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In marketing and consumer behaviour, brand loyalty describes a consumer's persistent positive feelings towards a familiar brand and their dedication to purchase 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.American Marketing Association Dictionary . Retrieved 2011-07-09. The Marketing Accountability Standards Board (MASB) endorses this definition as part of its ongoing Common Language: Marketing Activities and Metrics Project . In a business-to-business context, the term source loyalty is also used.Wind, Y., Industrial Source Loyalty, Journal of Marketing Research, Volume 7, No. 4 (November 1970), pp. 450-457, accessed on 22 January 2025 Loyalty implies dedication and should not be confused with habit, its less-than-emotional engagement and commitment. whose financial and ethical values (for example, ESG responsibilities) rest in large part on their brand loyalty are said to use the loyalty business model.
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.
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”.
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.
Previous studies showed that customer loyalty is affected by customer satisfaction, but the association differs based on customer switching costs (procedural, relational, and financial). 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.
the 'rate' of usage, to which the [[Pareto 80-20 rule|Pareto principle]] applies: Kotler's "heavy users" are disproportionately important to 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". However, research shows that heavy users of a brand are not always the most profitable for a company.
Other Advertising 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.
Low-involvement consumers take on habitual buying behavior or variety-seeking behavior. These processes occur when a consumer is purchasing fast-moving goods and requires a low product-involvement level. Habitual behavior occurs when the consumer doesn't see large differences between brands, and therefore doesn't search for information. Consumers usually purchase because advertising or promotion created familiarity. The attitudes formed by being exposed to advertisements and promotions cause brand loyalty to occur. Because consumers do less mental work to assess each brand, they may stick with a brand simply because it takes less work to do so. Low-involvement consumers use short-cut evaluations, so, for example, a known brand name that they haven't thought about deeply enough to find faults in will be an easy buy decision. Habitual buying behavior can result in brand loyalty subconsciously. The consumer isn't actively aware they want to purchase repeatedly from a particular brand, it is just in their habitual nature to do so. Alternatively, low-involvement consumers who are using variety-seeking behavior see differences between brands and tend to do a lot of switching. To attempt to persuade these consumers into habitual buying behavior, marketers will try to dominate shelf space, cut prices, or introduce new products. If a low-involvement consumer continues to use variety-seeking behavior, brand loyalty is unlikely to be established.
Fred Reichheld, one of the most influential writers on brand loyalty, claimed that enhancing customer loyalty could have dramatic effects on profitability. However, new research shows that the association between customer loyalty and financial outcomes such as firm profitability and stock-market outcomes is not so straightforward.
An organization's ability to attract and retain customers is vital to its success. Customer loyalty requires a strong appetite by the customer for a product. Marketing tools such as integrated marketing communications (IMC) and branding can increase perceived attraction between the consumer and the brand. These tools boost emotional response and attachment to the brand, and influence feelings the customer has for a brand; both are important for congruency and a relationship. This in turn leads to the development of brand loyalty. Relationship development and maintenance can also be achieved through the use of loyalty programs or a celebrity endorser. These can help to increase a bond between a brand and a consumer.
IMC is defined as "integrating a variety of convincing messages across various forms to communicate with and develop relationships with customers." IMC can convey the brand image, increase awareness, build brand equity, and achieve shared values between the consumer and the brand.
Loyalty programs reward and encourage customers, which is necessary for customers to want to repurchase. The consumer should feel a connection with the brand to want repeat purchase and to exhibit other brand loyalty behaviors such as positive word of mouth. "A loyalty program is an integrated system of marketing actions that aims to make member customers more loyal to a brand." The main goal of a loyalty program is to create or enhance customer loyalty towards a brand whilst being sustained even after a loyalty program is discontinued.
Marketers use such tactics as a loyalty program to increase likelihood of repeat purchase and to retrieve information about the spending habits of the consumer. Loyalty programs that enhance the consumer's opinion about how much the firm can offer them may be essential for building a relationship. Even though these programs can cost a lot of money, they help to create a relationship between the brand and the consumer. An example of a loyalty program is a point system: Frequent customers earn points which transform into freebies, discounts, rewards, or special treatment of some sort; customers work toward a specific number of points to redeem their benefit.
Celebrity endorsers moderate the relationship between the consumer and the brand by personifying the brand to match the perceptions of the consumer. Using a celebrity endorser can build a relationship between consumers and a brand because endorsers can represent similarities between themselves and the consumer, and themselves and the brand. Celebrities make marketing tactics more convincing and marketing communications more effective.
For example, a celebrity may be influential to a Generation Y consumer because that generation views them as likeable, real, and beautiful. In order for celebrity endorsers to effectively reach the audience, they must connect and identify with the audience. The use of a popular celebrity endorser could personalize the brand for the consumer and create the relationship between the consumer and the brand. To ensure endorsement is successful, the celebrity should match the brand and the consumer. The effect of using a celebrity endorser that consumers look up to and want to emulate can lead to increased congruence between the values of the consumers and the brand, and improve the relationship between the two.
Influencing the statistical probabilities facing a consumer choosing from a portfolio of preferred brands, which is required in this context, is a very different role for a brand manager; compared with the much simpler one, traditionally described, of recruiting and holding dedicated customers. The concept also emphasizes the need for managing continuity.
Some organizations may regard "heavy users" as "major accounts" to be handled by senior sales personnel and sales manager; whereas "light users" may be handled by the general sales force or by a dealer.
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