Copyright © 2002 by South-Western. All rights reserved. CHAPTER 11 Customer Loyalty to Products,...

Copyright © 2002 by South-Western.All rights reserved.

CHAPTER 11CHAPTER 11

Customer Loyalty to

Products, Brands and Stores

Customer Loyalty to

Products, Brands and Stores

CUSTOMER BEHAVIOR: A MANAGERIAL PERSPECTIVECUSTOMER BEHAVIOR: A MANAGERIAL PERSPECTIVE

PART 4: Building Loyalty and Customer ValuePART 4: Building Loyalty and Customer Value

CUSTOMER BEHAVIOR: A MANAGERIAL PERSPECTIVECUSTOMER BEHAVIOR: A MANAGERIAL PERSPECTIVE

PART 4: Building Loyalty and Customer ValuePART 4: Building Loyalty and Customer Value

Copyright © 1999 by Thomas Southwestern. All rights reserved.

CHAPTER 11CHAPTER 11PART 4Customer Behavior: A Managerial Perspective

Conceptual FrameworkConceptual Framework

Payer

UserBuyerUNDERSTANDING

CUSTOMER

BEHAVIOR

UNDERSTANDING

CUSTOMER

BEHAVIOR

STORE LOYALTYSTORE LOYALTY

• A model of store loyalty• Store choice• Planned, unplanned and impulse

buying• One stop shopping

• A model of store loyalty• Store choice• Planned, unplanned and impulse

buying• One stop shopping

BRAND LOYALTYBRAND LOYALTY

• Behavioral brand loyalty• Attitudinal brand loyalty• A model of brand loyalty• Brand equity

• Behavioral brand loyalty• Attitudinal brand loyalty• A model of brand loyalty• Brand equity



Brand LoyaltyBrand Loyalty

Brand loyalty as a behavior

Brand loyalty as an attitude



Behavioral Brand LoyaltyBehavioral Brand Loyalty

The consistent repurchase of the same brand

Brand loyalty is measured in several ways: Proportion of purchase Sequence of purchase Probability of purchase



Attitudinal Brand LoyaltyAttitudinal Brand Loyalty

Greater liking for a brand

Attitudinal brand loyalty can be measured by asking customers to rank various brands in terms of how much they like a brand or which brand they prefer the most



Brand Loyalty as Attitude-Based BehaviorBrand Loyalty as Attitude-Based Behavior

Brand relationship quality Love/Passion Self-Connection Commitment Interdependence Intimacy Brand Partner Quality



Illustrative Measures of Brand LoyaltyIllustrative Measures of Brand Loyalty

These statements may be rated on a five-point scale. (from 1 - Strongly Disagree to 5 -Strongly Agree); stronger agreement shows higher loyalty.

1. I like this brand very much.

2. In this product category, I have a favorite brand.

3. When buying _____, I always buy my favorite brand no matter what.

4. In the past, almost all of my purchases of _____ have been this brand.

5. If my favorite brand of _____ is not available in the store, I would go to another store rather than buy a substitute brand.



A Model of Customers’ Brand LoyaltyA Model of Customers’ Brand Loyalty

Performance-fit

Social/Emotional Identification

Habit

TowardBrand Loyalty

Brand ParityToward Brand

Disloyalty

Brand Parity

Competitive Promotional Activity

Variety Seeking

Lack of

Involvement

Price Sensitivity

Market Factors

Customer Factors

Customer

Negative Forces Positive Forces



Contributors to Brand LoyaltyContributors to Brand Loyalty

Perceived brand performance fit

Social and emotional identification with the brand

Habit combined with a long history of using the brand



The Role of Cure Quality versus Caring Quality in Retaining CustomersThe Role of Cure Quality versus Caring Quality in Retaining Customers

‘High’

45.168.7‘Low’

8.437.6Quality of ‘Caring’

Physicians

‘High’

59.172.2‘Low’

13.017.4

Hospitals (Public)

‘High’

53.463.9‘Low’


Dentists

‘High’

41.978.8‘Low’

11.130.8

Hospitals (Private)

‘High’

50.762.2‘Low’


Pharmacists

‘High’

