explain
consumer decision making processes. Brand loyalty leads to business profitability thus providing
competitive advantage to the owner of that particular brand (Kambiz, Mahsa, & Afshin, 2011).
Brand loyalty develops when the brand fit the unique personality of the consumer. In order to
effectively capture and define brand loyalty three components of attitude have to considered;
cognitive, affective ad conative components.
Loyalty programs are therefore developed to create this loyalty among customers. However this
can range from repeated purchase to hardcore advocates of the store. Kerrie Bridson indicates in
the literature that there have been attempts to study whether loyalty programs really encouraged
repeat purchase form buyers. The results showed that not all retailers were making repeated
purchases, but a trend towards excess loyalty was recorded. However contrasting studies showed
that 76percent of card holders had not changed their shopping behavior (Bridson, Evans, &
Hickman, 2008). Findings from a study of how consumer’s perception of loyalty programs
changed over time suggested that program members spent more time and money in the store and
were inclined to visit.
Other studies indicated that consumers who received benefits such as gifts or discounts were
more loyal than those who merely received a complementary ‘Thank you’ note. In addition,
consumers who received branded gifts were also more loyal than those who were given a
discount of similar value (Bridson, Evans, & Hickman, 2008). Other studies showed that there is
a link between relationship commitment and behavioral loyalty as well as the use of rewards.
These theoretical aspects reinforce on the fact that different types of rewards offered different
degrees of loyalty. It can therefore be hypothesized that loyalty programs lead to customer
loyalty.

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Linking purchase and product involvement to brand loyalty
The concept of consumer involvement has been studied for a long time by many researchers and
has provided a way in which certain consumer choices can be understood (Kambiz, Mahsa, &
Afshin, 2011). The concept has been well exhibited in consumer behavior. Consumer decisions
are mainly influenced by the concepts of product involvement and brand loyalty. Several studies
have done to elucidate the relationship between these two concepts. All in all, the relationship
between brand loyalty and product involvement is centered on the fact that consumers who are
more involved with a particular brand tend also to be more committed and more loyal to that
brand. High involvement with a brand will therefore lead to loyalty to that brand (Quester &
Lim, 2003). Studies have found an interaction between brand loyalty and product involvement.
Repeat purchase behavior for a high involvement produced was a sign of loyalty to that brand
while repeat purchase on a low involvement product is just habitual purchase behavior. Highly
loyal people will therefore, show high levels of involvement. Transformation into a loyal
consumer of a certain brand is therefore, a sequential process (Quester & Lim, 2003).
What is clear from this literature is that involvement in a particular brand is related to being loyal
to that particular brand. Other work for instance Traylor suggested that brand commitment is not
related to product involvement. He argued that there are scenarios where low brand commitment
is coupled with high product involvement and also where high brand commitment is linked to
low product involvement (Quester & Lim, 2003). Product involvement can be defined as a
commitment exhibit by the consumer as a result of thoughts, feelings, and behavioral response to
a particular category. Consumers with high product involvement would find products interesting
and this would occupy their minds.

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Product involvement differs from purchase involvement in the sense that purchase involvement
measures the relevance of purchasing activities to the individual. Product involvement on the
other hand, refers to the relevance of the product category to the individual on a continual basis
(Quester & Lim, 2003).
There are multiple reasons why consumers repeatedly purchase a specific brand in a certain
product category. One reason to explain this behavior is that repeat purchase involves less effort
and makes consumer decision making process simplified (Quester & Lim, 2003).
Consumer behavior and decision making process
For a long period of time Literature on consumer behavior has been based on two major
assumptions. First is that consumer behaviors can be influenced by many other factors e.g.
environmental, individual and psychological factors. Second is that consumers are just human
being who can make rational decisions therefore, have the ability to go through a decision
making process and make a choice among optimal alternatives (Lee, 2005). Various models have
been developed for decision making processes. However, all these models recognize five similar
decision making stages. They include: problem/need recognition, information search, alternative
evaluation, purchase, and outcomes/post-purchase (Lee, 2005).
Need/problem is the most crucial stage because it determines whether the purchase will happen
or not. This stage can be triggered by consumer’s state and is related to other consumer decision
making stages. Information search involve the consumer trying to recall information about the
product from their memory as well as fetching for information from word of mouth or mass-
market communication. In the alternative stage, the consumer evaluates an alternative product to
the one in question. This is where brand name and brand loyalty has significant effect on the

