In marketing, brand loyalty describes a consumer's positive feelings towards a brand and their dedication to purchasing the brand's products and/or services repeatedly regardless of deficiencies, a competitor's actions, or changes in the environment. It can also be demonstrated with other behaviors such as positive word-of-mouth advocacy.[1]Corporate brand loyalty is where an individual buys products from the same manufacturer repeatedly and without wavering, rather than from other suppliers.[2] Loyalty implies dedication and should not be confused with habit, its less-than-emotional engagement and commitment. Businesses whose financial and ethical values (for example, ESG responsibilities) rest in large part on their brand loyalty are said[by whom?] to use the loyalty business model.
Brand loyalty, in marketing, consists of a consumer's commitment to repurchase or continue to use the brand. Consumers can demonstrate brand loyalty by repeatedly buying a product, service, or by other positive behaviors such as by engaging in word of mouth advocacy.[3] This concept of a brand displays imagery and symbolism for a product or range of products.[clarification needed] Brands can engage[when defined as?] consumers and make them feel emotionally attached.[citation needed] Consumers' beliefs and attitudes make up brand images, and these affect how they will view brands with which they come into contact.[4] Brand experience occurs when consumers shop or search for, and consume products.[5] Holistic[when defined as?] experiences such as sense, relation[clarification needed], acting, and feeling occur when one comes into contact with brands. The stronger and more relational[when defined as?] these senses are to the individual, the more likely it is that individual will make repeat purchases. After contact has been made,[clarification needed] psychological reasoning[when defined as?] will occur, followed by a decision to buy or not to buy. This can result in repeat purchase behavior, thus incurring the beginning[clarification needed] brand loyalty.[citation needed] Brand loyalty is not limited to repeat purchase behavior, as there is deeper psychological reasoning[when defined as?] as to why an individual will continuously re-purchase products from one brand. Brand loyalty can be defined as the "behavioral willingness" to consistently maintain relations with a particular brand.[6] In a survey of nearly 200 senior marketing managers, 68 percent responded that they found the "loyalty" metric[clarification needed] very useful.[7]
Brand loyalty occurs when consumers are willing to pay higher prices for a certain brand and go out of their way for the brand, or think highly of it.[8]
Brand loyalty can predict brand performance[clarification needed] outcomes. It also highlights the importance[clarification needed] of marketing communication when trying[who?] to promote a certain product that's not doing as well as other brands. Marketers are able to look at the patterns[when defined as?] of brand loyalty and pick out characteristics that make that product thrive.[9]
Brand loyalty in marketing consists of a consumer's devotion, bond, and commitment to repurchase and continue to use a brand's product or service over time, regardless of changes with competitors' pricing or changes in the external environment. Brand loyalty reflects a customer's commitment to remain in a relationship for a long period of time with a brand.[10]
A critical factor of building brand loyalty is developing a connection or relationship between the consumer and the brand. When an emotional relationship is created between the consumer and the brand, this leads to a strong bond and a competitive advantage for that particular brand. Loyalty consists of both attitudinal and behavioral components. Attitudinal loyalty relates to the customer's willingness to purchase a product or service from the brand at any reasonable cost. Behavioral loyalty is re-purchasing. Both behavioral and attitudinal components are important. One example is that a consumer displays behavioral loyalty by buying Coke when there are few alternatives available and attitudinal loyalty when they will not buy an alternative brand when Coke is not available. The attitudinal component is psychological, this leads to the behavioral action of repeat purchase. It is the attitudinal loyalty that drives most loyalty behavior and ensures loyalty over time, not just with one purchase. “Brand loyalty is desired by firms because retention of existing customers is less costly than obtaining new ones. Firms profit from having loyal customers”.[11]
Creating barriers to entry for firms looking to enter the market.
Competitive edge in market.
Customers willing to pay high prices or accept far-reaching end user agreements
Existing customers cost much less to serve.
Potential new customers.
Generally speaking, brand loyalty will increase profit over time as firms do not have to spend as much time and money on maintaining relationships or marketing to existing consumers.[citation needed] Loyal long-term customers spend more money with a firm.
