On Brand Loyalty- the invisible asset

For several decades, researchers and practitioners have recognized the importance of brand loyalty in the marketing literature (Aaker, 1996) and have therefore widely investigated it. However, despite the significant number of studies, there is little general agreement among researchers about what loyalty is and how it should be measured (Tabaku et al., 2015).

In modern dictionaries it is defined as “the tendency of consumers to continue buying the same brand of goods rather than competing brands” (Oxford Languages, 2022) and is a reflection of “the perception that the particular brand has the qualities that will meet their expectations and identifies with the consumer at a personal level” (Ahsan S., 2022). According to more traditional literature, particularly a frequently cited theory by Jacoby (1971), “Brand Loyalty is the biased (non-random) behavioural response expressed over time by some decision-making unit with respect to one or more alternative brands out of a set of brands and is a function of psychological processes and emotional response”. Modern definitions and traditional ones both have in common two highlighted aspects: the repetition of purchase and an appreciation and liking towards brand image.

Brand loyalty can be inserted in a set of brand-related theoretical concepts that are part of marketing strategy. Some key terms to with is interconnected are are brand awareness, brand reputation, perceived quality, brand association, and other strategic terms (Aaker D., 1991). From several decades, researchers and practitioners have recognized the importance of brand loyalty in the marketing literature (Aaker D., 1996) and have investigated how it relates to the terms that have been cited.

An interesting paper published by the Journal of Business and Retail Management Research (Chinomona et al., 2017) constructs an interesting model to connect critical terms and proves correlations and causal relationships between them.

The researchers opted for a quantitative research design using a structured questionnaire to 200 participants. Results proved that:

1-????brand awareness directly influences brand attachment in a positive significant way. High levels of brand awareness will lead to higher leads on brand loyalty

2-???brand association positively influences brand loyalty but has an insignificant impact to be considered

3-???product quality has a direct strong positive effect on brand loyalty. So, the more a consumer fined a product is of good quality the more a consumer is loyal to the brand

4-???brand loyalty has a direct strong positive effect on re-purchase intention. Thus, the more a consumer is loyal to a brand the more a consumers' intents to repurchase the brand

Brand Loyalty allows customers to repeatedly purchase from a trusted source whenever they have a need, without constantly investing resources in investigating new brands. The stronger the brand in terms of quality offered, the lesser the risk customers bear in terms of purchasing a brand which may not perform to expectations […] and assures quality of products (Keller et al., 1998). Moreover, from a more practical point of view, from the buyer's standpoint, branding helps in identifying and recognizing the product, thus spending less time in the everyday shopping (Tabaku et al., 2015).

Brands have been considered as the second most important assets for a firm after customers (Doyle, 2001). This loyalty serves customer needs of comfort and trust but also corporate ones, as the cost of acquisition of a new customer is significantly higher than maintaining existing ones by investing in retention.

In fact, recent research available on cost of acquisition compared to retention shows that it costs up to seven times more to acquire a new customer than to retain an old one (Kiniulis M., 2021) or five times more than attaining existing ones (Kotler et. al., 2012). Brand loyalty is an important construct of the long-term financial performance of business firms (Reichheld F., 1996), as does not only represent a stream of income but also a powerful generator of word of mouth.

Brand loyalty does not only result in reduction of customer acquisition costs, but has several important strategic benefits to the firms, such as gaining?high market share and new customers,?supporting brand?extensions and strengthening brand to the competitive threats (Alhaddad, 2014).

The brand is one of the most valuable intangible assets a firm may have. Building a strong brand is both an art and a science (Tabaku et al., 2015). It requires careful planning, a deep long-term commitment, and creatively designed and executed marketing (Kotler & Keller, 2012).

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Reference List:

Aaker D., A. 1991. Managing Brand Equity. New York: The Free Press.

Ahsan, S., (2022): What is Brand Loyalty - Definition, Importance with Examples | Marketing Tutor

Alhaddad (2014): [PDF] The effect of brand image and brand loyalty on brand equity (researchgate.net)

Chinomona et al. (2017): researchgate.net/profile/Eugine-Maziriri-2/publication/320244178_The_influence_of_brand_awareness_brand_association_and_product_quality_on_brand_loyalty_and_repurchase_intention_ ?

Doyle, P., (2001), “Shareholder-value-based brand strategies”, Journal of Brand Management, Vol. 9(1),pp. 20-30.

Keller et al. (1998) Keller, Kevin. 1998. Strategic Brand Management: Building, Measuring and Managing Brand Equity, Prentice Hall.

Kiniulis, M. (2021): 11 Customer Acquisition vs Retention Statistics (2022) (markinblog.com)

Kotler, Philip and Keller, Kevin Lane. 2012. Marketing Management. Prentice Hall.

Reichheld, Frederick. (1996). The Loyalty Effect. Boston: Harvard Business School Press

Tabaku et al. (2015): BRAND LOYALTY AND LOYALTY PROGRAMS; A LITERATURE REVIEW Microsoft - REBE_10_2_2015.docx (rau.ro)