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overall decision making process. The purchase stage involves buying the product while the post-
purchase is the where the consumer evaluates the product after purchasing it. This will influence
the consumer decision making process in the next purchase (Lee, 2005).
Application of the concepts of product involvement, brand loyalty and consumer decision
making process in supermarket reward systems
Organizations have been using rewards and loyalty cards to develop brand loyalty among the
consumers. This is a step to increase the number of purchases made by the consumers thus these
organizations will definitely record increased sales. The approach of developing brand loyalty
gives competitive advantage to these organizations in the market place where competition is very
stiff. A good example is Australian supermarket chain Coles. Coles introduced its flybuys loyalty
card scheme in 1994 as a method to strengthen consumer loyalty. The method allows members to
collect points from purchase and their card use and exchange these points for gift cards,
merchandise, flights and other rewards. Coles went ahead and revised the scheme to offer more
areas to earn points and a faster way to get saving through buying groceries.
The use of loyalty programs to rewards consumers is not only being used on Coles alone but also
in other supermarkets. Woolworths is also using reward cards to pull consumers towards buying
their products. Woolworth recently appointed a new agency to handle its loyalty program.
Appointment of the new agency is a step to counter Coles’ new flybuys and My5 offering in the
loyalty war. Loyalty programs in these two organizations has increased their sale thus making
them the largest retailers in Australia
From the theoretical aspects discussed earlier the use of the right choice of rewards for a loyalty
program was emphasized (Bridson, Evans, & Hickman, 2008). It was also shown that brand

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loyalty and product involvement are two important concepts that can be use to explain consumer
decision making processes especially the alternative stage (Lee, 2005). It was also seen that
brand loyalty leads to business profitability thus providing competitive advantage to the owner of
that particular brand (Kambiz, Mahsa, & Afshin, 2011). These concepts form the basis upon
which Coles and Woolworths are using to establish brand loyalty and product involvement as a
measure to pull consumers towards buying more of their products. Examples from these two
retailers can be used to answer the thesis statement of this paper and indeed conclude that
rewards and loyalty cards can be used to achieve brand loyalty (Jacoby & Chestnut, 1978).
Conclusion
Consumers can develop a certain degree of faithfulness for a given product based on their level
of loyalty to the product. This brand loyalty can be achieved by applying different approaches.
This paper acknowledges the use of rewards and loyalty cards as a way of building brand loyalty.
Through brand loyalty organizations can record increased sales and therefore gain competitive
advantage over their competitors. This is true for Coles and Woolworths supermarkets. These are
Australia’s two major retailers who have taken huge steps towards winning the hearts and
loyalties of their customers through the use of brand loyalty programs. These awards programs
have been used successfully by Coles and Woolworths to build brand loyalty and finally be
successful marketers.

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Bibliography
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Chaudhuri, A. (1995). Brand Equity and Double Jeopardy. Journal of product and brand
management, 26-32.
Jacoby, J., & Chestnut, R. (1978). Brand loyality measurement and management. John Wiley &
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Jain, K., & Srinivasan, N. (1990). An empirical Assessment of multiple operationalisations of.
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Kambiz, H., Mahsa, K., & Afshin, R. (2011). Evaluation of product invlovement facets on brand
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Lee, S. H. (2005). An Application of a five-Stage Consumer Behaviour Decision Making Model:
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Quester, P., & Lim, A. L. (2003). Product Involvement/Brand Loyalty: Is there a link? Journal of
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