Brand Loyalty, Types, Importance, and Strategies for Increasing it

Brand loyalty is measured through methods like word of mouth publicity, repetitive buying, price sensitivity, commitment, brand trust, customer satisfaction, etc. It is the foundation of an organization and leads to less marketing expenditure. Brand extension is required for a company’s growth, profitability, and brand’s added reputation. There are various types of brands and each will have a finite potential to extend into related and unrelated product categories.

BRAND LOYALTY
Brand Loyalty is a scenario where the consumer fears purchasing and consuming product from
another brand which he does not trust. It is measured through methods like word of mouth
publicity, repetitive buying, price sensitivity, commitment, brand trust, customer satisfaction, etc.
Brand loyalty is the extent to which a consumer constantly buys the same brand within a product
category. The consumers remain loyal to a specific brand as long as it is available. They do not
buy from other suppliers within the product category. Brand loyalty exists when the consumer
feels that the brand consists of right product characteristics and quality at right price. Even if the
other brands are available at cheaper price or superior quality, the brand loyal consumer will
stick to his brand.
Brand loyal consumers are the foundation of an organization. Greater loyalty levels lead to
less marketing expenditure because the brand loyal customers promote the brand positively.
Also, it acts as a means of launching and introducing more products that are targeted at same
customers at less expenditure. It also restrains new competitors in the market. Brand loyalty is a
key component of brand equity.
Brand loyalty can be developed through various measures such as quick service, ensuring quality
products, continuous improvement, wide distribution network, etc. When consumers are brand
loyal they love “you” for being “you”, and they will minutely consider any other alternative
brand as a replacement. Examples of brand loyalty can be seen in US where true Apple
customers have the brand's logo tattooed onto their bodies. Similarly in Finland, Nokia
customers remained loyal to Nokia because they admired the design of the handsets or because
of user- friendly menu system used by Nokia phones.
Brand loyalty can be defined as relative possibility of customer shifting to another brand in
case there is a change in product’s features, price or quality. As brand loyalty increases,
customers will respond less to competitive moves and actions. Brand loyal customers remain
committed to the brand, are willing to pay higher price for that brand, and will promote their
brand always. A company having brand loyal customers will have greater sales, less marketing
and advertising costs, and best pricing. This is because the brand loyal customers are less
reluctant to shift to other brands, respond less to price changes and self- promote the brand as
they perceive that their brand have unique value which is not provided by other competitive
brands.
Brand loyalty is always developed post purchase. To develop brand loyalty, an organization
should know their niche market, target them, support their product, ensure easy access of their
product, provide customer satisfaction, bring constant innovation in their product and offer
schemes on their product so as to ensure that customers repeatedly purchase the product.
Brand Loyalty Types
Indian consumers are broadly categorized into four
 Pleasure seekers
 Value seekers
 Novelty seekers and

 Bargain Hunters
 Pleasure seekers: who purchase for the sake of pleasure, fun. Mostly because they enjoy
or derive pleasure using them.
Eg: Formula one cars, vintage cars, antiques, vintage wines etc.
 Value seekers: These people usually are very conscious about quality – price party. If
the value of the product is good or high, they don’t mind paying a higher price.
Eg: Purchasing electronic goods by software engineers, wedding jewellery by brides’
parents etc.
 Novelty seekers: They are more interested in new items which are introduced in the
market . They want and like to try everything new in the market.
 Bargain Hunters: These customers shop where maximum discounts are given or many
promotional offers are given. They prefer to purchase any product at the lowest possible
price.
Eg: Wal – Mart, Big Bazaar, Subhiksha etc.
The world over loyalty towards a brand by a consumer is categorized as
 Hard core loyalty: Those who have undivided loyalty to a brand, and buy the same
Product repeatedly. If A, B, C, D, E and F are the different brands of a particular product
category in the Market. Then hard core loyalists can be stated as people who purchase.
o Eg: A, A, A, A, A ( Mysore – Sandal Soap )
 Split Loyals: These people shift between two or three brands which have the same
or similar, attributes. They are also called divided loyalists
o Eg: AB, AB, AB ( Mysore Sandal Soap and Santoor )
 Shifting Loyals: These people shift from one brand to another slowly, They are also
Called unstable loyalist.
o Eg: AAA, BBB, CCC (Mysore Sandal Soap to Santoor to Rexona)
 Switchers: Who are not loyal to any product, or no loyalty
o Eg: A, B, C, D, E, F
Invariably it’s the hard core loyalists who make up for the population of brand
loyal people. Split loyal and Shifting loyal can be brought back through brand promotion
activities.
Increasing Brand Loyalty
Popular Loyalty Programs
Below are some of the most popular Loyalty Programs that are currently being used by major
companies as a means of engaging their customers beyond traditional advertising.
o Sweepstakes and Advergames
 Branded digital games that engage consumers with prize incentives
o Contests
 Skill tests and user-generated promotions such as video and photo contests
o Social Media Applications and Management

