Lecture 09

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BRAND MANAGMENT LESSON 9: BRAND LOYALTY O bjectives The learning objective: this lecture will help you to understand: a. Brand Loyalty its types and importance for branded products. aspects? Do psychological factors matter to brand loyalty in business-to-business marketing? While in-depth aspects of customer equity are firm-specific, certain concepts are likely to provide insights to marketers and these answers cover the questions mentioned above. There is a need not only for customer equity or
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  © Copy Right: Rai University 11.673.2 55 B    R    A     N    D    M    A     N    A     G    M    E     N    T     LESSON 9: BRAND LOYAL TY Objectives  The learning objective: this lecture will help youto understand: a. Brand Loyalty its types and importancefor branded products. In the previous lesson we discussed about Brand Relationship in detail. This gives us an insight tounderstand Brand Loyalty better. Brand loyalty is a very interesting topic as itrelates very closely to our daily lives. I’m verysure you can name atleast 10 great brands of Jeans, Shoes, Shirts, Sun glasses, Jackets you are crazy for.  Just think for a while.?? Now think that how many of these brands youhave used more than once. Introduction Retaining an existing consumer is often moreprofitable than finding a new consumer. This isknown to marketers for the last two decadesthough one has not seen too many retention strategies in India, until recently. While retainingbrand loyal customers, it is important to consider its impacton the bottom line of the company. Researchacross product categories has shown that 100 percent retention of customers will not be alwaysprofitable to the brand and retaining customers indiscriminately would not lead to profitability. A basic understanding of retention strategies isrequired for a marketer even before CRM(customer relationship management) strategies are planned. There cannot be a better time to understand and implement customer retentionstrategies (in both consumer and business-to-business marketing) given the economicdownturn in several markets and the need to retain profitable customers. Customer equity deals with the manner in whichcustomers can add value to the profitability of the company (customer equity also looks at howthe company can create value for the customer but this article deals with the other aspect).Loyalty and reten- tion strategies would have tobe understood before customer equity strategiesare formulated. The following aspects of  customerequity may be useful for marketers: What is brand loyalty? Is brand loyalty built on functional or symbolic aspects? Do psychological factors matter tobrand loyalty in business-to-business marketing? While in-depth aspects of customer equity are firm-specific, certain concepts are likely toprovide insights to marketers and these answerscover the questions mentioned above.  There is a need not only for customer equityoriented strategies but also for investing inbehavioural research of customers to know theunderpinnings on which loyalty or retention is built.  © Copy Right: Rai University 56 11.673.2 Brand Loyalty Brand loyalty is the repeat purchase made by theconsumer out of commitment to the brand. Inmany cases of  loyalty, marketers may do well tocheck if the repeat purchases are made out of commitment or if they are inertia purchases. You may keep buying a brand of soap or toothpastebecause of  its availability with regard to a specificstock-keeping unit which he can afford (50 gramsor 75 grams package is the specific stock keepingunit referred in this context). Brand loyalty is indicated when the consumer deliberatelychooses a brand from a set of  alternative brands.  You may not go through a decision process toselect a brand when you are brand loyal. Thoughthere is a great deal of  similarity/overlap betweenhabit and loyalty, the repeat purchase made outof convenience can be classified under habit whereas purchases made out of commitment is loyalty. When you develop loyalty towards a brand youdevelop a favourable attitude towards thebrand resulting in commit- ment. Brand loyaltyoffers a number of advantages to the marketer.“Brand loyal consumers start building a relationship with the brand”. You may becomeadvocates of the brand by the positive word of  mouth. “Brand loyal consumers may become passionateabout the brand and form clubs which results infurther strengthening the brand”. Bajaj, the motorcycle brand in India, is anexample of  how passion among consumers hasbeen instrumental in reflecting the loyalty tothe brand.  The members get together and go out onadventure trips on the bikes wearing specialgarments created by the brand.  The linkagesinvolved in brand visibility and the display of  loyalty results in a positive rub-off on theequity of the brand.  There is even research evidence to show thatbrand loyal consumers may even actually avoidadvertisements of  competi- tive brands. Loyalconsumers may also be prepared to try out the variants of the brand and in certain categoriesmay even be prepared to pay a premium (highpriced cigarettes and perfumes may be examples). Brand loyal consumers may try out otherofferings (other categories) brought out by thebrand. Fabmart, the Internet store, which isinto books, jewellery, music and groceries, has consumers who are loyal to the brand and arelikely to order several categories from the store- this indicates store loyalty. Under certainconditions, consumers may also transfer their brand loyalty across product categories. Virgin is a brand in the US, which is into financialservices, cola drink, music and airline and thebrand is doing well in all the categories.  B    R    A     N    D    M    A     N    A     G    M    E     N    T     Recently there has been research which reflectsthat brand loyalty could be enhanced if theproduct tried results in a high degree of satisfaction. This is because the consumerfeels that the time invested in learning about thebrand has resulted in a positive outcome. If you spend significant time in choosing areadymade apparel brand and find that it gaveyou high level of satisfaction, there is a highdegree of probability that you would become a loyal consumer of the brand.  