Loyalty For Big Brand and Small Brands
This project discusses a very important issue of brand loyalty in economic downturn. Companies invest a lot in building brand equity and they rely a lot on loyalty. My theory was that consumer doesn’t remain loyal for a long as they are searching for better option and added value in any item they purchase. Its money and desire to try new things which makes them shift their loyalty. I have analysed many literature review of different companies and researcher. I have explained how a loyalty is built and how it can deviate at different situation.
I have tried develop a method to which may help in increasing the loyalty of consumer for a company or brand. INTRODUCTION In last few decades market has become quite competitive and economic downturn has made it very unpredictable. It is difficult for consumer to differentiate products. Companies are centring their marketing strategy and tactics on brand loyalty (Fournier and Yao, 1997). Brand Loyalty brings greater sales and revenues, act fairly as barrier for new entrants and can response to competitive threats the customer’s lower sensitivity to marketing efforts of competitors (Delgado-Ballester and Munuera-Alemai??
n, 1999). Brand loyal customers can also be a good future referent power. Marketer invests lot of money energy and time in developing brand equity to build loyalty. Today’s society is much more transient than in before. They get exposure to many new brands, discounts, sale and offers. Companies argue that consumers are prison of habits and once they get used to one brand they don’t like to change as they feel loyal towards it and they get used to it, but I think when one find any deal under the sun which is cheap with great offer I will go for because cost becomes the bottom line. Methodologies
Qualitative method is the most basic form of research in social studies. An exploratory method based on secondary research of collecting online data, text books ,surveys have been used . Research papers from journals were read and data was analyzed. Many companies’ web sites and annual report were studies. Hypothesis was questioned and researched. While some theories agreed with the hypothesis some completely went in the opposite direction. What’s a brand? A brand is an identity, a trademark, a name of a product or company. It is a symbol, sign, term, design or combination of all these to make the goods or service distinctive.
It allows the consumer to distinguish the product among the crowd and allows the consumer to recommend, specify or reject. It is an easier way to communicate with the customers. Brands provide information of their users’ taste, wealth and styles (The Economist, 1994). Brand names brings the image of the product, distinguish it from competitor. Brandings add extra value to the product or services. This value arises by experienced gained from using the brand. It brings trust, confidence and pride in customers and familiarity belongingness with others who used the same brand. A brand is built on perception as well on its physical entity.
A brand specifies the attributes attached with its name. The loyalty make a consumer repeatedly go and sought the same brand over another, although he has many option and thus brand makes a consumer loyal. Marketer’s goal used to be to attract new customer, but now focus has been shifted to company’s existing customers. It is very important to convert one time buyer into regular loyal customer. Retention of customer has become a very important mission for the marketers as it can be shown that there are more expenses in attracting a new customer than to sell to a loyal customer.
As there has been mass introduction of product there was fight between products for the same niche at that time branding played a very important role and it evolved down the time. Companies invested lot of money and effort to develop a brand than later to keep its place and image. Its still a mystery that why and how different brand attract different consumers Why someone will choose “Pepsi” over “coco-cola” or “Tesco” over “Sainsbury” But as the consumers are getting more and more brand aware as they are bombarded by different marketing mix strategy they have more choice and they take their own time to decide.
‘Instead of trying to secure new business, marketers are focused on retaining existing clients and growing existing client relationships in order to minimize the impact of the weak economy on their business. ‘ Perry added: ‘Establishing a good relationship with target audiences and creating brand loyalty is essential in ensuring that your business remains buoyant despite the market conditions, and the results emphasize this.
Recent research done By Gyro International it was found that more and more marketer are investing in developing brand loyalty as they feel the credit crunch they feel consumer who are brand loyal will keep their business going. As per their survey it has been found that more and more marketer 51% confirmed that they are focusing on loyalty marketing and among these 38% said that they have significantly increased their investment for that purpose. (Gyro presee release) What’s Loyalty?
Fisher (1985) states “Marketers battling to keep competitors from grabbing off customers complain that there just doesn’t seem to be as much brand loyalty around as there used to be. ” . Jacoby and Chestnut (1978) implies that researcher have focused studies of brand loyalty on repetitive purchase of a brand but now time has come to check cognitive response and cognitive aspect of brand loyalty as one can predict the purchase behavior by a particular brand e. g. A bad impression of about certain brand will make him switch over to another brand.
Customer loyalty has been focus of many marketing strategy Brand loyalty offers brings competitive advantages which can be realized with marketing (Dick and Basu, 1994). Brand loyalty has been measured in context with behavioral aspect i. e. repeat purchases of same brand. Fader and Schmittlein (1993) found in their research that that high share brands have higher loyalty than low share brands. Figure 1 A dynamic model of customer loyalty For their research they didn’t consider cognitive aspects of brand loyalty. Bayus (1992) also measured brand loyalty by a probability of buying the same appliance brand as the one bought previously.
Brand loyalty is not a just a one dimensional concept, but a very complex multi-dimensional concept. Wilkie (1994) defines brand loyalty as “a favorable attitude toward, and consistent purchase of, a particular brand”. One thing is very clear from all above definition that Brand loyalty in context with Consumer behavior is not an easy thing to state in few words as behavior is based on perceptual ideas being recorded in subconscious. Today’s consumer is very intelligent he has different medias to check on brands internet has made it easier for him to learn about different brands and what are they offering .
He will be loyal when both attitude and behavior are favorable. Sometime brand loyalty is just superficial when his attitude is unfavorable. Price promotion can make a consumer switch brands (Bawa and Shoemaker, 1987; Rothschild and Gaidis, 1981; Winer, 1986). Consumer becomes Loyal Marketers spend loads to build brand image brand is build on quality, its position in market it can reposition according to need of consumer different communication mix is used to build an image. Brand brings credibility and trust in consumers Why marketers invest in brand loyalty:
There are many reasons why a marketer should invest to build brand equity which n turns bring loyalty. A brand loyal customer is an asset, an investment which goes on giving returns. He reduces the further cost of marketer mix (Reichheld, 1996) It is always cheaper to keep existing customer than to attract new (Aaker, 1992). This can be explain by a simple example a bank invest a lot in selling a credit card but if a customer continue for the second year the investment of back is zero ( Reichheld, 1993), it can be seen as investment which saves a marketer cost (Jones, et. al 1995, Aaker, 1991, Arnold, 1992)
Loyalty brings market shares and increase marketing share and in turns brings more market returns (Buzzell et. al. 1975, Buzzell, Gale, B. T. 1987) Purchasing behavior is thought to be a habitual in nature and thus loyalty brings assertions in quality of brand( Solomon, 1994). So one can say that loyalty means repetitive purchase (Ehrenberg, 1988), commitment ( Hawks, 19950 and preferences (Guest, 1994) Branding makes the task smooth and easier to differentiate product (Macr ae, 1996) Strong loyalty is seen in consumers especially in merchandise supermarket especially towards their favoured brand.
But it can be seen that many campaign which require unique positioning lack substance long term impact an emotion of brand building activity( Doyle,1998) and it has been seen that branding for business to business is still less persuasive. Marketing mix is still based on Mc McCarthy’s “4p” Product, promotion, pricing and place and they are still considered as main marketing tools and manipulated well by many marketer (Dibb and Simkin, 1997). It will be very interesting to study that what motivate consumer to certain product and make him loyal towards one product.