1
Natalia Halstead
Before creating a questionnaire to measure the probability that customers will become brand
loyal, I would like to review the definition of “brand loyalty”. First of all, brand loyalty is a
hypothetical construct, which according to the Wikipedia, consists of a consumer's commitment
to repurchase or otherwise continue using the brand; it can be demonstrated by repeated
buying of a product or service, or other positive behaviors such as word of mouth advocacy 1.
There are many reasons why customers keep buying the same product. Some customers
repurchase the brand because they truly like it. But quite a few customers may repurchase a
brand due to situational constraints (such as vendor lock-in), a lack of viable alternatives
(suppose they live in remote areas or smaller towns), or simply out of convenience. Such loyalty
is referred to as "spurious loyalty"2. Purchasing the same product over and over does not yet
make a brand loyal customer.
Brand loyalty is more than simple repurchasing, though. True brand loyalty exists when
customers have a high relative attitude toward the brand which is then exhibited through
repurchase behavior. This type of loyalty can be a great asset to the company: customers are
willing to pay higher prices, they may cost less to serve, and can bring new customers to the
firm3. As an example, if I have brand loyalty to Company A I will purchase Company A's products
even if Company B's are cheaper and/or of a higher quality. Therefore, from the point of view of
many marketers, loyalty to the brand – in terms of consumer usage - is a key factor, which can
be used and is being used.
When it comes to brand loyalty, probably one of the most important of all, is the 'rate' of usage,
to which the Pareto 80-20 rule applies. As professor Philip Kotler states in his famous textbook
“Marketing Management”, that 'heavy users' are likely to be disproportionately important to
___________________________
1
Definition of “brand loyalty”, Wikipedia
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 Differential Strategic Outcomes," Journal of
Business Research, 55, 441-50.
3
Reichheld, Frederick F. (1993), "Loyalty-Based Management," Harvard Business Review, 71 (2), 64-73.
2
2
the brand (typically, 20 percent of users accounting for 80 percent of usage — and of suppliers'
profit). As a result, suppliers often segment their customers into 'heavy', 'medium' and 'light'
users; as far as they can, they target 'heavy users'4.
A second important criteria, however, is whether the customer is committed to the brand. Philip
Kotler, again, defines four patterns of consumer behavior:
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 ( “deal-prone”, constantly looking for bargains or vanity prone,
looking for something different)5.
Brand loyalty is a competitive advantage when consumers face numerous choices. But what
exactly is a brand? A brand can be defined as the "relationship" with the consumer;
relationships, on the other hand, are built on experiences. The relationship with a consumer
constitutes the sum of his/her experiences with the brand. Because the concept of a brand is
the totality of a consumer's experiences with the brand, the consumer "owns" the brand
because he owns his experiences with that brand, according to the Advertising Educational
Foundation6. A business owner might own the trademark, which identifies the brand, but
consumers will help define the brand.
Now let’s specify what factors influence 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 factors
________________________________________
4
Philip Kotler, “Marketing Management” (Prentice-Hall, 7th edition, 1991)
The same
6
http://www.smallbusinesses.Chron.com/effect-brand-consumer-behavior-61767.html
5
3
influencing the brand loyalty.
Commitment and repeated purchase behavior are considered as necessary conditions for brand
loyalty followed by perceived value, satisfaction, and brand trust. Fred Reichheld, one of the
most influential writers on brand loyalty, claimed that “enhancing customer loyalty could have
dramatic effects on profitability”7. Among the benefits from brand loyalty — specifically, 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 found evidence that longer-term
customers were indeed less sensitive to price increases8.
Andrew Ehrenberg, then of the London Business School said that consumers buy 'portfolios of
brands'9. They switch regularly between brands, often because they simply want a change. Thus,
“brand penetration” or “brand share” reflects only a statistical chance that the majority of
customers will buy that brand next time as part of a portfolio of brands they favor. It does not
guarantee that they will stay loyal to that particular brand.
