Brand Quality and Loyality

2.2.1 LEVELS OF BRAND LOYALTY

The bottom most category of customers have no preferences, all products have almost the same effect for them. They are not biased towards any brand. The second ones from bottom are satisfied with what they consume and are very difficult customers to target as they usually do not go looking for alternatives. The third level consists of customers, who are satisfied but the switching cost is an obstruction for them to do so. When targeting such customers, the business has to take into account the switching cost likely to be faced by the customer. At the fourth level, there’s the customer who likes the brand and forms a

kind of relationship with it. But such relationships tend to phase out specially, if they have been a long one. At the top level are committed customers, who take pride in the Brand and they recommend it to others.

 

2.2.2 CUSTOMER LOYALTY AND CUSTOMER SATISFACTION

Figure 3

 

The most important factor leading to loyalty is customer satisfaction as can be seen in figure 2. Customer satisfaction can be translated into loyalty by satisfying customers every time. As the satisfaction level goes up there is a steep increase in the number of

loyal customers, which can be attributed to the fact that people will stay with the company because most of the customers will not take the risk of trying something else and getting disappointed in return unless the company, they are loyal to, starts compromising on standards or quality. Also, as customer satisfaction increases, the customer moves up the loyalty pyramid (Figure 2).

3. MARKETING STRATEGY

A Marketing strategy is a plan identifying what marketing plans and objectives will be pursued and how they will be achieved in the time available (Zikmund, 1995, p.31).

The building of strong brands is one of the ways, which a company can develop and sustain an advantage over its competitors, which will result in sustaining or increasing its market share or sales. When developing marketing strategies companies need to take into account their customers and competitors and how companies strengths and weaknesses will affect them (Figure 3).

FIGURE 4: STRATEGIC TRIANGLE

SOURCE:  Jobber, D., Practices and Principles of Marketing, (2001), Third Edition, McGraw- hill publishing company, p.603

At the top level companies deal with strategic planning like articulating the strategic objectives and achieving objectives. The top level is concerned with making long-term goals, which are not a part of the middle management. Middle management is more concerned with planning strategy and business units.

FIGURE 5: SOURCE: Zikmund, W. G. and d’amico, M. (1995), Effective Marketing (Creating and Keeping Customers), West Publishing Company, p.33

Middle management is also responsible for the operational managers, who are concerned with more day-to-day activities. Different levels of management are involved at different stages of developing a strategy. The organisations mission is clearly the first thing to start with.

 

3.1 MISSON STATEMENT OR CORPORATE MISSION

The top-level deals with questions like “what does the company want to achieve”, “how does the company organise its activities” etc. The answer can be found by looking at the mission statement.  Mission statement is a statement of purpose, which explains why the organisation exists and what it wants to achieve (Zikmund, 1995).  For example the mission statement of Sainsbury’s’ is ‘making life taste better for less’. The company had to change its mission in the face of competition from TESCO’s offering of cheaper products. Even the most loyal customers were flocking to TESCO’s, when Sainsbury’s’ did not respond to competition. Though Sainsbury’s generally perceived to have better quality products but it could not match the pricing strategy. The company has a quite a big base of loyal shoppers and the company has now put plans in accordance to its mission statement to get back the lost customers. Product success, industry leadership, and even the organization’s success depend on satisfying the customer.

3.2 ESTABLISHING STRATEGIC BUSINESS UNITS

The middle management is involved in these units. They are the ones who make the business unit strategies. A strategic business unit is division of the company that deals with the organisations strategic focus. A manager is responsible for the whole unit. A business unit can be seen as a process of satisfying customer needs for which the whole process is in existence. A company can have a diverse set of products and this concept is of a company within a company, where every product is looked at individually. One company does not compete, another company but it is the product of two or more companies, trying to capture the same-targeted customers, which compete each other. Therefore, it is the business units which rival each other. For example, Samsung’s mobile manufacturing division competes with Ericsson’s mobile phone manufacturing division but both the companies as a whole do not. The units should be focused to maintain or enhance the perception of the product in the market. It is the responsibility of each unit to adhere to the standards in order to get a quality product or service. Brand loyalty is very

sensitive to quality. Loyalty is created through consistent standard through years. Business units can bring competitive advantage. Porter has proposed three generic strategic which provide a good starting point for strategic thinking: overall cost leadership, differentiation and focus.

1. Overall cost leadership: According to this concept a business does all it can to keep the cost minimal and try to offer the customer a price lower than the competitors. The marketing cost can be kept minimal by retaining the customers by creating loyalty through consistent quality of products or services.

2. Differentiation: The business concentrates on superior performance in an important customer benefit area (Kotler, Marketing management, 2003). Intel has through continuous innovation created a widely believed perception of being the best chipmaker in the world and a lot of customers like to have Intel chips in their computers.  

