Loyalty programs and their impact on repeat-purchase loyalty patterns

Loyalty programs are currently increasing in popularity around the world. This paper discusses the potential of loyalty programs to alter the normal market patterns of repeat-purchase behaviour which characterise competitive repeat-purchase markets. In line with this thinking, a large scale loyalty program is evaluated in terms of its ability to change normal repeat-purchase patterns by generating ‘excess loyalty’ for brands in the program. Panel data were used to develop Dirichlet estimates of expected repeat-purchase loyalty statistics by brand. These estimates were compared with the observed market repeat-purchase behaviour. Overall a trend towards a weak level of excess loyalty was observed, although the expected deviation was not consistently observed for all the loyalty program brands. Only two of the six loyalty program participant brands showed substantial excess loyalty deviations. However, these deviations in repeat-purchase loyalty were observed for non-members of the loyalty program as well as members and appear likely to be at least partially the result of other loyalty efforts particular to these brands.     

Factors that influence manufacturer and store brand behavioral loyalty

This study examines the factors that are linked to consumer goods brands having unusually high or low behavioral loyalty, after controlling for the association between brand size and loyalty that occurs due to the ‘double jeopardy’ effect. Behavioral, or repeat-purchase loyalty is measured as the brand's average share of category requirements (in volume) among its buyers over a 12-month period. We examine a range of factors that theory or past evidence suggests are associated with higher or lower behavioral loyalty, including brand type (store brand/manufacturer brand), price level, promotion intensity, as well as average brand volume per occasion and pack size. Using extensive US panel purchasing data, we find that store brands exhibit relatively higher behavioral loyalty than manufacturer brands. We explain the theory behind this result. We also find that the brand's average pack size and volume bought per occasion has a markedly positive association with behavioral loyalty. Finally, we find that the effect of low price on excess loyalty is moderated via a positive association with average volume purchase per occasion. These findings add to the body of knowledge relating to patterns in behavioral brand loyalty for both manufacturer and store brands, as well as the marketing-mix factors that influence it.     

Generalizations regarding the growth and decline of manufacturer and store brands

Stimulating growth or staving off decline in market share are core objectives for brand managers, including retailers who now offer store brands (SBs). This study identifies how changes in brand penetration and repeat-purchase loyalty accompany changes in brand share. We examine 1093 changes in brand share over 63 packaged goods categories in the UK from 2003 to 2007, covering both growth and decline. Two measures of repeat purchase loyalty are used—annual purchase frequency (PF) and share of category requirements (SCR). Our results show that brand share growth is accompanied by greater change in penetration than in loyalty, at a ratio of approximately 3:1. This finding generalizes across brand type, loyalty measure, retailer SB or manufacturer brand (MB), category purchase frequency, category type, and initial brand share. However, while brand share growth is accompanied by stronger changes in SCR than PF for MBs; the reverse is the case for SBs. For MB decline, both penetration and SCR change are significant correlates. However for SBs, the decline in brand share happens predominantly in loyalty—more strongly in SCR, followed by PF. Therefore, both brand types need to focus on building penetration to grow. While MBs also need to prevent light buyers from lapsing, SBs need to pay more attention to retaining heavy buyers to avoid repertoire demotion.     

Brand inequalities in the loyalty-effects of purchases

Choice models in marketing have generally included the effects of loyalty on individual choice behavior.Loyalty has been typically measured as proportion of purchases or as an exponentially smoothed index of past purchases. An underlying assumption of both measures is that all brands gain the same increase in loyalty with a purchase. However, such an assumption may not hold when the competing brands are not comparable. We propose a new exponential smoothing measure which incorporates brand-specific parameters for the loyalty effects of purchases. A choice model, calibrated on individual level data for the detergent category, is used to compare the proposed measure with its traditional version. This comparison reveals that the new approach improves both the fit and predictive performance of the choice model. The results also suggest that the loyalty effects of purchases are likely to be lower for brands which are purchased on price promotions and higher for expensive brands.     