Brands have value, and this value is well recognized by marketers. For instance, in an October
2012 report from Forbes magazine, Apple was ranked as the top global brand name with a value
of $87.1 billion. A brand, however, has value to business only to the extent that it helps drive the
clients' buying decisions.
We all have preferences in brands, but do brands really differ that much from one another? If
you think about it, there is not as much differentiation between products as marketers want us
to believe. “Differentiation,” the method marketers use to demonstrate differences between
products, is pursued with grail-seeking zeal by companies interested in beating the competition.
We hear all the time about mintier mouthwash, infinitely absorbing paper towels, longer-lasting
7
Reichheld, Fred, The Loyalty Effect 1996
Dawes, J. "The Effect of Service Price Increases on Customer Retention: The Moderating Role of Customer Tenure
and Relationship Breadth". Journal of Service Research, Vol. 11, 2009
9
Ehrenberg A.(1988) Repeat-buying: facts, theory and applications, 2nd ed., Edward Arnold, London; Oxford
University Press, New York. Reprinted in the Journal of Empirical Generalisations in Mark Science, 2000, 5, 392-770
8
4
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batteries, ever-sharper razors, crunchier chips, driest bottom diapers…and on and on. But does
it really matter to consumers what paper towel to use? My answer would probably be no.
Differentiation may be top of mind for marketers, but it’s just not that important to reasonable
consumers in terms of the choices they make. I am sure there are people out there who strongly
believe great difference in products produced by different companies, but in most consumers
(including myself) seek products and services that resolve their everyday needs – not
differentiation.
According to a Time magazine article on product sameness, "you’d have to be a true expert to
tease out any meaningful difference among dozens of detergents, cars, cereals, enhanced
waters, or running shoes”10.This perception of sameness points to why many marketers place
more emphasis on consumer experiences than brand functionality when building a brand in the
minds of consumers. Favorable experiences form strong emotional bonds that convert into
brand preference. Millward Brown, a global research agency, says that strong brands are mostly
"trustmarks.11" They truncate the decision-making buying process. Consumers can shop without
scrutinizing product features and benefits. Moreover, brands routinely command premium
prices, because they are trustmarks.
As I have mentioned earlier, in most cases there is no meaningful difference between the
products different brands produce. But if it’s true, why do people develop preferences and value
one brand over another?
In a Columbia University research paper titled "Brand Experience: What is It? How Do We
Measure It? And Does It Affect Loyalty?"12 researchers identified five dimensions of the brand
experience: sense, feel, think, act and relate. Sense experiences are the sensory or aesthetic
qualities of the brand. Feel experiences are the moods or emotions that brands induce in
10
“Differentiation: A Surprising Story of Sameness”, by Teddy Hall, August 7, 2012
“A brand development Model: how to define and measure brand equity”, by Charles Colby, Bridge Associates,
2011
12
"Brand Experience: What is It? How Do We Measure It? And Does It Affect Loyalty? Author: J. Joško Brakus, Bernd
H. Schmitt, & Lia Zarantonello, published 05/01/2009
11
5
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consumers. Think experiences stimulate the imagination and intellect -- "the brand makes me
think about the happy times in life." Act experiences stimulate behavioral reactions -- "the brand
makes we want to work out." Relate experiences refer to the social context of the brand
experience -- "I feel like I'm a member of an exclusive club."13 Brands might not incorporate all
five dimensions of the brand experience. The intensity of relevant experiences, however, drives
the strength of brand preference in consumers.
The phenomenon of brand love is an interesting marketing topic. Arguing that research on
brand love needs to be built on understanding of how consumers actually experience this
phenomenon, B. Rajeev (2012) and his colleagues conducted an interesting study to uncover
different elements of the consumer prototype of brand love14. We can specify them as features
of brand love:
Great quality: When talking about loved brands, respondents’ comments included a list of the
perceptions about the brand’s many attractive qualities, such as its exceptional performance,
trustworthiness, good-looking design, and so on. Loved brands were praised for being the best
available (best in every way, best value for money). The only complaint that came up in
connection with loved brands is the high price of some high-end brands. Interestingly, but even
for these brands, consumers feel satisfied, believing that this high price is justified.
