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CONSUMERS LOYALITY IN ECONOMIC DOWN TURN Submitted By Mariam Hashmi CONTENT 1. Summery 3 2. Methodologies 3 3. What's a brand 3 4. What's a loyalty 5 5. Consumer becomes loyal 6 6. Why marketer's invest in brand loyalty 7 7. Loyalty for by brand and small brand 7 8. Brand loyalty a question in economic downturn 8 9. Conclusion 10 10. References 11 SUMMERY This project discusses a very important issue of brand loyalty in economic downturn. Companies invest a lot in building brand equity and they rely a lot on loyalty. My theory was that consumer doesn't remain loyal for a long as they are searching for better option and added value in any item they purchase. Its money and desire to try new things which makes them shift their loyalty. I have analysed many literature review of different companies and researcher. I have explained how a loyalty is built and how it can deviate at different situation. I have tried develop a method to which may help in increasing the loyalty of consumer for a company or brand. INTRODUCTION In last few decades market has become quite competitive and economic downturn has made it very unpredictable. It is difficult for consumer to differentiate products. Companies are centring their marketing strategy and tactics on brand loyalty (Fournier and Yao, 1997). Brand Loyalty brings greater sales and revenues, act fairly as barrier for new entrants and can response to competitive threats the customer's lower sensitivity to marketing efforts of competitors (Delgado-Ballester and Munuera-Alema´┐Żn, 1999). Brand loyal customers can also be a good future referent power. Marketer invests lot of money energy and time in developing brand equity to build loyalty. Today's society is much more transient than in before. They get exposure to many new brands, discounts, sale and offers. Companies argue that consumers are prison of habits and once they get used to one brand they don't like to change as they feel loyal towards it and they get used to ...read more.


Loyalty brings market shares and increase marketing share and in turns brings more market returns (Buzzell et.al. 1975, Buzzell, Gale, B.T. 1987) Purchasing behavior is thought to be a habitual in nature and thus loyalty brings assertions in quality of brand( Solomon, 1994). So one can say that loyalty means repetitive purchase (Ehrenberg, 1988), commitment ( Hawks, 19950 and preferences (Guest, 1994) Branding makes the task smooth and easier to differentiate product (Macr ae, 1996) Strong loyalty is seen in consumers especially in merchandise supermarket especially towards their favoured brand. But it can be seen that many campaign which require unique positioning lack substance long term impact an emotion of brand building activity( Doyle,1998) and it has been seen that branding for business to business is still less persuasive. Marketing mix is still based on Mc McCarthy's "4p" Product, promotion, pricing and place and they are still considered as main marketing tools and manipulated well by many marketer (Dibb and Simkin, 1997). It will be very interesting to study that what motivate consumer to certain product and make him loyal towards one product. Loyalty For Big Brand and Small Brands Building of brand does bring lot of benefits to the companies the most important are "trust" and " no risk" theory as Consumers think that being loyal to a particular brand is no risk as its tried and tested. It is the cosmetic industries which get affected a lot by brand image. Big brand bring lots of loyal customer. A person using L'Oreal hair colour will stick to it even though cost is high because consumers think it to contain quality ingredient and they remain loyal to it for a long time. Small brand in any product category faces two disadvantages against the big brands; one is frequencies of purchasing and then fewer buyers and lower purchase Mc Phee (1963), termed this as "double jeopardy". ...read more.


Over the past 24 months, consumer prices have risen 7.8% according to the U.S. Bureau of Labor Statistics. Conclusion I don't believe that brand loyalty gets built because your elder sister or mom wore the same brand of makeup or your dad wore the same brand of shoes, one become loyal because a particular brand offered something special to you may be trust, quality, good customer service. Regardless of rising price that should have some added value something which one will weigh before taking the decision to change your loyalty for a brand in lieu of something cheaper. CEO of Sanani Coffee, Tariq Ausaf (sanani.com) says that that though present state of the economy is discouraging for consumers who occasionally loved to treat themselves to high end products, but he explain that his company is not just built on the class positioning, but on delivering a gourmet coffee on the basis of value and good customer service. According to him, this has been the main factor in customer brand loyalty to Sanani coffee in this economic downturn. When there is insecurity and risk involve. When the economy tumbles, consumers tend to purchase products that make him feel secure. People remain brand loyal if quality and value is involve as they don't want to try a brand Y which may be less expensive but possibly may be less effective, less in quality or may have a poor customer service. It will be very interesting to check the Customer Loyalty Engagement Index for 2008. Where famous brands can be seen topping the list Apple in computers and Estee lauder in cosmetics. We can conclude that brand loyalty has gone strayed with economic downturn but some brand still enjoyed a good sale in 2008 in spite of economic downturn due to brand equity which they have developed down the year with quality and good customer service, strong referent power. Marketers and companies should follow the rule of quality and good marketing mix. ...read more.

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