Customer behavior
Brand loyalty leads not only to repurchasing. Customers may repurchase a brand due to situational constraints (such as vendor lock-in), a lack of viable alternatives, or out of convenience.[12] Such loyalty is referred to as "spurious loyalty".
Previous studies showed that customer loyalty is affected by customer satisfaction,[clarification needed] but the association differs[clarification needed] based on customer switching costs (procedural, relational, and financial).[13][14] Real brand loyalty exists when customers have a high relative attitude[when defined as?] toward the brand which they then exhibit through repurchase behavior.[3] This type of loyalty can be a great asset to the firm: customers are willing to pay higher prices, they may cost less to serve, and can[who?] bring new customers to the firm.[15][16] For example, if Joe has brand loyalty to Company A, he will purchase Company A's products even if Company B's are cheaper and/or of a higher quality. From the point of view of many marketers, loyalty to the brand — in terms of consumer usage[when defined as?] — is a key factor. However, companies often ensure that they are not spending resources to retain loyal but unprofitable customers.[17]
Usage rate
Most important is usually[weaselwords] the 'rate' of usage[who?], to which the Pareto 80-20 Rule applies: Kotler's[clarification needed] "heavy users" are likely to be[weaselwords] disproportionately important to the brand (typically, 20 percent of users accounting for 80 percent of usage — and of suppliers' profit). As a result, suppliers often segment their customers into "heavy", "medium", and "light" users; as far as they can, they target[when defined as?] "heavy users". However, research shows that heavy users of a brand are not always the most profitable for a company.[17]
Loyalty
A second dimension, is whether the customer is committed to the brand. Philip Kotler, again, defines four status of loyalty:[18]
Hard-core Loyals — who buy the brand all the time.
Split Loyals — loyal to two or three brands.
Shifting Loyals — moving from one brand to another.
Switchers — with no loyalty (possibly "deal prone", constantly looking for bargains or "vanity prone", looking for something different). Again, research shows that customer commitment is a more nuanced a fine-grained construct[when defined as?] than what was previously thought. Specifically, customer commitment has five dimensions, and some commitment dimensions (forced commitment may even negatively impact customer loyalty).[clarification needed]
Psychological reasoning
A person's psychological disposition affects which brands they are attracted to. Cognitive responses can be matched with brand personalities.[clarification needed] Brand personalities are[who?] broken down into five categories of traits: sincerity, ruggedness, competence, sophistication and excitement.[4] Consumers are usually[weaselwords] drawn to a brand because the brand strongly conveys one of these traits, and that trait resonates in the consumer's mind. These traits are[who?] matched to the five psychological factors that the consumers are influenced by: perception, learning, motivation, beliefs, and attitudes.[4] In relation to brand loyalty, the most important factors are beliefs and attitudes. A belief can be based on real knowledge, faith, or opinion and has the ability to carry an emotional charge.[4] Consumers use beliefs to form a brand image in their minds, and marketers try to either change or enhance people's beliefs to draw them to their brand.[4] Marketers can advertise messages such as "no added sugar" and then, if this statement resonates in the consumer's mind, the consumer will believe that this brand's beliefs[clarification needed] matches theirs.[4] Beliefs that consumers hold against brands can also be false, as word of mouth, false advertising, and so forth can create false impressions.[non sequitur] Marketers will try to counteract these negative beliefs so the consumer feels like they hold similar beliefs as the brand. Attitudes can be[who?] based on brand salience[clarification needed] and accessibility[clarification needed].[19] Consumers make constant evaluations on every aspect of their lives and these make up attitudes.[4] Ones attitude is usually difficult to change, so marketers try to fit their brands and products into categorical attitudes.[4] Each time a consumer makes contact with a brand (through advertising and promotion), they reflect on their attitudes to make judgements and decisions about that particular brand.[19] If a person's attitude coincides with what a brand is trying to convey, the consumer will put the brand into a "liking" category in their mind. The consumer will then be more likely to increase involvement with this brand, and because attitudes are difficult to change, the chances of brand loyalty occurring increase.