Strongly held values and existential meaning: While loved brands are praised for providing a
wide variety of benefits, such as comfort, relaxation and so on, brands are more likely to be
loved when they also connected to something the person believes is deeper, such as selfactualization, close interpersonal relationship, etc. For example, Apple represents creativity and
self-actualization, which appeals to many consumers.
13
14
The same
Brand Love, Rajeev Barta, Aaron Ahuvia, Journal Of Marketing, Vol. 76, (March 2012)
6
Intrinsic rewards: There is a distinction between performing an act to get something (extrinsic
rewards) and doing it because you love it (intrinsic rewards)15. Loved brands commonly provide
________________________
both.
Self-identity: individuals strongly identify themselves with the things they love, reflecting
theimportant function of loved brands in expressing existing identities. This is especially true
with modern teenagers. I personally know one teenage boy who is “in love” with “Under
Armour” brand to the point that every single piece in his wardrobe (including underwear and
socks) has to be of this brand; he refuses to wear anything else not produced by “Under
Armour”. This drives his parents crazy, basically because this brand is not especially cheap, but
there is nothing they can do about it (or so they think).
Positive effect: people describe their experience with loved brands in positive emotional terms,
and this tendency is even more prevalent for loved consumption activities. This affect covered
the lower-arousal emotions termed “affection”16, almost like in a relationship with a loved
person.
Passionate desire and sense of natural fit: people loyal to a particular brand often talk about a
sense of natural fit and harmony between themselves and their loved brand.
Emotional bonding and anticipated heartbreak: individuals feel bonded with, and emotionally
connected to the brand. In addition to these positive emotions, some consumers are likely to
feel a strong desire to maintain proximity with the loved objects, even feeling “separation
distress”17 when they anticipate or experience being distanced from them, for example when the
loved brand gets discontinued.
15
Babin, Darden, and Griffin, 1994, p.645
Thomson, MacInnis, and Park 2005
17
The same
16
7
Willingness to invest: individuals invest high levels of time, energy, and money into loved
brands. These investments highlight the importance of the brand and integrate it more deeply
into the consumer’s identity, thus increasing attachment to the brand.
Frequent thought and use: having frequent interactions with, or thoughts about, a brand is an
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important aspect of brand love.
All these factors constitute brand love; they explain to some degree why some customers
develop strong attachment to specific brands.
Customer loyalty is widely accepted by marketers as being something that's worth nurturing,
with many renowned analysts and researchers repeatedly showing the value of loyalty
programmes in terms of greater spending and satisfaction, more profitable customer behavior,
reduced defection levels, and unique competitive advantages. But what are the main business
factors that directly influence the loyalty of customers? In other words, what tools companies
use to acquire loyalty of its customers?
According to Peter Clark, co-editor of The Wise Marketer and co-author of The Loyalty Guide
report series18, there are six major factors that play key roles in influencing the loyalty and
commitment of customers:
1. Core offering
The companies that boast the highest levels of fiercely loyal customers have built that loyalty not
on card programmes or gimmicks, but on a solid, dependable, core offering that appeals to their
customers. These companies have focused intently on what they know appeals to the type of
customers they want to attract, and have determinedly concentrated on delivering what is
expected every time. North American retailer, Nordstrom, for example, is well known for the
18
Peter Clark, co-editor of The Wise Marketer and co-author of The Loyalty Guide report series
http:www.thewisemarketer.com/news/read.asp?lc=w29860tx2320zs
8
loyalty of its customers. It built this loyalty by understanding what its customers wanted and
then empowering its employees to deliver those needs consistently.