69.665.7‘Low’

14.325.0

Hospitals (Religious Affiliation)

‘High’‘Low’

Quality of ‘Cure’---

‘High’‘Low’

Quality of ‘Cure’---



Detractors From Loyalty: Attraction of AlternativesDetractors From Loyalty: Attraction of Alternatives

Market factors Brand parity Competitive

promotional activity

Customer factors Variety seeking Product involvement Price sensitivity Multi-brand loyalty Withdrawal from the

product category Change in needs



Brand EquityBrand Equity

Two views of brand equity Investor

The financial worth of the brand Brand valuation

Customer The value of a brand to the customer compared to

other brands



Brand Equity Versus Brand LoyaltyBrand Equity Versus Brand Loyalty

Brand loyalty is a consistent repurchase of the brand accompanied by a favorable brand attitude

Brand equity is a mental concept of a brand’s superiority



Components of Brand EquityComponents of Brand Equity

Five dimensions of brand equity Performance Social image Value Trustworthiness Identification



Customer LoyaltyCustomer Loyalty

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



Illustrative Measures of Components of Brand EquityIllustrative Measures of Components of Brand Equity

P1 From this brand of television, I can expect superior performanceP2 During use, this brand of television is highly unlikely to be defectiveP3 This brand of television is made so as to work trouble freeP4 This brand will work very well

State Your opinion on the following statements by rating them 1 - 5 where 1 means strong disagreement and 5 means strong agreement:

Performance

I1 This brand of television fits my personalityI2 I would be proud to own a television of this brandI3 This brand of television will be well regarded by my friendsI4 In its status and style, this brand matches my personality

Social image



Illustrative Measures of Components of Brand Equity (cont’d)Illustrative Measures of Components of Brand Equity (cont’d)

T1 I consider the company and people who stand behind these television to be trustworthy

T2 In regard to consumer interests, this company seems to be very caringT3 I believe that this company does not take advantage of consumers

Trustworthiness

A1 After watching this brand of television, I am very likely to grow fond of itA2 For this brand of television, I have positive personal feelingsA3 With time, I will develop a warm feeling toward this brand of television

Attachment

V1 This brand is well pricedV2 Considering what I would pay for this brand of television, I will get much

more than my money’s worthV3 I consider this brand of television to be a bargain because of the benefits I

receive

Value



Loyalty Needs Both Attitude and BehaviorLoyalty Needs Both Attitude and Behavior

BEHAVIOR

STRONG WEAK

ATTITUDE

STRONG Loyalty Latent

WEAKSpurious Loyalty

No Loyalty



A Framework for Brand LoyaltyA Framework for Brand Loyalty

COMMUNITY AND SOCIAL SUPPORT

HIGH LOW

INDIVIDUAL FORTITUDE

HIGHImmersed Self

IdentifyDetermined Self-

Isolation

LOWVillage

EnvelopmentBasic Product

Superiority



Illustrative Measures of Store LoyaltyIllustrative Measures of Store Loyalty

These statements may be rated on a five-point scale. (1 - Strongly Disagree to 5 - Strongly Agree); stronger agreement shows higher loyalty.

1. I like this store very much.

2. For this group of products, I have a favorite store.

3. When buying _____, I always shop this store first.

4. In the past 3 months, a majority of my shopping trips have been to this store.

5. I usually divide my shopping among two or three stores.



A Model of Store LoyaltyA Model of Store Loyalty

What factor Merchandise quality Assortment Price value Store brands

How factor Ease of merchandise

selection In-store information

and assistance Convenience Problem resolution Personalization



How Customers ShopHow Customers Shop

A dynamic interplay of factors influences store choice Location Merchandise quality Selection Price

A Flow Chart of Customers’ Store Choice Decision ProcessA Flow Chart of Customers’ Store Choice Decision Process

Divide regular

shopping

Divide regular

shopping

Occasional trip for major

shopping

Occasional trip for major

shopping

Does store offer rare

merchandise assortment and

service?

Does store offer rare

merchandise assortment and

service?

Infrequent special

shopping trips

Infrequent special

shopping trips

Does store offer good prices?