3. Focus: According to this concept, the company should learn about the tiniest details of the market and the focus on a narrow market. This could be done through cost leadership or differentiation. For example, Dell’s success can be accredited to the strategy that they offered customised computers without the customers needing to go to a shop. Dell won the confidence of people by offering computers which were just as they specified where as the failure of Sainsbury’s website has been due to the fact that some of the products were not available most of the time or the wrong products were delivered.

4. MANAGEMENT FUNCTION

The concept of Branding affects the management in everyday decision making procedure. So, the managers should follow a stepwise procedure as shown below.

FIGURE 6: STAGES IN BRAND STRATEGY DEVELOPMENT

Source: Aaker, Managing Brand Equity (1991) p.177

4.1 ESTABLISHING THE BRAND PROPOSITION

Here the objectives are clearly set and by doing so, the company sets out the positioning of the product. This also helps creating an image or perception in the mind of a possible consumer. For example, BMW’s statement is ‘the ultimate driving machine’. This suggests that the car is going to be the best vehicle ever driven by customer. It does not say anything about the looks or anything else. This helps it target customers who like to enjoy their driving.

4.2. SELECTING THE APPROPRIATE MARKETING MIX

The four P’s (Product, Price, Place and Promotion) have always been important components used in positioning a product. The higher the price, the more people expect from that product. Loyalty has another advantage here; people usually are ready to pay a premium price for a product once start thinking that the pricing is justified. Promotion leads to increased expectations from the product. Managers need to keep in mind that they need to match the perception created in the minds of the consumer. This can be done by not creating too much hype but reasonable excitement among people.

4.3. ROLLING OUT THE STRATEGY

Whan Park et al. (1986) divided the life of a brand in three stages.

• Introductory stage.
• Elaboration stage
• Fortification stage

4.3.1 Introductory stage:

The primary task of the marketing mix is to bring out a product, which justifies the perception created. If it is able to do so, then the business can capture a significant share of the marketing a new market and penetrate a market already full of choices. For example, British telecom entered the industry and captured such a big market share and even in the face of such intense competition remains the biggest telecom company. It has created a huge base of loyal customers, most of which it has been able to retain.

4.3.2 Elaboration stage:

In this stage the business moves one step forward and tries to prove its superiority over its rivals. The business can achieve that by creating a superior image, by adding more values and spreading more awareness. For example, ASDA entered the retail market already dominated by Sainsbury’s and TESCO but today the company has become the second largest retailer in UK, in a few years based on the value it has given to the consumers.

4.3.3 Fortification stage:

In this stage the brand can be stretched to other product areas. This depends a lot on how the brand is perceived and how loyal the customer base is to follow the brand in other areas. There is a danger of dilution of the original brand. For example, Virgin, today is into airlines, music, finance, cosmetics, trains, mobile network etc. and it has been able to stretch into different product areas very successfully because it has been able to provide value to the customer. The customer is now ready to try the product from the Virgin stable because they trust and virgin has created the perception that they provide value.

4.4 MODIFYING THE PROPOSITION

A brand like its consumers grows old. Most managers at some stage in their life face the decision, whether to kill a brand or revitalise it. The most famous example of it in the UK is Lucozade. Lucozade was a repositioned as an energy drink, which saw its fortune rise. It outgrew the original brand due to its effort to change the perception in the minds of the people.

The impact of the recognition of a relationship and the subsequent findings on a manager’s job will be enormous.

• The findings of this study reinforce the fact that brand loyalty is an important dimension of brand equity (Aaker, 1991). Brand equity is key element when managers’ think about brand extension and therefore makes brand loyalty an important aspect of extension as well. It is important to measure the loyalty to the original brand before launching a new one. For example, when the new Coke was launched, people famously protested it even when they thought the new one was

better than the old one. Managers will have to make sure that the awareness of the new product is good.

• The manager can create more awareness in the market. The right kind of information needs to be given to the consumers so that they are not disappointed.

 

5. STAKEHOLDERS PERSPECTIVE

Most businesses must define its stakeholders and their needs. In the past there was lot of attention paid to the shareholders only and the other stakeholders like the employees, distributors, Suppliers, customers were neglected. The company can achieve its targets and sustain the results, only when all the stakeholders are satisfied. A smart company creates a high level of employee satisfaction, which leads to higher effort, which leads to higher quality of products and services, which creates higher customer satisfaction, which leads to repeat business, which leads to higher growth and profits, which leads to high stockholder satisfaction, which leads to more investment and so on (Kotler, Marketing management (2003), p. 66)

An important feature of Brand loyalty, as said earlier is, that the company has to be consistent with the quality of the product or services. The company should sustain or try to improve the quality of the products or services. This is vital for the business, in order to achieve quality throughout the business and therefore should be considered from different stakeholders’ perspective.