2. Satisfaction
Clearly, satisfaction is important. But, taken in isolation, the level of satisfaction is not a good
measure of loyalty. Many auto manufacturers claim satisfaction levels higher than 90%, yet few
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have repurchase levels of even half that19. The situation is stacked against the business: if
customer satisfaction levels are low, there will be very little loyalty. However, customer
satisfaction levels can be quite high without a corresponding level of loyalty. Customers have
come to expect satisfaction as part and parcel of the general deal, and the fact that they are
satisfied doesn't prevent them from defecting in droves to a competitor who offers something
extra. The point is that, while high levels of customer satisfaction are needed in order to develop
loyal customers, the measure of customer satisfaction is not a good measure of the level of
loyalty; the two are not measuring the same thing.
3. Elasticity level
Elasticity expresses the importance and weight of a purchasing decision - effectively the level of
involvement or indifference. This applies to both the customer and the business. The customer's
involvement in the category is important: the more important the product or service is to the
customer, the more trouble they have probably taken in their decision to do business with the
company, and the more likely they are to stick with what they have decided. Most customers
would be highly involved in the category when choosing a new car, a new jacket, or a bottle of
wine. However, when choosing a new pair of shoelaces, involvement is not usually high.
Businesses dealing in commoditised products and services cannot expect high involvement and
need to earn loyalty in other ways.
19
The same
9
4. The marketplace
The marketplace is a key factor in the development of loyalty. The elements most closely
involved are opportunity to switch and inertia loyalty.
Opportunity to switch - if the number of competing suppliers is high and little effort is required
to switch, switching is clearly more likely. Conversely, the more time and effort invested in the
relationship, the more unlikely switching becomes. The level and quality of competition has a
____________________________
significant effect on how easy it is for a customer to switch from any one particular supplier.
When competitors are offering very similar products at similar prices, with similar levels of
service, some means of useful differentiation has to be found in order to give customers a
reason to be loyal.
Inertia loyalty
This is the opposite of ease of switching. Most banks enjoy a high level of inertia because it's
often so difficult and time-consuming to change to a new bank and transfer direct debits and
standing orders.
5. Demographics
According to Jan Hofmeyr and Butch Rice, developers of The Conversion Model20, more affluent
and better educated customers are less likely to be committed to a specific brand. They say that
the commitment of less affluent consumers to the brands they use is often unusually strong possibly because they cannot afford to take the risk of trying a brand that might not suit them as
well. They also suggest that younger consumers are less committed to brands than older
consumers. Interestingly, these differences carry over into cultural groups as well: they find that
French-speaking Canadians are more likely to be committed to a brand than English-speaking
20
Jan Hofmeyr and Butch Rice, The Conversion Model, Commitment-Led Marketing: The Key to Brand Profits Is In
the Customer's Mind”, Jan. 1, 2003
10
Canadians, and Afrikaans-speaking South Africans are more likely to be committed than Englishspeaking South Africans.
6. Share of wallet
As markets become saturated and customers have so much more to choose from, share of wallet
becomes increasingly important21. It is cheaper and more profitable to increase the share of
what the customer spends in your sector, than to acquire new customers. After all, that's what
loyalty is really about.
____________________________________________
When it comes to brand loyalty, yet another important factor to consider is cultural differences.
It is not a secret for marketers, that culture can have a strong influence on the values,
perceptions and actions exhibited by a consumer. Cultural values differ significantly from
country to country, which typically affects decisions on product development, pricing,
distribution. People in some societies are more influenced by others and by the image they
produce. In some countries, such as Russia and China, image plays a greater role than in other
countries, and people tend to pay more attention to what they wear, what type of clothes they
buy and what cars they drive simply because owning a specific stuff is often viewed as an
indicator of their social status. You are simply expected to wear specific (meaning expensive)
brands of clothes and own the latest models of the car, if you want to be viewed as a respected
businessmen/lawyer/doctor, etc. People in those countries just think differently: it’s simply hard
for them to believe that an individual has money in his pocket if he does not look presentable.