Does store offer good prices?

Use for filler & emergency

trips only

Use for filler & emergency

trips only

Does store offer better price

deals?

Does store offer better price

deals?

Shop here most oftenShop here most often

Does store offer deep price discounts?

Does store offer deep price discounts?

DistanceIs the store

nearest to home or commuting

route?

DistanceIs the store

nearest to home or commuting

route?

Is the extra distance

negligible?

Is the extra distance

negligible?

Do not shop here

Do not shop here

Are store prices at least

comparable?

Are store prices at least

comparable?

Yes

Yes

Yes

Yes

Yes

Yes

Yes

No

NoNo

No

No

NoNo



Choices Based on Nonlocational CriteriaChoices Based on Nonlocational Criteria

Self selection Customers self-select themselves to be the

customers of the store that offers the advantage they seek

Other factors Service In-store display The pleasantness of the ambiance



Planned, Unplanned, and Impulse BuyingPlanned, Unplanned, and Impulse Buying

Planned purchases: those the customer had planned to buy before entering the storeUnplanned purchases: those the customer did not intend to buy before entering the store Restocking unplanned purchases Evaluated new unplanned purchases Impulse purchases



In-Store FactorsIn-Store Factors

Knowledge of the store

Time pressure

Purchase companion

Special store promotions

Atmospherics

Customer mood



Nonfood Store ShoppingNonfood Store Shopping

Significant factors in deciding on the store: Expected merchandise and price levels Customer service Store image Special advertised promotions



Shopping MotivesShopping Motives

Recreation

Socialization

Seeking status

Self-gratification

Information



One-Stopping ShoppingOne-Stopping Shopping

Suppliers that offer a variety of products or services may want their customers to engage in one-stop shopping (OSS), the practice of acquiring all related products from one supplier



Customer Motivations for Seeking OSSCustomer Motivations for Seeking OSS

Convenience

Cost savings

Integrated products



Perceived Risks of OSSPerceived Risks of OSS

The customer’s fate is tied to a single supplier Customers may believe that they can lower the

risk by diversifying the suppliers



Implications for MarketersImplications for Marketers

OSS should offer better value to customers, in time and/or cost savings, than what the customer can obtain from buying the bundled products or services individually



Customer Loyalty to Products and Stores and the Three Customer RolesCustomer Loyalty to Products and Stores and the Three Customer Roles

CONCEPT BUYERPAYERUSER

•Brand Performance • User value

BRAND LOYALTY

Behavioral • Reflects buyer’s sale consistent behavior

•Social/emotional identification

• User value

•Habit and history • Buyer routinizes brand decision

• User conditioning to product/source

Attitudinal • Reflects user preferenceA MODEL OF BRAND

LOYALTY DETERMINANTS



Customer Loyalty to Products and Stores and the Three Customer Roles (cont’d)Customer Loyalty to Products and Stores and the Three Customer Roles (cont’d)


•Attraction of alternatives

Brand parity • Reflects user indifference

Competitor promotions • Most appealing to payer

Variety seeking • Buyers may desire variety in sellers they deal with

• Users may seek variety in product/use

Product involvement • Users care about the brand

Price sensibility • Payer role dominates when customers are price sensitive





Performance • Payers willing to pay for these superior user values

• Most relevant to user roles

BRAND LOYALTY

Social/image

Value • User values are compared with payer value

Trustworthiness • Trust of brand maker most valuable to buyers who may be accountable for this decision

• Users can enjoy the product/service with assurance





STORE CHOICE

Distance/convenience • Of concern to buyer

Price • Of concern to buyer

Merchandise • User influence

UNPLANNED AND IMPULSE PURCHASESExploratory shopping • Buyers may try to

minimize future task• Can be driven by user

role seeking new items

Atmospherics • Buyer is influenced the most by these factors

In-store promotions • Most relevant to payer role

Knowledge of the store

Time pressure

Purchase companion

Copyright © 2002 by South-Western. All rights reserved. CHAPTER 11 Customer Loyalty to Products,...

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Transcript of Copyright © 2002 by South-Western. All rights reserved. CHAPTER 11 Customer Loyalty to Products,...