The development of a consumer value proposition of private label brands and the application thereof in a South African retail context

Private Label Brands are of strategic importance to retailers worldwide. However, there is a dearth of knowledge, particularly in emerging markets, as to the manner in which consumers cognitively assess these brands. At the heart of the issue is a gap in knowledge as to how consumers formulate a value proposition in their minds and the effect of loyalty to existing brands. This paper assumes a positivist, hypothetico-deductive approach by attempting to address the question: What are the key drivers of perceived value of private label branded breakfast cereals, taking price, perceived risk and perceived quality into account? Moreover, the study considers how various attributes of brand image contribute to the perception of brands and the extent to which loyalty to established national brands inhibits purchasing intent of private label merchandise. A conceptual model was developed, and tested by means of Partial Least Squares path analysis, using a sample of 482 respondents. The outcome reflects that consumers take cognisance of value through price, risk and quality cues, but that loyalty to existing brands has a minimal effect in the final stage of the model. Moreover, both in- and out-of-store influences were found to play a significant role in the determination of product quality. Retailers therefore possess a number of levers at their disposal to influence perceived value, most notably price, product quality and the perceived risk portfolio, as well as packaging, shelf placement, store environmental factors, etcetera.     

The impact of customer awareness of manufacturer name disclosure on retail brand attitudes and loyalty in Korea

This paper explores the impact of exposing the name of the manufacturer on a retail brand product upon national brand loyalty, retail brand loyalty and store loyalty, It does so by exploring customer attitudes towards retail brands in South Korea, where there is a legal requirement for retail brands to portray the manufacturer׳s name. For international retailers entering markets where such disclosure is a legal requirement an understanding of the implications of this for retail brand management is essential. The findings suggest that in the Korean case revealing the name of the manufacturer who supplies the retail brand on the product packaging has a positive influence on attitudes towards retail brands, although it did not mitigate the perceived risks held by customers towards retail brand products in general.     

The persistence of excess brand loyalty over multiple years

This study examines the extent to which packaged-goods brands exhibit excess loyalty over a multi-year period. Brand loyalty for 300 brands in 20 UK product categories are compared to theoretically expected loyalty levels calculated using the Dirichlet model. Results show that while many brands show excess loyalty in a particular year (31%), fewer of them (25% and 22%) exhibit excess loyalty over 2 and 3?years, respectively. Almost all the brands that do show persistent excess loyalty are private-label brands or are market-share leaders (either the biggest or the second-biggest brand in the market). Therefore, excess loyalty over multiple years is a rare occurrence for a brand unless it is a market leader or a private-label brand. The study also shows that 38% of all high-share brands have consistent excess loyalty, and 37% of all private-label brands have consistent excess loyalty. These results suggest that existing explanations in the literature as to the sources of excess loyalty need further investigation. The reason is that those explanations relate to distribution effects, which should be similar across such brands. They therefore imply that most high-share and private-label brands should exhibit excess loyalty. The study suggests several avenues for further research to identify the reasons why some high-share or private-label brands show excess loyalty and others do not.     

The effect of distribution channel diversification of foreign luxury fashion brands on consumers’ brand value and loyalty in the Korean market

The purpose of this research is to examine South Korean consumers’ brand value and brand loyalty toward foreign luxury fashion brands and current distribution channels for those brands (i.e., Department stores/Specialty stores, Factory outlet, Internet retailing, TV home shopping). Furthermore, this research examines the impact of channel diversification on consumers’ brand value and brand loyalty toward foreign luxury fashion brands. This study employed a quantitative research method. Factor analysis, ANOVA, Duncan test, and multiple regression analysis were employed to test the hypotheses. When testing brand values for each channel diversification case, participants evaluated brand value differently depending on the type of distribution channel. Participants did not show significantly different brand loyalty depending on distribution diversification cases. When the influence of brand value on brand loyalty was tested, different brand values affected brand loyalty depending on the type of distribution channel. Also, this research could suggest possible distribution channel options for foreign luxury brands to be successful in the Korean market and values they need to put an importance depending on the retail types. In addition, foreign luxury brands could apply the results of this study to their own markets.     