That kind of reminds me the “pretty woman” example, when Julia Roberts was kicked out of the
stores on Rodeo Drive when she was shopping for clothes and did not look “rich” enough. Sadly,
but in some countries sales people are trained to “differentiate” the customers by the way they
look.
This can also be seen on the example of luxury brands, in particular. A luxury brand, as we know,
is defined as going beyond functionality; it emphasizes the status and image of an individual.
Important reasons for owing luxury products (goods, cars, fur coats, etc.) are to show success
21
The same
11
and social status, reward one self and provide people with confidence. In general, people in
collectivist societies are often more influenced by others and more image-concerned than those
in individualistic societies22, and marketers have to take into account these important
differences if they want to succeed in modern markets.
_______________________________
Conclusion
Brand loyalty is a hypothetical construct. It is different from simple repurchasing and mere brand
preference. A phenomenon of brand love is an amazing marketing tool and a great value to the
company. Brand love is a competitive advantage when customers face numerous choices; it has
been used by companies for a long time and will be used as long as companies are able to
produce and individuals are able to consume. Some profitable companies do a great job using
brand loyalty of their customers. At the same time, as consumers become more demanding,
brand loyalty is getting harder to acquire. Increasing global economic uncertainty and intense
competition in the marketplace have made it clear that companies have to improve their
business models to attract, satisfy, and form sustainable relationships with customers.
Probably the most extreme example of brand loyalty I have ever heard of is a story of a young
woman from one popular reality show. The woman loves to shop (and there is nothing wrong
with it), but has a special passion for Birkin handbags. Birkin handbags are considered luxury
brand, and typically retail for around 14,000 USD and up per purse. The woman has a collection
of these purses, but she wants them all. So, to brake her habit of spending on Birkin purses, the
host of the reality show offers her to chose between another 16,000 USD purse and her
boyfriend. And sure enough, she chooses the purse over her boyfriend (the purse is unique and
one of a kind, but I can always find another boyfriend, she says). A sad story, but is a great
22
Self-congruity, brand attitude and brand loyalty: a study on luxury brands, Fang Liu, European Journal of
Marketing, 2012, Vol.46, Issue 7/8, p.922-937
12
example of an incredible brand loyalty accompanied by even more incredible stupidity. But as
long as it works, I do not see a reason why companies should not use brand loyalty of their
customers to their advantage.
The questionnaire I created is intended to measure brand loyalty of customers to a particular
brand. I did not specify the brand (which I thought could be any), but tried to include different
types of questions and different scales.
1.
Do you agree with the statement that the brand is a part of you?
Strongly agree
Agree
Disagree
Strongly disagree
Neither agree nor disagree
2.
Do you feel personally connected to the brand?
Very much so
T
To some extent yes
Not at all
Not sure
3.
Do you feel emotionally bonded to the brand?
Yes
No
13
If answered Yes to this question, please move to question 4. If answered No, move to question 5.
4.
How often do you think about the particular brand?
Very often
5.
Once in awhile
Hardly ever
No
Does the name of the brand automatically evoke good memories in your mind?
Yes
7.
Not often
Do you think that the brand says something to other people about who you are?
Yes
6.
Often
No
Do you involve in activities associated with your favorite brand (online shopping, web
searching, visiting the
store, etc.)?
Yes
No
If answered Yes to this question, please move to the next question. If answered No, proceed to
question 9.
8. During one month period, how much time do you invest in activities involving interaction with
your favorite brand (visiting the store, online shopping, web-site searching, etc.)?
0 - 5 hours
6 - 10 hours
11-15 hours
16-20 hours
More than 21 hours
None
9. How much money do you spend monthly on purchases associated with your favorite brand?
14
0-100 US dollars
101-300 US dollars
301-500 US dollars
501-700 US dollars
701-1000 US dollars
Over 1000 US dollars
10.
Does a customer service experience affect your loyalty to the particular brand?
Yes
11.
No
If a brand/company incentivized you to engage with them by actively tweeting about them
by offering rewards, would you be willing to do this?
