Brand Loyalty

This scholarly article illustrates that cognitive and emotional factors are involved in the brand loyalty of consumers in consumer goods markets.

Brand loyalty

Brand loyalty is a measure of the attachment that a customer has to a brand. Essentially, brand loyalty refers to a consumer's consistent repurchase of a favored brand. Considerable discussion exists in the literature over the definition and dimensionality of loyalty. According to Aaker (1991) brand loyalty reflects how likely a customer will be to switch to another brand, especially when that brand makes a change, either in price or product features. In line with Aaker's (1991) description of loyalty, Fournier and Yao (1997) note that there appears to be general agreement in the literature that brand loyalty refers to a biased behavioral response to choose one brand out of a set of alternative brands.

There are many advantages of brand loyalty. Primarily, it is clear that it is much less costly to retain customers than to attract new ones, and existing customers represent a substantial entry barrier to competitors, in part, because the cost of enticing customers to change loyalties is often prohibitively expensive. There is also the advantage of trade leverage, ensuring preferred shelf space for preferred brands and additionally brand loyalty provides a firm with time to respond to competitive moves. According to Delgado-Ballester and Munuera-Aleman (2001) the interest in brand loyalty derives from the value that loyalty generates to companies in terms of:

  • A substantial entry barrier to competitors
  • An increase in the firm's ability to respond to competitive threats
  • Greater sales and revenue
  • A customer base less sensitive to the marketing efforts of competitors
Further, Rowley (2005) identifies the benefits of brand loyalty as:
  • Lower customer price sensitivity
  • Reduced expenditure on attracting new customers
  • Improved organisational profitability
Caudron (1993) and Olsen (1997), however, argue that the ever-increasing proliferation of brands, price competitiveness, and the strength of own label brands have all worked to drive down brand loyalty. It has been suggested that a loyal customer is an oxymoron in today's marketplace. Research has shown that there is a 50% chance that a shopper will switch from their normal brand to a competitor's brand, which is on promotion, and furthermore that two thirds of shoppers claim to always compare prices before choosing a product. Research in the UK across different industry sectors has shown that more than 95% of retail petrol buyers buy more than one brand; about 85% of customers shop at more than one grocery retailer and personal investors will, on average, subscribe to three different financial services companies. Given these tendencies, it is not surprising that marketers are increasingly interested in understanding the sources of loyalty and the mechanisms through which it comes about.

When developing an understanding of loyalty, it is essential to describe what loyalty is not to enable the true dynamics of brand loyalty to be understood. Essentially brand loyalty is not satisfaction with a brand nor is it repeat purchase behavior (inertia). Both of these concepts are explored in the following sections.

Satisfaction

Satisfaction can be broadly characterized as a post purchase evaluation of product quality given pre-purchase expectations. Anderson and Sullivan (1993) found that satisfaction among consumers has a positive impact on repurchase intentions. They argue, that by consistently providing high satisfaction a resulting higher repurchase intention among consumers should be observed. This finding is supported by Cronin and Taylor (1992) who found that satisfaction has a significant positive influence on repurchase intentions. However, while satisfaction is widely regarded as an important indicator of repurchase intentions, satisfaction with a product does not ensure the development of loyalty.

Burger and Cann (1994) found that satisfaction does not guarantee that the same supplier will be used again for the next purchase. Research has shown that each year, US companies lose 15-20% of their customers, many of whom were considered satisfied. Indeed, it is not uncommon to have high levels of customer satisfaction and still be losing customers. This can occur because satisfied customers leave for the lure of competitors' offers. Customer satisfaction measures how well a customer's expectations are met by a given transaction. Customer loyalty on the other hand, measures how likely a customer is to return. Therefore, in attempting to enhance loyalty among consumers, marketers need to ask what drives loyalty beyond satisfaction. In this context, it is essential for marketers to understand how loyalty differs from repeat purchase behavior.

Repeat Purchase Behavior (Inertia)

Brand loyalty is not the same as repeat purchase behavior. Repeat purchase behavior, means that the consumer is merely buying a product repeatedly without any particular feeling for it. Where a brand is bought out of habit merely because less effort is required, inertia is said to be present. Many people tend to buy the same brand almost every time they go to a shop and such a consistent pattern of behavior is often due to the presence of inertia. It is argued in these cases that there is little or no underlying commitment to the product. In essence, the consumer passively accepts a brand.

In contrast, the concept of brand loyalty implies that a consumer has some real preference for the brand and makes a conscious decision to continue buying the same brand. Loyalty therefore is present only when consumers evaluate available brands and make a deliberate choice for one of those. In other situations, repeat purchasing is inertia to stay with the present brand. Aaker (1991) is of the opinion that an enormous amount of inertia exists in consumer choice, and that consequently there is a need, when examining loyalty to clearly differentiate between situations where inertia or loyalty is present.

Despite differentiating between loyalty, satisfaction and inertia, it is argued that understanding of the phenomenon of brand loyalty remains lacking, with no universally agreed definition. This may be as a result of two different theoretical research orientations to the study of brand loyalty. The first orientation focuses on loyalty expressed in terms of revealed behavior and cognitive thought processes, while the second orientation focuses on attitudes and the meaning and hedonic-emotive aspects of brand loyalty. Essentially, brand loyalty studies have focused on loyalty as a result of cognitive decision making or as a result of positive attitudes. The following sections examine both orientations.