This is because the time invested in learningabout the category and the brand has resulted ina positive outcome which is likely to discourageyou from experimenting with other brands during your subsequent cycles of the category purchase.  There is a need to investigate you as a consumerlearn about a product category and brands asthis would be useful to provide the learningexperience (besides providing a good product or service) which may also have an impact on loyalty. For instance, the experience of logging on toAmazon.com may be important because of thebenefits offered by the Web site. Is Brand Loyalty Built on Functional or SymbolicAspects? Drawing upon several theories and modelsassociated with consumer loyalty and learningprocesses, consumers may initially become loyalto a particular brand because of  its functionalbenefits. Loyalty across toothpastes, cars, banking services and books clearly show that abrand has to score on functional aspectswhenever consumers use ‘search-oriented’ products (search-oriented products are thosewhich could be evaluated by consumers evenbefore they buy/try the product). For instance, aconsumer may go through the ingredients of  Colgate Total and derive inferences about thebenefits (evaluate it to a certain extent) and trythe brand. Loyalty on such search- orientedproducts gets initiated when the consumer experiences the benefits of functional attributes. Symbolic associations may also play an importantrole in strengthening loyalty to a brand (geltoothpastes are advertised on the symbolicaspects and this trigger a certain kind of  loyalty because of peer group associations - this couldhappen after the brand is established). But evenwhen symbolism triggers loyalty, a certain degree of benefit should be anoutcome of  the brand usage. Symbolism canhave an impact on loyalty related to products which are consumed for sensorygratification - such as beer, perfumes andcigarettes. A brand’s communication revolvingaround symbolism (status or snob appeal or group affiliation or a personality trait) adds to thegratification inherent in the product and results inloyalty. Raymond which has positioned itself forthe ‘complete man’ may attract a certain degreeof loyalty from its target segment (but in thiskind of  product category, improvements infunctional qualities of  offerings would strengthenand sustain the loyalty of  the brand). In categories which are highly ‘experiencerelated’ like hotel services or airline services,symbolism could enable consumers try theservice. Experience related services are those which could be evaluated only after the consumergoes through the consumption experience. Ahotel or an airline could bring in appealingsymbolism in its advertisements but the ‘experience’  would prove to be the final dimension whichwould trigger loyalty. An ideal approach for a brand would be to usethe functional route to loyalty and then useappropriate symbolic communica- tion tostrengthen the loyalty over a period of time. The basic assumption in this kind of an approach isthat the brand would constantly update its offerings (or productline) with improvements which would result in acompetitive advantage over competing brands. Abrand has to adapt itself to the changingenvironment over a period of time (while using symbolic imagery consistent with its brandproposition). Bajaj has a strong value for moneyfamily-oriented and a very Indian (ethinocentric)image. It may be a good strategy for Bajaj to strengthen these associations rather than get intoan other- directed trendy mode (the TVcommercial lady for Chetak being driven by amodern lady). Such symbolic brands (like Bravo or Classic from the same company) should bepromoted without the association of Bajaj‘Chetak’ given its presence in the Indian scootermarket is the “vehicle for the masses” and such exclusive symbolism may not be in tune with themindset of a loyal brand of consumers. The equity of this brandcould be realised from the fact that it is perhapsthe only brand to command a respectable secondhand value in a scooter market which is registering negative growth. Symbolic orpsychological appeals should strengthen loyaltyrather than create a feeling of  alienation fromthe existing loyal base of consumers. Volvo, a brand name known for safety and reliability forseveral decades (around the world) may launchcampaigns which centre around psychologicalappeals which reinforce the safety image - the advertisements may show beautiful scenic spotswhich provide a break for the pressurisedurbanites and the advertisement could presenthow such consumers could reach these spots safely with their Volvo (See chart). Thepsychological factors like reliability, trust andreassurance also matters in business-to- business marketing as they provide the basicplatform for CRM. Retention As stated earlier 100 per cent retention may notbe a very practical retention strategy. An airlinelike Jet Airways or Indian Airlines would certainlylike to retain 100 per cent of  its customers in thetop segment (perhaps Business class). But there is a vast segment which is highly price sensitiveand several dimensions are to be analysed beforea decision is taken to retain these price-sensitive customers with rewardsand freebies. Price-sensitive customers may shift to anotherbrand which offers them more freebies; besides itmay be worthwhile to analyse the purchasepattern of these price- sensitive customers - whatis the potential profitability of retaining these customers? The Brand Loyalty Challenge: An Indian Perspective By Chandranath Chakraborty & Nandini JayaramM, NITIE Indian consumers have always exhibitedMultiple Brand Loyalty (MBL). The increasingbrand variety in the Indian Market is erodingbrand loyalty per se and the multiple-brand loyalty brand bouquet is witnessing greatervariety-seeking behavior. The most importantfactors contributing to this phenomenon are thegrowth of organized retailing, changing consumer
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