Yes
12.
No
What else would you be willing to do to get rewards from a company? Please mark all that
apply.
Visit their web-site
Watch a video
“Like” their face-book page
Referring friends
Other (please specify) _________________________________________________
__________________________________________________
None of the above
13. Please specify the types of rewards the company could offer you that you would be
interested in.
Cash
15
Discounts
Free products
Free promotional gifts
Other (please specify)___________________________________________________
___________________________________________________
I am not interested in rewards
14.
Would you feel upset if the brand was discontinued?
Definitely yes
To some extent, yes
Probably
No, it would not affect me
On a scale of 1 – 10 how likely are you to purchase more products or services form the
brand in the future? Please circle.
15.
1
16.
2
3
4
5
6
7
8
How likely are you to recommend the brand to your friends and family?
Very likely
Likely
Very unlikely
9
10
16
Will not recommend
17. Your age
0-10
11-20
21-30
31-40
41-50
51-60
61-70
71-80
81-90
91-100
18. Your gender
male
19. Marital status
married
Over 100
female
single
divorced
widowed
20. Your annual household income (in US dollars)
0 - 25, 000
25,500 - 50,000
50,500 - 75,000
100,500 - 125,000
2 75,500-100,000
125,500 – 150,000
over 150,500
References:
1.
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.
2.
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 Differential Strategic Outcomes," Journal of Business Research, 55, 441-50.
3.
Reichheld, Frederick F. (1993), "Loyalty-Based Management," Harvard Business Review,
71 (2), 64-73.
4.
http://www.smallbusinesses.Chron.com/effect-brand-consumer-behavior-61767.html
5.
A Brand Development Model: How to Define and Measure Brand Equity”, by Charles
Colby, Bridge Associates, 2011
6.
“Differentiation: A Surprising Story of Sameness”, by Teddy Hall, August 7, 2012
7.
"Brand Experience: What is It? How Do We Measure It? And Does It Affect Loyalty?
Author: J. Joško Brakus, Bernd H. Schmitt, & Lia Zarantonello, published 05/01/2009
8.
Philip Kotler, “Marketing Management” (Prentice-Hall, 7th edition, 1991)
17
9.
Self-congruity, brand attitude and brand loyalty: a study on luxury brands, Fang Liu,
European Journal of Marketing, 2012, Vol.46, Issue 7/8, p.922-937
10.
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)
11.
Reichheld, Frederick, The Loyalty Effect, 1996
12.
Dawes, J. "The Effect of Service Price Increases on Customer Retention: The Moderating
Role of Customer Tenure and Relationship Breadth". Journal of Service Research, Vol. 11,
2009
13.
Brand Experience: What Is It? How is it Measured? Does It Effect Loyalty? J.Josko Brakus,
Bernd H.Schmitt, and Lia Zarantonello, Journal Of Marketing, Vol 73, (May 2009)
14.
“Brand Attachment And Brand Attitude Strength: Conceptual and Empirical
Differentiation of Two Critical Brand Equity Drivers”, Whan Park, C., Journal of Marketing,
(Nov 2010), Vol. 74, Issue 6
15.
“Brand
16.
Ehrenberg A.(1988) Repeat-buying: facts, theory and applications, 2nd ed., Edward
Arnold, London; Oxford University Press, New York. Reprinted in the Journal of Empirical
Generalisations in Mark Science, 2000, 5, 392-770
17.
Peter Clark, co-editor of The Wise Marketer and co-author of The Loyalty Guide report
series at http://www.thewisemarketer.com/news/read.asp?lc=w29860tx2320zs
18.
Jan Hofmeyr and Butch Rice, The Conversion Model, “Commitment-Led Marketing: The
Key to Brand Profits Is in the Customer's Mind”, Jan. 1, 2003
19.
Wikipedia, definition of “brand loyalty” and “brand love”
Love”, Rajeev Barta, Aaron Ahuvia, Journal Of Marketing, Vol 76, (March 2012)
18