Other advertising techniques such as comparative advertising have shown to increase[clarification needed] the brand attitudes one might have.[19] When a brand praises a competitor, rather than using a negative comparison, consumers are shown to have more positive brand attitudes, therefore drawing them to the brand.[19] Brands may advertise themselves in ways that have nothing to do with their product, but by using emotional influences that they know the average consumer will engage with. For example, they may use religion, world peace, love, death, children and other symbols that humans can feel sentimental about to attract consumers to their brand.[citation needed] Through advertising, marketers may focus more on implicit emotional messages, rather than the actual content or information about their brand.[20] Consumers take notice of campaigns, and a wave effect[when defined as?] can occur, due to the relational sense[when defined as?] of the campaign to the common person's emotions. Once a consumer establishes an emotional bond with a brand, the consumer is more likely to be able to recall the brand than consumers who have been subject to a large amount of content information.[20] Because of this increased level of recall, brand loyalty is more likely to occur, as the brand name is resonating in the consumer's mind due to a feeling of emotional attachment.[citation needed] Furthermore, consumers are willing to pay more for a product that has a brand name that resonates with them emotionally.[citation needed]
High- vs. low-involvement consumers
Buying decisions from consumers can be dependent[clarification needed] on their level of involvement[when defined as?] with the product or brand. Brand loyalty can stem from whether the consumer has a high or low level of involvement with the brand. High-involvement consumers interact with brands and products that are important to them, are risky or expensive and products that people who are important to the consumer have strong opinions on.[clarification needed][4] High-involvement consumers will usually progress through complex buying behavior to decide whether they want to purchase a product whose brand greatly differs from others. Such behavior involves gaining knowledge of the product, specifications and attributes, and furthermore creating attitudes that lead to the buyer's decision.[4] Similarly, dissonance[when defined as?]-reducing buying behavior occurs in the same situation, but instead with brands they see little differences between.[4] This process consists of consumers finding purchase convenience, attractive pricing, and shopping around.[clarification needed] High-involvement consumers search for more product attributes and engage in more product-related activities, such as searching for more information on a product and researching the brand's background.[21] This engagement makes consumers aware and knowledgeable of the brand's attributes, so this engagement can shape behavioral brand loyalty, as the consumer feels that they know the brand well.[21]
Low-involvement consumers take on habitual buying behavior or variety-seeking behavior.[4] These processes occur when a consumer is purchasing fast-moving[when defined as?] goods and requires a low product-involvement level.[4] Habitual behavior occurs when the consumer doesn't see large differences between brands, and therefore doesn't search for information. Consumers usually purchase because advertising or promotion created familiarity.[4] The attitudes formed by being exposed to advertisements and promotions cause brand loyalty to occur.[21] Because consumers do less mental work to assess each brand, they may stick with a brand simply because it takes less work to do so.[21] Low-involvement consumers use short-cut evaluations, so, for example, a known brand name that they haven't thought about deeply enough to find faults in will be an easy buy decision. Habitual buying behavior can result in brand loyalty subconsciously. The consumer isn't actively aware they want to purchase repeatedly from a particular brand, it is just in their habitual nature to do so.[4] Alternatively, low-involvement consumers who are using variety-seeking behavior see differences between brands and tend to do a lot of switching.[4] To attempt to persuade these consumers into habitual buying behavior, marketers will try to dominate shelf space, cut prices, or introduce new products.[4] If a low-involvement consumer continues to use variety-seeking behavior, brand loyalty is unlikely to be established.
