Brand loyalty is when customers buy the same brand of a product repeatedly – over and over again for a long time.
Branding differentiates the brand name from the competitors’ brand names. It is the process by which companies distinguish their product offerings from the competition. The way in which a firm differentiates itself from rivals. Branding is a form of differentiating a firm’s products from those of its competitors.
What is brand loyalty?
Brand loyalty occurs when customers keep buying the same brand of a product over and over again. They are devoted to the particular brand instead of choosing a competitor’s brand.
When customers have brand preference over other brand names, it means that they have habitual preference for one brand compared to other similar available options on the market. Customers are satisfied with the brand, like it very much and are committed to further purchases in the future.
Brands will have brand loyalty when they have the right appeal. Customers will perceive that the brand offers the right combination of quality versus price, hence they will consistently repurchase it.
Why is brand loyalty important?
Brand loyalty is important to businesses for several reasons.
1. Helps to achieve higher market share. Brand loyalty helps to improve market share and maintain it over a long period of time. It is because new players find it hard to gain a market. Also, brand loyalty plays a main role in the future success of a business in prolonging Product Life Cycle (PLC) along with the brand’s life cycle.
2. Allows to charge high prices. Brand loyalty allows a business to charge premium prices for their products. Price inelastic demand as customers are not sensitive to price changes; therefore setting higher prices will increase sales revenue. Consequently, this which improves profit margins of popular brands. Additionally, brand loyalty helps to protect a business against price competition from rival companies and potential new entrants.
3. Extends the brand. Brand loyalty makes brand extension strategies way easier to accomplish. Once a product has an established brand, it is faster and cheaper to promote new products under the successful brand. Hence, brand loyalty helps when firms develop and launch new products.
4. Creates barriers to entry. Brand loyalty makes it more difficult for new firms to enter markets because it reduces the likelihood of brand switching. New firms have it difficult to win over your loyal customers who are satisfied with tried and tested products that they like. Therefore, brand loyalty acts as a barrier to entry in highly competitive markets such as the clothing industry.
How to build brand loyalty?
Customer loyalty is built over a long period of time. Building brand loyalty requires appropriate marketing know-how and skills as well as spending large amounts of money in promoting and sustaining the loyalty to the brand.
Many small companies encourage brand loyalty by offering a better service than their larger competitors with big promotional budgets. It may expressed through caring customer service, knowledgeable after-sale service or fulfill one-off customer requests that larger businesses may be reluctant to provide for.
When the business has many loyal customers who are satisfied with the products, they may even be willing to promote the brand though Word of Mouth (WoM) advocacy.
Benefits of brand loyalty
There are many benefits for a business of having high brand loyalty such as:
- Higher market share.
- Premium pricing.
- Ensured brand extension and growth strategies.
- High barriers to entry.
How to measure brand loyalty?
Brand loyalty is measured in terms of repeat purchase behavior irrespective of how much marketing pressure is generated by competing brands.
What is opposite to brand loyalty?
The opposite of brand loyalty is brand switching. Brand switching happens when customers choose to buy alternative brands from rival companies. It occurs mainly because the original brand has lost some of its former appeal, e.g. price is not competitive anymore or when competing products offer better functionality.
To prevent brand switching in the future, firms use customer loyalty schemes to entice customers to stick to the brand by rewarding devoted customers, e.g. Starbucks Rewards used by Starbucks, Miles & More program scheme used by many airlines, etc.
Brand loyalty is the ultimate goal of any business organization. In fact, it should be an aim for its marketing efforts.
