Brand loyalty

In marketing and consumer behaviour, brand loyalty describes a consumer's persistent positive feelings towards a familiar 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 market environment. It's also demonstrated with behaviors such as positive word-of-mouth advocacy. Corporate brand loyalty is where an individual buys products from the same manufacturer repeatedly and without wavering, rather than from other suppliers. In a business-to-business context, the term source loyalty is also used. Loyalty implies dedication and should not be confused with habit, its less-than-emotional engagement and commitment. Businesses whose financial and ethical values rest in large part on their brand loyalty are said to use the loyalty business model.

Marketing

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. This concept of a brand displays imagery and symbolism for a product or range of products. Brands can engage consumers and make them feel emotionally attached. Consumers' beliefs and attitudes make up brand images, and these affect how they will view brands with which they come into contact. Brand experience occurs when consumers shop or search for, and consume products. Holistic experiences such as sense, relation, acting, and feeling occur when one comes into contact with brands. The stronger and more relational these senses are to the individual, the more likely it is that individual will make repeat purchases. After contact has been made, psychological reasoning will occur, followed by a decision to buy or not to buy. This can result in repeat purchase behavior, thus incurring the beginning brand loyalty. Brand loyalty is not limited to repeat purchase behavior, as there is deeper psychological reasoning 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. In a survey of nearly 200 senior marketing managers, 68 percent responded that they found the "loyalty" metric very useful.
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.
Brand loyalty can predict brand performance outcomes. It also highlights the importance of marketing communication when trying to promote a certain product that's not doing as well as other brands. Marketers are able to look at the patterns of brand loyalty and pick out characteristics that make that product thrive.
Examples of brand loyalty promotions include My Coke Rewards, Pepsi Stuff, and Marriott Rewards.

Long-term impact on business

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.
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”.

Benefits for companies

Brand loyalty profits firms by saving them money. Benefits for companies associated with loyal consumers include:

Acceptance of product extensions.
Defense from competitors' cutting of prices.
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. 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, a lack of viable alternatives, or out of convenience. Such loyalty is referred to as "spurious loyalty".
Previous studies showed that customer loyalty is affected by customer satisfaction, but the association differs based on customer switching costs. Real brand loyalty exists when customers have a high relative attitude toward the brand which they then exhibit through repurchase behavior. 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 bring new customers to the firm. 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 — is a key factor. However, companies often ensure that they are not spending resources to retain loyal but unprofitable customers.

Usage rate

the 'rate' of usage, to which the Pareto 80-20 rule applies: Kotler's "heavy users" are disproportionately important to the brand. As a result, suppliers often segment their customers into "heavy", "medium", and "light" users; as far as they can, they target "heavy users". However, research shows that heavy users of a brand are not always the most profitable for a company.

Loyalty

A second dimension, is whether the customer is committed to the brand. Philip Kotler, again, defines four status of loyalty:

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. Again, research shows that customer commitment is a more nuanced a fine-grained construct than what was previously thought. Specifically, customer commitment has five dimensions, and some commitment dimensions.
Psychological reasoning

A person's psychological disposition affects which brands they are attracted to. Cognitive responses can be matched with brand personalities. Brand personalities are broken down into five categories of traits: sincerity, ruggedness, competence, sophistication and excitement. Consumers are 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 matched to the five psychological factors that the consumers are influenced by: perception, learning, motivation, beliefs, and attitudes. 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. 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. 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 matches theirs. Beliefs that consumers hold against brands can also be false, as word of mouth, false advertising, and so forth can create false impressions. Marketers will try to counteract these negative beliefs so the consumer feels like they hold similar beliefs as the brand. Attitudes can be based on brand salience and accessibility. Consumers make constant evaluations on every aspect of their lives and these make up attitudes. Ones attitude is usually difficult to change, so marketers try to fit their brands and products into categorical attitudes. Each time a consumer makes contact with a brand, they reflect on their attitudes to make judgements and decisions about that particular brand. 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 the brand attitudes one might have. 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. 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. Through advertising, marketers may focus more on implicit emotional messages, rather than the actual content or information about their brand. Consumers take notice of campaigns, and a wave effect can occur, due to the relational sense 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. 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. Furthermore, consumers are willing to pay more for a product that has a brand name that resonates with them emotionally.