Factors influencing brand loyalty
Loyalty includes some degree of predisposition toward a brand. It is determined by several distinct psychological processes, and it entails multivariate measurements. Customer perceived value, brand trust, customer satisfaction, repeat purchase behavior, and commitment are found[weaselwords] to be the key influencing factors of brand loyalty. Commitment and repeated purchase behavior are considered[weaselwords] as necessary conditions for brand loyalty followed by perceived value, satisfaction, and brand trust.[22]
Fred Reichheld,[23] one of the most influential writers on brand loyalty, claimed that enhancing customer loyalty could have dramatic effects on profitability. However, new research shows that the association between customer loyalty and financial outcomes such as firm profitability and stock-market outcomes is not so straightforward.[24]
An organization's ability to attract and retain customers is vital to its success. Customer loyalty requires a strong appetite by the customer for a product.[citation needed] Marketing tools such as integrated marketing communications (IMC) and branding can increase perceived attraction between the consumer and the brand. These tools boost emotional response and attachment to the brand, and influence feelings the customer has for a brand; both are important for congruency[when defined as?] and a relationship[when defined as?]. This in turn leads to the development of brand loyalty. Relationship development and maintenance can also be achieved through the use of loyalty programs or a celebrity endorser. These can help to increase a bond between a brand and a consumer.[25]
IMC is defined as "integrating a variety of convincing messages across various forms to communicate with and develop relationships with customers."[26] IMC can convey the brand image, increase awareness, build brand equity, and achieve shared values between the consumer and the brand.
IMC and brand loyalty
IMC and branding are both marketing tools for increasing the brand loyalty of consumers. The decisions made[who?] around communications and branding should be based on solid[when defined as?] and factual market research about the consumers. If the brand or the IMC do not seem[who?] to be relevant to the target market, consumers will not pay attention. An example of this is that high customization, creativity, and a more direct voice is recommended for messages directed towards Generation Y consumers as Generation Y want to be treated differently from the rest of the market and marketers should acknowledge this.[27]
Loyalty programs reward and encourage customers, which is necessary for customers to want to repurchase.[citation needed] The consumer should feel a connection[when defined as?] with the brand to want repeat purchase and to exhibit other brand loyalty behaviors such as positive word of mouth. "A loyalty program is an integrated system of marketing actions that aims to make member customers more loyal to a brand."[11] The main goal of a loyalty program is to create or enhance customer loyalty towards a brand whilst being[who?] sustained even after a loyalty program is discontinued.[11]
Marketers use such tactics as a loyalty program to increase likelihood of repeat purchase and to retrieve information about the spending habits of the consumer. Loyalty programs that enhance the consumer's opinion about how much the firm can offer them may be essential for building a relationship[when defined as?]. Even though these programs can cost a lot of money, they help to create a relationship between the brand and the consumer.[11] An example of a loyalty program is a point system: Frequent customers earn points which transform into freebies, discounts, rewards, or special treatment of some sort; customers work toward a specific number of points to redeem their benefit.[28]
Celebrity endorsers moderate the relationship between the consumer and the brand by personifying the brand to match the perceptions of the consumer. Using a celebrity endorser can build a relationship between consumers and a brand because endorsers can represent similarities between themselves and the consumer, and themselves and the brand. Celebrities make marketing tactics more convincing and marketing communications more effective.[26]
For example, a celebrity may be influential to a Generation Y consumer because that generation views[clarification needed] them as likeable, real, and beautiful. In order for celebrity endorsers to effectively reach the audience, they must connect and identify with the audience.[clarification needed][29] The use of a popular celebrity endorser could personalize the brand for the consumer and create the relationship between the consumer and the brand. To ensure endorsement is successful, the celebrity should match the brand and the consumer.[30] The effect of using a celebrity endorser that consumers look up to and want to emulate can lead to increased congruence between the values of the consumers and the brand, and improve the relationship between the two.
Industrial markets
In industrial markets, organizations regard "heavy users" as "major accounts" to be handled by senior sales personnel and even managers; whereas "light users" may be handled by the general sales force or by a dealer.[clarification needed]
Portfolios of brands
Andrew Ehrenberg, then of the London Business School said that consumers buy "portfolios of brands."[citation needed] They switch regularly between brands, often because they simply want a change. Thus, "brand penetration" or "brand share" reflects only a statistical chance that customers will buy that brand next time as part of a portfolio of brands they prefer. It does not guarantee that they will stay loyal.