 Develop promotions and offers within social media channels
 Ongoing management and maintenance of brand Facebook pages and
other social media
o Customer Rewards Programs
 Online points programs – earn prizes for incremental purchase behavior
(e.g., JetBlue's TrueBlue and American Airlines's AAdvantage frequet
flyer programs)
o My Coke Rewards, Pepsi Stuff, and the Marriott Rewards loyalty programs
o Promotional auctions – bid for prizes with points earned from incremental
purchase behavior
o Email Clubs
o Manage overall subscription databases – national and/or segmented by market
o Design, develop, and publish email blasts
o Develop templates specific offers and promotions / delivery
o Text Messaging / Mobile Apps / Desktop Apps and Widgets
o SMS Promotions
o iPhone apps
o Branded web apps
Brand Extension:
Brand extension is required for a company’s growth, profitability, and brand’s added reputation.
It is an inevitable strategic move at some point of time in brand management. While extending a
brand, all assumptions related to that brand held for a long time are revised and the brand’s
identity is redefined. The brand managers need to identify growth opportunities and increase
parent brand’s value.
Brand Extension is nothing but launching a product in a different category under an already
established brand name. It is extending the existing brand promise with diverse products or
services.
The following diagram shows the matrix of brand growth.

When a company introduces a new product, it has the following choices:
 New Brand, New Product (New Brand)
 New Brand, Existing Product (Multi-Brand)
 Existing Brand, New Product (Brand Extension)
 Existing Brand, Existing Product (Line Extension)
The last two in the above list are the types of brand extensions.
Types of Brand Extensions:
Related brand extensions can further be classified into two sub-types viz. category related
brand extensions and image related brand extensions.
Category Related: When a brand is extended to a related product category meaning a category
that has similar purpose to serve, it is called category related brand extension.
Eg: Lux has been known as a premium bathing soap. When it was launched as a body wash, it
had a similar purpose to serve in a related product category.
Eg: EverYuth orange peel off is known to impart glow to the face and is a product used by young
ladies. When it was extended to face wash, the objective of the newly launched product was the
same and that was to offer freshness and glow to the face even after exposure to sunlight. This
was another instance of category related brand extension.

Image Related: When a brand is extended into a new product category with an identity similar
to that of the original brand so that it is perceived similarly by the target segment, it is called
image related brand extensions.
Eg: Let’s take the case of Lifebuoy. When Lifebuoy was launched as a hand wash, it was an
example of image related brand extension. The original brand was a bathing soap with germ
fighting abilities. The newly launched product (hand wash) was perceived as a germ fighter
similar to the original brand but then it was a different product altogether having different set of
functional attributes.
Unrelated Brand Extension: When a brand is extended such that it is neither category related
nor image related, it is called unrelated brand extension.
Eg: Tata as a brand was primarily a manufacturer of steel. When the TATA brand name was
extended to FMCG items like salt and tea, it was an example of unrelated brand extension. There
was no similarity in product category or in image attributes.
Vertical Brand Extension: When a brand is extended up into more premium market segments
or down into more value-conscious segments to attract new groups of consumers, it is called
vertical brand extensions. The basic tenet of vertical brand extensions is that the equity of the
parent brand gets transferred in either direction in order to appeal to those consumers who would
otherwise have not considered the parent brand.
Across product categories, success of an extension depends upon its ability to achieve
some of its own brand equity in the new category and contribute to the equity of the parent
brand. It has been observed that it is not just the product brands but also service brands,
destination brands and celebrity brands that take the extension root for better visibility and
enhanced sustenance.
Among the product brands examples of brand extensions are not just restricted to
individual brands but even corporate brands and umbrella brands.
Eg: Britannia as an example of corporate brand has been found to extend into dairy
products like cheese, milk after establishing itself as a leading brand of biscuits in the country.
Eg: Amul, an umbrella brand owned by GCMMF (Gujarat Co Operative Milk Marketing
Federation) has successfully extended itself into various product categories over the years after
being strongly associated as a brand of butter.
Brand extensions offer certain distinct advantages:

