Customer Roles and Loyalty to products, brands and stores

Brand loyalty• Behavioral evidence of brand loyalty

Consistency of repurchase of brand as measured by:– proportion of purchase: loyalty as a percentage– sequence of purchase: undivided versus divided loyalty– probability of purchase based on history– Length of time as a loyal buyer

• Attitudinal evidence of brand loyalty– a greater liking of a particular brand (liking, satisfaction,

preference)– measured through customer rankings, ratings, choice

measures– Measures of performance/importance for brand overall or of

specific attributes and benefits associated with the brand

Jacoby’s definition of brand loyalty

• Brand loyalty is the biased (i.e. non-random) behavioral response (i.e. purchase), expressed over time by some decision-making unit, with respect to one or more alternative brands out of a set of such brands, and is a function of psychological (decision-making, evaluative) processes.

(Jacob Jacoby, emeritus professor, Purdue University)

Customer loyalty

• A customer’s commitment to a brand, store or supplier, based on a strong favorable attitude and manifested in consistent repurchase

• Loyalty is evidenced as both a Behavioral and an Attitudinal construct

Loyalty Measurements:Loyalty to a product/brand

• Please rate the following statements on a 5 point scale from 5 (strongly agree) to 1 (strongly disagree).

• I like this brand very much• In this product category I have a favorite brand• When buying X, I always buy my favorite brand, no

matter what.• In the past, almost all of my purchases of (product

class) have been of this brand.• If my favorite brand of (product class) is not available in

the store, I would go to another store rather than buy a substitute

Loyalty Measurements: Shopper Proneness to Loyalty

• Please rate the following statements on a 5 point scale from 5 (strongly agree) to 1 (strongly disagree).

• I generally buy the same brands I have always bought• Once I have made a choice on which brand to purchase,

I am likely to continue to buy it without considering other brands

• Once I get used to a brand, I hate to switch• If I like a brand, I rarely switch from it just to try

something different• Even though certain products are available in a number

of different brands, I always tend to buy the same brand.

Contributors to brand loyalty

• Perceived brand–performance fit– meets customers’ needs/wants

• Social and emotional identification– social images acquired through marketing– customers identify selves with brands

• Habit and history– customers acquire preferences through

repeated use– customers become familiar/comfortable

with brand

Detractors from loyalty: Attraction of Alternatives

• Market factors– brand parity: how similar and mutually

substitutable the brands are– competitive promotional activity: special price

deals available on competing brands• Customer factors

– variety seeking: customers get bored with the same brands

– product involvement: some products considered trivial

– price sensitivity: negatively related to loyalty

Brand equity

• Two views– investors: brand equity is brand valuation– customers: value of brand to customer compared to

other brands

• Brand equity versus brand loyalty– brand loyalty is consistent repurchase of brand

accompanied by a favorable brand attitude– brand equity is the value of the brand to the buyer

and seller

Store choice

• Planned purchases– those that customers intended to make

before entering the store

• Unplanned purchases– those that customers did not intend to

make before entering the store• restocking unplanned purchases• evaluated new unplanned purchases• impulse purchases

Store choice (cont.)

• In-store factors– These include knowledge of the store, time

pressures, purchase companions, special store promotions, atmospherics and customer mood.

• Exploratory shopping– browsing: more likely if customer is

familiar with the store• Atmospherics

– the physical setting of the store

Shopping motives

• Reasons customers visit stores– recreation

• shopping is fun!– socialisation

• social interaction with friends and family– seeking status

• respect and attention from sales staff– self-gratification

• rewarding self– information

• what’s new, what’s in fashion

Customer loyalty to stores

• The Store Offering– merchandise quality: brand names stocked– assortment: number of different items carried– price value: customers seek low prices

• The Shopping Process– ease of merchandise selection: layout and design– in-store credible information and sales assistance– convenience: ease getting in and out of store– problem resolution: remedy for mistakes– personalization: positive employee behavior

One-stop shopping / Super Stores Big Box/Category Killer Stores

• The practice of acquiring of all related products from one supplier

• Customer motivations for seeking one stop shopping:– convenience– cost savings– integrated products

• Risks of one stop shopping:– lower risk selecting a single supplier

Walmart / Kmart superstores for all needsCategory Killers (Home Depot, Office Max) for needs within a given product category

– fate tied to single supplier

The Three Customer Roles

Customer loyalty to products and stores and the three customer roles

Concept User Influencer ShopperBrand Loyalty ConceptBehavioralAttitudinal

.Preferences

.Preference / Knowledge

Sales Pattern Loyalty.

B. L. DeterminantsBrand PerformanceSocial/Emotional

Habits/History

User Attribute/benefit evaluation

User conditioning to products / sources

Attribute / benefit evaluation

Requests purchase

.

.

Routinized purchase behavior/history

Available AlternativesBrand ParityCompetitive PromotionsVariety Seeking

Product InvolvementPrice Sensitivity

User Indifference.May seek variety in product/use.Emotion about brand

.

.

.

.

.

.Appeals to shopperTry new stores or new products/brands.Shopper role dominates when price sensitive

The Three Customer Roles Concept User Influencer Shopper

Brand EquityPerformance

Social Image / Value

Trustworthiness

Most relevant to user

User value vs. economic valueUsers have assurance of quality/value

Knowledgeable about product, may specify May specify preferred brand

.

Shopper willing to pay more for superior value

.

.

Store ChoiceDistance/conveniencePriceMerchandise

.

.Specification of brand

May put pressure on shopper

Time/ConvenienceBudget Value

Unplanned and Impulse PurchasesBrowsing/Shopping

In-Store PromotionsAtmospherics Knowledge of store layout Time Pressure Purchase companion

Seeks new items May request if with shopper

Minimize cognitive effort

Seeks economic valueInfluenced by shopping experience

The Three Customer Roles Concept User Influencer Shopper

Store Loyalty Merchandise Quality Assortment Price value Store Brands Service Quality Store Image

Users want quality and value

Little input for nationally branded or commodity/ generic products.

May influence store selection for specialty goods

Shoppers maximize these factors while minimizing cost. These create value in the shopping experience.

Store Purchase Process Ease of shopping experience In-store assistance Convenience Problem resolution Personalization

May focus here when user is also the shopper, especially for hard to solve problems

Seek these benefits in a store. These create an enjoyable shopping experience and minimize the effort involved.

Key terms

Behavioral brand loyalty Restocking unplanned purchasesAttitudinal brand loyalty Evaluated new unplanned purchases Brand loyalty Impulse purchasesCustomer loyalty Brand parityAttraction of alternatives Competitive promotionalExploratory shopping activity AtmosphericsBrand valuation Store visitingBrand equity Shopping motivesPlanned purchases Store loyaltyUnplanned purchases Assortment

One-stop shopping