Influencing the statistical probabilities facing a consumer choosing from a portfolio of preferred brands, which is required in this context, is a very different role for a brand manager; compared with the much simpler one, traditionally described, of recruiting and holding dedicated customers. The concept also emphasizes the need for managing continuity.[clarification needed]
Issues
After brands are well established and have a decent flow of consumers, problems may arise such as slips in product quality or in safety of products, or lack of customer care. Such problems can be detrimental to a brand that has become too confident[clarification needed]. Many brands continue to get away with scandals, and it does not affect their image in any way.[citation needed] For example, the Coca-Cola brand has been involved in[weaselwords] scandals including murders in Colombia, crimes in India, and various health dangers; all of which relate back to the company name.[citation needed] Yet the power of the Coca-Cola brand puts it at the top of its field. The reputation of such a massive organization is hard to dent with the powerful distribution rights[clarification needed] and funds to create some of the best ad campaigns.[citation needed]
Stability
Many markets exhibit overall stability, or "marketing inertia." In their essential[clarification needed] characteristics they change very slowly, over decades or even centuries rather than over months.
This stability has two implications: The first is that those who are brand leaders are especially well placed in relation to their competitors and should want to further the inertia that reinforces the stability of that position. This, however, still demands minor changes to keep up with marginal changes in consumer taste (which may be minor to the theorist but will still be crucial in terms of those consumers' purchasing patterns as markets do not favor the over-complacent).[citation needed] These minor investments are a small price to pay for the long term profits that brand leaders usually enjoy.
The second, and more important, is that someone who wishes to overturn this stability and change the market (or significantly improve their position in it) must expect to make massive investments in order to succeed. Even though stability is the natural state of some markets, sudden changes can still occur.
Marketing is the process of identifying customers and "creating, communicating, delivering, and exchanging" goods and services for the satisfaction and retention of those customers. It is one of the primary components of business management and commerce.
In marketing, market segmentation is the process of dividing a broad consumer or business market, normally consisting of existing and potential customers, into sub-groups of consumers based on shared characteristics.
Consumer behaviour is the study of individuals, groups, or organisations and all the activities associated with the purchase, use and disposal of goods and services. Consumer behaviour consists of how the consumer's emotions, attitudes, and preferences affect buying behaviour. Consumer behaviour emerged in the 1940–1950s as a distinct sub-discipline of marketing, but has become an interdisciplinary social science that blends elements from psychology, sociology, social anthropology, anthropology, ethnography, ethnology, marketing, and economics.
Marketing communications refers to the use of different marketing channels and tools in combination. Marketing communication channels focus on how businesses communicate a message to its desired market, or the market in general. It is also in charge of the internal communications of the organization. Marketing communication tools include advertising, personal selling, direct marketing, sponsorship, communication, public relations, social media, customer journey and promotion.
As part of consumer behavior, the buying decision process is the decision-making process used by consumers regarding the market transactions before, during, and after the purchase of a good or service. It can be seen as a particular form of a cost–benefit analysis in the presence of multiple alternatives.
Relationship marketing is a form of marketing developed from direct response marketing campaigns that emphasizes customer retention and satisfaction rather than sales transactions. It differentiates from other forms of marketing in that it recognises the long-term value of customer relationships and extends communication beyond intrusive advertising and sales promotional messages. With the growth of the Internet and mobile platforms, relationship marketing has continued to evolve as technology opens more collaborative and social communication channels such as tools for managing relationships with customers that go beyond demographics and customer service data collection. Relationship marketing extends to include inbound marketing, a combination of search optimization and strategic content, public relations, social media and application development.
In the field of consumer behavior, an impulse purchase or impulse buying is an unplanned decision by a consumer to buy a product or service, made just before a purchase. One who tends to make such purchases is referred to as an impulse purchaser, impulse buyer, or compulsive buyer. Research findings suggest that emotions, feelings, and attitudes play a decisive role in purchasing, triggered by seeing the product or upon exposure to a well crafted promotional message.
Celebrity branding or celebrity endorsement is a form of advertising campaign or marketing strategy which uses a celebrity's fame or social status to promote a product, brand or service, or to raise awareness about an issue. Marketers use celebrity endorsers in hopes that the positive image of the celebrity endorser will be passed on to the product's or brand's image. Non-profit organizations also use celebrities since a celebrity's frequent mass media coverage reaches a wider audience, thus making celebrities an effective ingredient in fundraising.