• Improvement in brand image
• Reduce perceived risk of customers
• Enhancement of probability of gaining distribution and trial
• Enhance efficiency of promotional expenditures
• Avoid costs of developing a new brand
• Allows for packaging and labeling efficiencies
• Permits variety seeking among consumers
• Clarifies the meaning attached with a brand
• Attracts new customer segments
• Revitalization of the parent brand
• Prepares a platform for subsequent extensions
Some of the disadvantages are:
• Confusing or frustrating consumers
• Encounter retailer resistance
• Negatively impact the image of the parent brand
• Cannibalize the existence of the parent brand
• Erase identification of a brand with a particular product category
• Dilute the overall meaning of the brand
• Cause the company to forego the chance of developing a new brand
Brand extensions have assumed a lot of significance in the contemporary world of
branding as far as the visibility and long term sustainability of brands is concerned. However the
success of brand extensions will depend upon the degree to which a certain extension will be
desired and accepted by customers. Generally it has been found that the two major ingredients of
successful brand extensions across industries are product similarity and concept consistency.
There are various types of brands and each will have a finite potential to extend into related and
unrelated product categories. Any forced or irrelevant extension may ruin not just the prospects
of an extended brand but also the parent brand and the company associated with the brand.

Marketers thus should abstain from making certain critical errors related to brand extension and
focus their efforts on aspects that go into the making of successful brand extensions. Branding
experts thus often refer to brand extensions as a double edged sword which needs to be executed
only after thorough research of consumer preferences for it is this aspect that serves as the
starting point for all successful brand extensions.
According to Kotler’s Definition, learning involves changes in an individual’s behavior
arising out of the experience. Most of the human behavior is learned over time, out of
the experience.
Following are the features of consumer learning
 Consumer learning is a process. A process which continually changes and
acquires new knowledge.
 This knowledge can be obtained from reading, discussing, observing, thinking,
etc.
 Newly acquired knowledge or personal experience, both serve as feedback.
Elements of Consumer Learning
Motivation is the driving force of all important things to be learnt. Motives allow
individuals to increase their readiness to respond to learning. It also helps in activating
the energy to do so. Thus the degree of involvement usually determines the motivation
to search information about a product.
For example, showing advertisements for summer products just before summer
season or for winter clothes before winters.
Motives encourage learning and cues stimulate the direction to these
motives. Cues are not strong as motives, but their influence in which the consumer
responds to these motives.
For example, in a market, the styling, packaging, the store display, prices all serve as
cues to help consumers to decide on a particular product, but this can happen only if
the consumer has the motive to buy. Thus, marketers need to be careful while
providing cues, especially to consumers who have expectations driven by motives.
Response signifies how a consumer reacts to the motives or even cues. The response
can be shown or hidden, but in either of the cases learning takes place. Often
marketers may not succeed in stimulating a purchase but the learning takes place over
a period of time and then they may succeed in forming a particular image of the brand
or product in the consumer’s mind.
Reinforcement is very important as it increases the probability of a particular response
in the future driven by motives and cues.
Consumer Behavioral Learning Theories

There are various theories which are developed to explain the learning theories. The
below are the major theories related to consumer behavior.
Classical Conditioning theory refers to learning through repetition. This is referred to
as a spontaneous response to particular situation achieved by repetitive exposure. It is
such a kind of a behavioral theory which says, when a stimulus is connected to or
paired with another stimulus, it serves to produce the same response even when used
alone.
For example, if you usually listen news at 9 pm and have dinner too at 9 pm while
watching the news then eventually the sound of news at 9pm may make you hungry
even though you are not actually hungry or even if the dinner is not ready.
Instrumental Theory is developed by B F SKINNER, an American psychologist, he was
the first to develop this model of learning. Instrumental theory suggests that human
beings learn by trial and error method and then find out a particular stimulus that can
yield best results. Then, this is subsequently formed as a habit
This theory is very important and applies to many common situations in the context of
consumer behavior. It suggests that consumers learn by means of trial-and-error
method in which some purchase behaviors result in a more favorable outcome.