Marketing Brand Loyalty Term Paper

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Future of Marketing: Brand Loyalty

1994 report on marketing described an ongoing paradigm shift from the old 4P model of marketing, to a newer model based on relationship marketing. The report describes how evolving trends in business such as "the globalization of business and the evolving recognition of the importance of customer retention and marketing economies and of customer relationship economics, among other trends, reinforce the change in mainstream marketing" (Gronroos 10). The other major factor that has driven the change is the rise of services marketing, which requires a different approach than traditional product marketing.

The shift to relationship marketing is described saying, "a shift is clearly taking place from marketing to anonymous masses of customer, to developing and managing relationships with more or less well-known or at least somehow identified customers" (Groonroos 22).

One method of creating this relationship between the customer and the company is by brand building and creating brand loyalty.

Stephen King argues this point saying that in the increasingly competitive and rapidly changing business world "it becomes increasingly difficult to sustain an objective comparative advantage over one's competitors so it will become increasingly important to position organizations as 'brands' in the minds of actual and potential customers" (King 3).

According to King, in the fast-paced business world, brand building is the only way to create a stable long-term demand for any product or service, the only way to add value to attract customers, and the only way to maintain profitable margins (King 5).

The current pace of change is especially rapid in the ecommerce market. A recent study on brand loyalty in this market shows how the ideas about brand loyalty are changing. The study provides the usual definition of brand loyalty as being "the minimum price differential needed before consumers who prefer one brand switch to some competing brand" (Chen & Hitt 5). Brand loyalty is also described as being due to "real switching costs, decision biases, uncertainty about the quality of other brands, or other psychological issues that drive customers' seemingly 'unreasonable' behaviors" (Chen & Hitt 5).

This study then continues to apply these past ideas on brand loyalty to ecommerce.

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The findings of the study are that even though the barriers to switching between providers is minimal in ecommerce, brand loyalty still exists in ecommerce. It was also found that 70% of CD and book shoppers were loyal to just one site (Chen & Hitt 6).

A recent survey by AARP reported that 91% of consumers care more about value than brand name, that 71% use past experience to decide whether to purchase a brand or not, and that 61% also include quality as an important characteristic impacting their decision-making (AARP).

The discrepancy in this data is that while 91% of customers report that they care more about value than brand, 70% of book and CD purchasers repurchase from the same provider even if products are available cheaper elsewhere. In this case, the customers are reporting on their attitude via the survey, but clearly there must be other factors affecting their behaviors.

Grisaffe gives a reason for this discrepancy where he says that there are two components to brand loyalty, attitude and behavior, where the attitude about a brand impacts the behavior but does not necessarily lead to the behavior. For example, a customer satisfied with a brand does not always make the decision to repurchase, for various reasons. Therefore, attitude is only half the picture, with behavior being the other half.

The Future of Brand Loyalty

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