A target audience is the intended audience or readership of a publication, advertisement, or other message catered specifically to said intended audience. In marketing and advertising, it is a particular group of consumer within the predetermined target market, identified as the targets or recipients for a particular advertisement or message. Businesses that have a wide target market will focus on a specific target audience for certain messages to send, such as The Body Shops Mother's Day advertisements, which were aimed at the children and spouses of women, rather than the whole market which would have included the women themselves. A target audience is formed from the same factors as a target market, but it is more specific, and is susceptible to influence from other factors. An example of this was the marketing of the USDA's food guide, which was intended to appeal to young people between the ages of 2 and 18.
Food marketing brings together the food producer and the consumer through a chain of marketing activities.
Digital marketing is the component of marketing that uses the Internet and online-based digital technologies such as desktop computers, mobile phones, and other digital media and platforms to promote products and services. Its development during the 1990s and 2000s changed the way brands and businesses use technology for marketing. As digital platforms became increasingly incorporated into marketing plans and everyday life, and as people increasingly used digital devices instead of visiting physical shops, digital marketing campaigns have become prevalent, employing combinations of search engine optimization (SEO), search engine marketing (SEM), content marketing, influencer marketing, content automation, campaign marketing, data-driven marketing, e-commerce marketing, social media marketing, social media optimization, e-mail direct marketing, display advertising, e-books, and optical disks and games have become commonplace. Digital marketing extends to non-Internet channels that provide digital media, such as television, mobile phones, callbacks, and on-hold mobile ringtones. The extension to non-Internet channels differentiates digital marketing from online marketing.
"Youth Marketing" is a term used in the marketing and advertising industry to describe activities to communicate with young people, typically in the age range of 11 to 35. More specifically, there is teen marketing, targeting people age 11 to 17, college marketing, targeting college-age consumers, typically ages 18 to 24, and young adult marketing, targeting ages 25 to 34.
A touchpoint can be defined as any way consumers can interact with a business organization, whether it be person-to-person, through a website, an app or any form of communication. When consumers come in contact with these touchpoints it gives them the opportunity to compare their prior perceptions of the business and form an opinion.
Customer engagement is an interaction between an external consumer/customer and an organization through various online or offline channels. According to Hollebeek, Srivastava and Chen S-D logic-Definition of customer engagement is "a customer’s motivationally driven, volitional investment of operant resources, and operand resources into brand interactions," which applies to online and offline engagement.
Brand awareness is the extent to which customers are able to recall or recognize a brand under different conditions. Brand awareness is one of two dimensions from brand knowledge, an associative network memory model. Brand awareness is a key consideration in consumer behavior, advertising management, and brand management. The consumer's ability to recognize or recall a brand is central to purchasing decision-making. Purchasing cannot proceed unless a consumer is first aware of a product category and a brand within that category. Awareness does not necessarily mean that the consumer must be able to recall a specific brand name, but they must be able to recall enough distinguishing features for purchasing to proceed. Creating brand awareness is the main step in advertising a new product or bringing back the older brand in light.
Customer experience is the totality of cognitive, affective, sensory, and behavioral consumer responses during all stages of the consumption process including pre-purchase, consumption, and post-purchase stages.
Word-of-mouth marketing differs from naturally occurring word of mouth, in that it is actively influenced or encouraged by organizations. While it is difficult to truly control WOM, research has shown that there are three generic avenues to 'manage' WOM for the purpose of WOMM:
Fan loyalty is the loyalty felt and expressed by a fan towards the object of his/her fanaticism. Fan Loyalty is often used in the context of sports and the support of a specific team or institution. Fan loyalties can range from a passive support to radical allegiance and expressions of loyalty can take shape in many forms and be displayed across varying platforms. Fan loyalty can be threatened by team actions. The loyalties of sports fans in particular have been studied by psychologists, who have determined several factors that help to create such loyalties.
Demographic targeting is a form of behavioral advertising in which advertisers target online advertisements at consumers based on demographic information.
For the purpose of better understanding attitudinal targeting, it can be discussed using the 5 Ws and one H: who, what, when, where, why, and how. David Grossman, author of the article "How To Communicate Better with The 5 Ws and an H", stated this is the essential foundation in understanding the full context of a topic and making it relevant to the audience.
References
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