Employees: There should be standards set for the employees. Quality should start from within the company. If the employees of the company think that for the product or service they produced, they would be more than happy to pay the price, then only the product should be sold to customers. Employees are the internal customers of an organisation. Rewarding the employees appropriately for excellence is one of the techniques.

Distributors: A set of quality standards needs to be put in place for distributors. The distributors should be delivering on time and also the right kind of product. A company can set objectives for the distributors and review them periodically.

Suppliers: The bargaining power of the suppliers should be kept low because the company would not like to compromise on the quality of the product as a result strong suppliers. The products should be standardised. Businesses should try to seek new sources of supply and design standardised components so that many suppliers are capable of producing them.

There are some Stakeholder management techniques that are suggested here

• Service level agreements: These are detailed agreements to provide service that meets specific quality and cost requirements. Frequent reviews can check if the procedures are followed properly.
• Formal review meetings: The objectives and resource allocation should be made clear by having regular meetings with the stakeholders.
• Advisory council/executive board: The stakeholders can always give some valuable advice to the managers. Regular meetings with an advisory committee can always help employees give the business their view.

6. SUMMARY DISCUSSIONS AND CONCLUSION

Branding strategies need to adapt to the perception created in the market. Over a period of time, a lot of people become loyal to a brand. This happens where the consumers perception of a product in the consumers mind is second to none. If the company can manage to make a sizeable lot of loyal customers, then it can not only manage to sustain itself in the market, it can also explore new possibilities based on its original product, which give it a competitive edge over other competitors. Brand Loyalty gives the company a competitive advantage, which gives it time to respond to outside threats. If a business has loyal customers then it is difficult for other companies to penetrate that market and it takes a lot of time as well.

By making customers loyal to a brand the company can benefit a lot in the long term and short term. It is a lot cheaper to keep old customers than to find new customers, therefore

by making customers loyal, a company can save a lot on cost provided that the standards of the product do not deteriorate. Also loyal customers are like marketing agents.

Loyal customers form a bond with the company and product and wherever they go, they do the publicity by word of mouth, which is one of the most powerful sources of marketing. In the January, 2004 issue of the Harvard business Review, according to an article the biggest test of customer loyalty is whether a customer refers the product to other people or not because by doing so he or she is putting their own credibility at risk.  As consumers become loyal to a brand they become less sensitive to prices, in the process a business can chare premium prices but they have to give more value as well.

Equity creates value for the company and the consumer by giving customers quality, it has to make sure that they have quality in all departments. Giving the consumers a product, as they perceived it, creates brand Loyalty, which means Equity needs to be managed carefully to develop loyalty.

REFERENCES

Aaker, D. A. (1991), Managing Brand Equity, The Free press.

Hankinson, G. and Cowking, P. (1993), Branding in Action, McGraw-Hill international (UK) Limited.

Jobber, D., Practices and Principles of Marketing, (2001), Third Edition, McGraw-Hill publishing company.

Kotler, P., Armstrong, G., Saunders, J. and Wong, V. (2001), Principles of marketing, Third European edition, Pearson education limited.

Kotler, P. (2003), Marketing Management, Eleventh Edition, Pearson Education Limited.

Kotler, P. (2003), A Framework for marketing Management, International edition, Pearson Education Limited.

Schultz, D. E. and Barnes, B. E. (1999), Strategic Brand Communication Campaigns, Fifth Edition, NTC Business Books.

Watkins, T. (1986), The Economics of the Brand (A marketing Analysis), McGraw-Hill Book Company.

Zikmund, W. G. and d’amico, M. (1995), Effective Marketing (Creating and Keeping Customers), West Publishing Company.

BIBLIOGRPAHY

Graham, P., Harker, D., Harker, M. and Tuck, M. (1994), “Branding Food Endorsement Programs”, Journal of Product and Management, Vol. 3 No. 4, pp. 31-43.

Hem, L.E., and Iversen, N.M. (2003), “Transfer of Brand and Equity in Brand Extensions: The Importance of Brand Loyalty”, Advances in Consumer Research, Vol. 30.

Lassar, W., Mittal B. and Sharma, A. (1995), “ Measuring Customer Based Equity”, Journal of Consumer Marketing Management, Vol. 12 No. 4, pp. 11-19.

Stratigos, A. (2003), “Managing up:  Stakeholder Relationship Imperatives”, Industry Insights.

Wood, L. (2000), “Brand and Brand Equity: Definition and Management”, Management Decision, Vol. 38 No. 9, pp. 662-669.