Defining Brand “A set of mental associations in the minds of consumers, that create a perceived value of a product or service.” (Keller, 1998)
Brand Loyalty: Common Approach “A commitment to rebuy a preferred product/service consistently in the future, despite influences and (competitive) marketing.” (Oliver 1999, p.34)
Does it always apply? Luxury Goods - expensive to purchase often Service Industry - no necessity to use Technology - less frequent need Medical Industry - long warranty
Research Question: “Are there attributes other than repeat purchasing behavior that indicate brand loyalty?”
Case Study: Medical Company, Inc. Industry: Medical Products: High-precision surgical instruments Positioning: Quality, customer satisfaction and name recognition Issue: Expensive products that are not purchased frequently Objective: Find attributes of loyal behavior
Survey 150 customers of the Medical Company Inc. with previous purchase history: - surgeons - nurses - hospital purchasing managers 16 questions focused on attitude and preference towards the products of the Medical Company Inc. - 14 multiple choice or scale questions - 2 open-ended questions 2 weeks to complete on-line
Results Question: On a scale from 1(not satisfied) to 5 (very satisfied), please rate the following aspects: price, quality, product range, availability, service. Response Average: Price: 3.7 Quality: 4.9 Availability: 4.6 Service: 4.8
Results Question: How long have you been using products of the Medical Company, Inc.? Less than a year – 20% 1-5 years – 40% 6-10 years – 20% Over ten years - 20%
Results Question: Please indicate the most important factor that might influence your decision to switch to similar products offered by other companies. Price – 10% Incentives – 0% Service – 0% Quality – 10% Design – 30% I will not switch – 50%
Results Question: Would you recommend products of the Medical Company, Inc. to others? Yes - 100%
Results Question: Please specify which of the following actions better describe you (please check all the applies) I want to try new products – 100% I keep in touch with local sales representative – 50% I attend industry meetings to learn about new offerings – 40% I check the company website for updates – 10%
Attributes of Brand Loyalty: Satisfaction Product Superiority Longevity Brand Ambassadorship Social Community
Business Application: It is possible to be a loyal customer without frequent purchases. Product referrals by current customers attract new customers, and result in increased profitability. Active involvement with the products of the Medical Company, Inc. eliminates necessity for additional marketing spending.
Conclusion: Stimulate development of loyal customers by improving product quality, increasing customer satisfaction, and extending the product lines. Focus on attrition rate not only immediate profit. Develop referral programs that will increase name recognition. Increase involvement of the customers with the Medical Company, Inc. by updating the corporate website and participating in more industry meetings.