Brand Loyalty and Cognitive Decision Making

Loyalty expressed in terms of cognitive decision making and consumer behavior has traditionally received most attention in the literature but is limited according to Fournier (1998) as it fails to truly inform the phenomenology of brand–customer interactions. Loyalty as a result of cognitive decision making occurs when, through trial and error a brand, which provides a satisfactory experience is chosen. Rational thought processes dominate where loyalty to the brand is the result of repeated satisfaction with the brand. This perspective has primarily centered on the relationships between perceived quality, satisfaction and loyalty. Interestingly, Chaudhuri and Holbrook (2001) recently suggested that behavioral loyalty tends to lead to greater market share.

Despite large amounts of research examining brand loyalty as a result of cognitive decision making, many argue that this approach to the study of brand loyalty fails to capture its nuances with a growing body of literature over the last decade analyzing brand loyalty at an emotional level. Recognizing the importance of attitudinal and emotional aspects of brand loyalty, increasing numbers of researchers now argue that there must be a strong attitudinal commitment to a brand for true loyalty to exist.


Brand Loyalty and Positive Brand Attitudes

Examination of loyalty in this way focuses on the attitudes that consumers hold towards brands. These attitudes are seen as taking the form of a consistently favorable set of stated beliefs towards the brand purchased. Research of brand loyalty at this level has dominated the literature for the last decade or more, with studies primarily examining the role that brands play in the lives of consumers. Concepts such as brand identity and brand personality, coupled with the role of brands as relationship partners, has resulted in a relationship perspective to the study of brand loyalty governing much of this literature. Those in support of this perspective argue that people relate to brands much like they relate to other people and delving into loyalty is much like studying interpersonal relationships. A significant brand provides meaning and is important to a person because it connects with their life, and they have behavioral, attitudinal and emotional involvement. The essence of a brand–customer relationship resembles the typical "personal" relationship between two people. Essentially, the stronger the relationship, the greater the brand loyalty.

It is argued that this perspective is suitable in a marketing environment where brands at a functional level all appear to deliver great performances and are thus difficult to differentiate on the basis of that performance. The emotional and attitudinal reasons for loyalty in such instances are regarded by many as being more suited to the building of brand loyalty, than the rational, cognitive, behavioral perspective that traditionally dominated the literature.

Examination of loyalty from an attitudinal perspective, however, is not without its critics. Dabholkar (1999) believes that attitudinal and relationship perspectives on brand loyalty have applicability problems when examining purchases in FMCG markets, while Oliver (1999) has argued that there is little systematic empirical research to corroborate or refute the attitudinal perspective on brand loyalty. Indeed, Delgado-Ballester et al. (2003) state that there are few studies that are informative about brand–customer interactions, despite the fact that the idea of brand–customer relationships is not new. Despite these reservations, loyalty studies at an attitudinal level continue to dominate the more recent literature on brand loyalty.


Brand Loyalty and the Role of Bonds

An examination of brand loyalty is incomplete without an analysis of the development of bonds. Bonds are those which join two parties together, and when present can lead to the development of brand loyalty. Bonds can be of either a structural or a social nature. Fournier (1998) refers to structural bonds as substantively grounded and social bonds as emotionally based. The literature proposes that bonds of a social nature develop between customers and brands. Trust and commitment, followed by interdependence are the most mentioned social bonds in the literature. Other social bonds include reciprocity, empathy, cooperation, and satisfaction. According to De Chernatony (2001) bonds are present where consumers are loyal for either cognitive or emotional reasons, however it is interesting to note that the type and nature of bonds that develop where consumers are loyal for emotional reasons have traditionally received more attention in the literature than the types of bonds that develop for cognitive reasons.

It is argued that as bonds grow in intensity, the attachment that the customer has for the brand deepens. Connections such as these demonstrate the powerful emotional attachments that can form when brands connect with customers in deep and significant ways. Fournier (1998) proposes that bonds can range in intensity from superficial to liking, friendly affection, passionate love and addictive obsession, and where these bonds exist the brand contributes to the customers' life in significant ways. According to Uncles et al. (2003), marketers must understand why bonds exist and attempt to nurture them to enhance the strength of the consumers' attitudes towards a brand and thus strengthen the loyalty that exists.

Thus, it is apparent from the literature that bonds can lead to loyalty and can strengthen the loyalty that exists, however it is also possible that bonds can exist without the presence of loyalty. For example, a customer may have trust in a brand and be satisfied with a brand and yet switch to an alternative brand on offer for a variety of reasons. Interestingly however, while bonds can exist without the presence of brand loyalty, it is evident that loyalty cannot be present without the existence of bonds. For example, if a customer is loyal to a brand and engages in consistent repurchasing of a favored brand, bonds such as satisfaction are inevitably present. In summary therefore it can be said that:

Bonds can lead to and can strengthen brand loyalty but do not guarantee brand loyalty, however brand loyalty cannot be present without the existence of bonds.

It is argued that the development of effective marketing strategies is dependent on knowing if and why loyalty does/can exist, and the type and nature of bonds that lead to the development of loyalty. In this context therefore, there is a necessity to discover from the consumers' perspective the types of bonds that exist in FMCG exchange situations and the role of bonds in the development of loyalty.