Brand loyalty

Brand loyalty is where an individual buys products from Usage rate

the same manufacturer repeatedly rather than from other Most important is usually the 'rate' of usage, to which
suppliers.[1]
the Pareto 80-20 Rule applies. Kotlers 'heavy users
In a survey of nearly 200 senior marketing managers, 68 are likely to be disproportionately important to the brand
percent responded that they found the loyalty metric (typically, 20 percent of users accounting for 80 percent
of usage and of suppliers prot). As a result, suppliers
very useful.[2]
True brand loyalty occurs when consumers are willing to often segment their customers into 'heavy', 'medium' and
pay higher prices for a certain brand, go out of their way 'light' users; as far as they can, they target 'heavy users.
However, research shows that heavy users of a brand are
for the brand, or think highly of it.[3]
not always the most protable for a company.[10]
Loyalty

Purpose

A second dimension, is whether the customer is committed to the brand. Philip Kotler, again, denes four patBrand loyalty, in marketing, consists of a consumer's terns of behaviour:
commitment to repurchase or otherwise continue using
the brand and can be demonstrated by repeated buying
1. Hard-core Loyals - who buy the brand all the time.
of a product or service, or other positive behaviors such
2. Split Loyals - loyal to two or three brands.
as word of mouth advocacy.[4]
Examples of brand loyalty promotions

3. Shifting Loyals - moving from one brand to another.

My Coke Rewards

4. Switchers - with no loyalty (possibly 'deal prone',

constantly looking for bargains or 'vanity prone',
looking for something dierent). Again, research
shows that customer commitment is a more nuanced
a ne-grained construct than what was previously
thought. Specically, customer commitment has
ve dimensions, and some commitment dimensions
(forced commitment may even negatively impact
customer loyalty).[11]

Pepsi Stu
Marriott Rewards

Construction

Brand loyalty is more than simple repurchasing. Customers may repurchase a brand due to situational constraints (such as vendor lock-in), a lack of viable alternatives, or out of convenience.[5] Such loyalty is referred to
as spurious loyalty. A recent study showed that customer loyalty is aected by customer satisfaction, but
the association diers based on customer switching costs
(procedural, relational, and nancial)[6] True brand loyalty exists when customers have a high relative attitude
toward the brand which is then exhibited through repurchase behavior.[4][7] This type of loyalty can be a great asset to the rm: customers are willing to pay higher prices,
they may cost less to serve, and can bring new customers
to the rm.[8][9] For example, if Joe has brand loyalty to
Company A he will purchase Company As products even
if Company Bs 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 is a key factor.
However, companies should ensure that they are not retaining loyal, but unprotable customers.[10]

Factors inuencing brand loyalty

It has been suggested that loyalty includes some degree
of pre-dispositional commitment toward a brand. Brand
loyalty is viewed as multidimensional construct. It is determined by several distinct psychological processes and
it entails multivariate measurements. Customers perceived value, brand trust, customers satisfaction, repeat
purchase behavior, and commitment are found to be the
key inuencing factors of brand loyalty. Commitment
[11]
and repeated purchase behavior are considered as
necessary conditions for brand loyalty followed by perceived value, satisfaction, and brand trust.[12] Fred Reichheld,[13] One of the most inuential writers on brand
loyalty, claimed that enhancing customer loyalty could
have dramatic eects on protability. However, new research shows that that the association between customer
loyalty and nancial outcomes such as rm protability
and stock-market outcomes is not as straightforward as
1

was once believed.[14] Many rms may overspend on customer loyalty, and then do not reap the intended benets.
Among the benets from brand loyalty specically,
longer tenure or staying as a customer for longer was
said to be lower sensitivity to price. This claim had not
been empirically tested until recently. Recent research[15]
found evidence that longer-term customers were indeed
less sensitive to price increases. However, the claims of
Reichheld have been empirically tested by Tim Keiningham and not found to hold.[16] Byron Sharp showed empirically that behaviour aects attitudinal response not
the other way round. Longer term customers are less sensitive because it is harder for them to completely stop using the brand.[17] In another study Mittal and Kamakura
showed that though satised customers were more likely
to repurchase their previous brand of car, the relationship
was not very strong, varied for dierent customer groups,
showed non-linear patterns for dierent groups, and was
virtually non-existent for some customer groups.[7]
Industrial markets
In industrial markets, organizations regard the 'heavy
users as 'major accounts to be handled by senior sales
personnel and even managers; whereas the 'light users
may be handled by the general salesforce or by a dealer.
Portfolios of brands
Andrew Ehrenberg, then of the London Business School
said that consumers buy 'portfolios of brands. They
switch regularly between brands, often because they simply want a change. Thus, 'brand penetration' or 'brand
share' reects only a statistical chance that the majority
of customers will buy that brand next time as part of a
portfolio of brands they favour. It does not guarantee that
they will stay loyal.
Inuencing the statistical probabilities facing a consumer
choosing from a portfolio of preferred brands, which is
required in this context, is a very dierent role for a brand
manager; compared with the much simpler one traditionally described of recruiting and holding dedicated
customers. The concept also emphasises the need for
managing continuity.

