Brand loyalty develops from customer satisfaction and contributes to higher brand equity. For a company to establish brand loyalty, it must capitalize on some key features of brand loyalty. A company may choose a couple of these features and implement them simultaneously. In other cases, a company will try to effect these features through a process of successive implementation basis. Regardless of the process chosen by a company, the scorecard of success of a brand’s market share of loyal customers.
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Brand Loyalty Definition
Brand loyalty is the tendency of repeat purchase by consumers of a particular brand with knowledge about availability of other offers by competitors.[1]
A more straightforward definition of brand loyalty is the special devotion by a consumer towards a particular brand and product. These consumers believe that the product and brand have a higher quality and utility.
In this situation, they don’t mind the prices and are willing to pay any price to access the brand. This decision by the consumer is emotional. It is made with the perception that the brand will uniquely fulfil some physical or emotional need. It evokes these emotions in the purchasing and using process.
The consumer expects that the product purchased will meet expectations and identify with them. Once a firm builds a strong brand loyalty with consumers, they’ll significantly reduce their marketing costs. This is attributed to the high cost of attracting a new customer than the cost of retaining a current one.
Features of Brand Loyalty
1. Consumers perceived value on the brand
Perceived value is the difference between the highest price consumers are willing to pay and the amount they actually pay. The consumer will assess the goods purchased to determine whether the quality is satisfactory. They want to get more value than they paid for. When perceived value feels to be high, the satisfaction will be equally high.
2. Brand trust
Brand trust is a two-way affair. A company trusts that the customers will remain loyal to the brand as long as the quality remains constant. On the other hand, customers will have to trust the company to fulfil their duties in keeping them satisfied.
3. Customer satisfaction
Customer satisfaction is the level of happiness a consumer has with a product. It is based on expectations on the product and its past performance. If a customer develops a positive attitude based on the consumption of the product, then such customer is satisfied.
4. Repeat purchase behavior and customer commitment
This goes hand in hand with consumers’ commitment to the brand. If the customer’s positive feelings towards the brand are strong enough, they will commit to the brand. Such customers will be willing to spend whatever amount for the product.
5. Perceived brand equity
Brand equity is the value of a brand placed by a consumer. If the perceived brand equity is optimistic, the company will significantly benefit. Such benefit emanates from consumers’ willingness to purchase products in question at higher prices than competitors’ fairer prices.
Importance of Brand Loyalty
If an organization is able to build a faithful customer base, it can greatly benefit from it. This kind of brand loyalty does not occur overnight but requires a lot of time, resources and dedication.
For a company that has brand loyalty, price of the products will never be a huge issue to consumers. It will even be easier to attract new customers. Some of the benefits of brand loyalty include:
1. Reduced cost of advertising:
Satisfied customers will promote the company’s product and bring in referral customers.
2. Meager chances of loyal customers getting impressed by competitors:
This is because a solid customer base has been set, and the consumers’ emotions have been involved. It creates a competitive advantage for the company in the marketplace as competitors cannot exploit such company’s gap at ease.
3. Success for new product under brand name:
Brand loyalty increases the likelihood of the existing customers trying out a new product from the company in question. This is because consumers already trust the brand and are willing to try a newly launched product.
4. Contributes to increased profitability:
Existing loyal consumers develops repetitive buying behavior leading to an increase in the company’s sales per unit buyer. The profit margins of the company increases, leading to economies of scale for a company.
5. Develops sense of belonging for customers:
If and when the brand loyalty process is done to perfection, the customers develops sense of belonging. They get a chance to see themselves as part of the brand and the company. This strengthens the relationship between the clients and the company, and attract more potential customers to be part of it.
Brand Loyalty Examples
Companies have invested a lot of money into customer service and marketing to build and maintain brand loyalty. Some are Coca-Cola, Apple and Nike.
Coca-Cola; is a beverage brand that has invested in attaining the “good old days” vibe. They have mastered the art of nostalgia to keep customers coming back for more.
Apple; apple products are identified and associated with class, high-quality and creativity. The company is preferred such that most iPhone users buy another iPhone if there is an upgrade.
Nike; with its famous tagline, “just do it” and its swoosh is one of the most popular shoe brands in the world. It is associated with winners and superstars in athletics.
Relationship Between Brand Loyalty and Brand Knowledge
People are now more likely to stick to a brand than switch between different brands when buying a product or service. Customers with brand knowledge have deep understanding of brands they consume. It has led to increased brand loyalty leading to higher sales and revenue to brand in question.
When it comes to choosing a brand of coffee, many people make a conscious decision to choose the most convenient brand or the cheapest one. However, there is a much deeper reason behind the brand choice. The brand that you choose shows a great deal about who you are as a person. It also shows the kind of person you are when deciding.
We consume products today vastly different than when our parents were younger. Companies are now focused on capturing our attention through digital marketing and not just through traditional advertising. It has resulted in a shift in how we interact with brands and which ones we choose to purchase, which has profoundly impacted the economy.
References:
1. Mellens, M., Dekimpe, M., & Steenkamp, J. B. E. M. (1996). A review of brand-loyalty measures in marketing. Tijdschrift voor economie en management, (4), 507-533.
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