Cautions

One of the most prominent features of many markets is

their overall stability or marketing inertia. Thus, in
their essential characteristics they change very slowly, often over decades sometimes centuries rather than
over months.
This stability has two very important implications. The
rst is that those who are clear brand leaders are especially well placed in relation to their competitors and
should want to further the inertia which lies behind that
stable position. This, however, still demands a continuing
pattern of minor changes to keep up with the marginal

REFERENCES

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 favour the
over-complacent). These minor investments are a small
price to pay for the long term prots which brand leaders
usually enjoy.
The second, and more important, is that someone who
wishes to overturn this stability and change the market (or
signicantly change ones position in it), massive investments must be expected to be made in order to succeed.
Even though stability is the natural state of markets, sudden changes can still occur, and the environment must be
constantly scanned for signs of these.

4 See also
Brand architecture
Brand aversion
Brand equity
Brand management
Brand language
Brand tribalism
Customer engagement
Employer branding
Evangelism marketing
Visual brand language

5 References
[1] American Marketing Association Dictionary. Retrieved
2011-07-09. The Marketing Accountability Standards
Board (MASB) endorses this denition as part of its ongoing Common Language: Marketing Activities and Metrics
Project.
[2] Farris, Paul W.; Neil T. Bendle; Phillip E. Pfeifer; David
J. Reibstein (2010). Marketing Metrics: The Denitive
Guide to Measuring Marketing Performance. Upper Saddle River, New Jersey: Pearson Education, Inc. ISBN 013-705829-2. The Marketing Accountability Standards
Board (MASB) endorses the denitions, purposes, and
constructs of classes of measures that appear in Marketing
Metrics as part of its ongoing Common Language: Marketing Activities and Metrics Project.
[3] What is brand loyalty?". Market Business News. July
2015.
[4] Dick, Alan S. and Kunal Basu (1994), Customer Loyalty:
Toward an Integrated Conceptual Framework, Journal of
the Academy of Marketing Science, 22 (2), 99-113.

[5] Jones, Michael A., David L. Mothersbaugh, and Sharon

E. Beatty (2002), Why Customers Stay: Measuring the
Underlying Dimensions of Services Switching Costs and
Managing Their Dierential Strategic Outcomes, Journal
of Business Research, 55, 441-50.
[6] Blut, Markus and Frennea, Carly and Mittal, Vikas and
Mothersbaugh, David L., How Procedural, Financial and
Relational Switching Costs Aect Customer Satisfaction, Repurchase Intentions, and Repurchase Behavior:
A Meta-Analysis (January 20, 2015). International Journal of Research in Marketing, Forthcoming. Available at
SSRN: http://ssrn.com/abstract=2553402
[7] Vikas Mittal and Wagner Kamakura. (2001) Satisfaction, Repurchase Intent, and Repurchase Behavior: Investigating the Moderating Eect of Customer Characteristics. Journal of Marketing Research, 38(1): 131-142.
Available at SSRN: http://ssrn.com/abstract=2344925
[8] Reichheld, Frederick F. and W. Earl Jr. Sasser (1990),
Zero Defections: Quality Comes to Services, Harvard
Business Review (SeptemberOctober), 105-11.
[9] Reichheld, Frederick F. (1993), Loyalty-Based Management, Harvard Business Review, 71 (2), 64-73.
[10] Reinartz, Werner J., and Vita Kumar. The impact of customer relationship characteristics on protable lifetime
duration. Journal of marketing 67.1 (2003): 77-99.
[11] Keiningham, Timothy L. and Frennea, Carly and Aksoy, Lerzan and Alexander and Mittal, Vikas, A FiveComponent Customer Commitment Model: Implications
for Repurchase Intentions in Goods and Services Industries (2015). Journal of Service Research, 1-18, 2015 .
Available at SSRN: http://ssrn.com/abstract=2593914
[12] Punniyamoorthy, M and Prasanna Mohan Raj, An empirical model for brand loyalty measurement, Journal of
Targeting, Measurement and Analysis for Marketing, Volume 15, Number 4, September 2007 , pp. 222-233(12)
[13] Reichheld, F. The Loyalty Eect 1996
[14] Reinartz, Werner, and V. I. S. W. A. N. A. T. H. A. N.
Kumar. The mismanagement of customer loyalty. Harvard business review 80.7 (2002): 86-95.
[15] Dawes, J. The Eect of Service Price Increases on Customer Retention: The Moderating Role of Customer
Tenure and Relationship Breadth. Journal of Service Research, Vol 11, 2009.
[16] A longitudinal examination of Net Promoter and Firm
Revenue Growth (PDF). Journal of Marketing 71. July
2007.
[17] Byron Sharp. How Brands Grow.

P. Kotler, 'Marketing Management ' (Prentice-Hall,

7th edn, 1991)
Jacoby, J. and Chestnut, R.W., 1978, Brand Loyalty: Measurement Management (John Wiley &
Sons, New York).

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