The Relationship Between Customer Loyalty and Purchase Incidence

Little is known about customer loyalty to brands over many dozens or even hundreds of purchases. In this paper we describe, and seek to explain, such patterns of loyalty in two very different markets: a consumer market (laundry detergents), and a more frequently used service (physicians' prescribing of anti-hypertension drugs). Purchase incidence heterogeneity – a problem in most loyalty studies – is addressed by measuring loyalty at different rates of category purchase (rather than over time). Using share-based measures we expect that loyalty will decline as purchase incidence increases, however we clarify the shape of that decline. We find that, as the number of purchases rises, loyalty initially falls steeply, but after around 15 purchases it starts to stabilize, and from 60 to 200 purchases there is very little change in observed measures of customer loyalty. A comparison of the findings with those expected from a stationary market model (the Dirichlet), suggests that the decline in loyalty seen as the number of purchases rises is largely a statistical artifact, dependent on the number of purchases used to calculate loyalty. However, we also find that the higher loyalty exhibited by heavier buyers at low purchase levels is not captured well by the model. The implication here is that, contrary to a central assumption of the Dirichlet model, brand choice is partially dependent on purchase weight.     

Is your brand''s loyalty too much, too little, or just right?: Explaining deviations in loyalty from the Dirichlet norm

This paper formally investigates the factors that relate to the deviations of brand's actual loyalty levels from theoretical norms in packaged goods markets. An aggregate measure of brand loyalty, share of category requirements, commonly tracked by marketing managers is used for this analysis. The comparison is conducted against the estimated share of requirements provided by the well established Dirichlet model of purchasing behavior. We posit that a brand's positioning strategy and marketing mix can influence the magnitude and the direction of the deviation from the norm. We use a two step modeling procedure where we first compute the deviation from the norm for each brand and subsequently conduct a regression analysis of this brand-level data to test the proposed hypotheses. We find that on average, brands that cater to some market niche, are bought in higher quantities, have lower prices, promote to a lesser extent, and have shallower price-cuts and enjoy higher than expected loyalty levels. We discuss possible implications of these results and offer guidelines that managers can use to better assess both the actual and the theoretical loyalty levels of their brands.     

全球广告标准化与全球品牌一致性的关系模型

全球化背景下,通过全球广告策略来建立和维护能被不同国家市场普遍接受的具有独特形象的全球品牌是跨国公司亟需解决的问题,本文据此提出了全球广告标准化与全球品牌一致性的关系模型。全球广告在综合考虑企业内外部因素的前提下,通过战略、执行和语言的不同程度的标准化,可以塑造全球品牌的识别和全球品牌形象,进而实现全球品牌个性、文化、定位和价值的一致性,并最终促使全球品牌正面性、认知度和忠诚度的提升。     

Determinants of customer brand loyalty in the retail industry: A comparison between national and private brands in South Korea

Finding motivations for customer brand loyalty is one of the most popular academic and practical research fields; in this regard, some scholars have explored motivations in the retail industry. As the concept of private brands has been one of the most widely employed strategies for business success in the industry, comparing private and national brands in terms of customer loyalty is an important topic in the retail industry. Thus, the current research focuses on exploring antecedents of customer loyalty in private and national brands, as well as investigating whether there are notable structural differences between the brands. The results, based on 1,631 responses, indicate that customer perceived service/product quality, satisfaction, trust, and cost are notable determinants of brand loyalty, while the relationship between customer satisfaction and service quality of private brands is not supported. Moreover, both indirect and direct effects of the employed factors on customer brand loyalty are reported.     

Decline and variability in brand loyalty

In this paper, we examine the over-time behavior of brand loyalty for a large set of brands drawn from 21 consumer packaged goods categories. Using the brand-loyalty operationalization of Colombo and Morrison (1989), the following conclusions are obtained. First, little support is found for the often-heard contention that brand loyalty is gradually declining over time. Second, while the short-run variability around a brand's mean loyalty level is not negligible, no evidence is found that this variability has systematically increased over time, and it can be reduced considerably through a simple smoothing procedure. Finally, the brand-loyalty pattern for market-share leaders is found to be more stable than for other brands. The study findings were robust to variation in the time interval used to construct the switching matrices, and to different treatments of multiple purchases.     

A temporal analysis of behavioural brand loyalty among urban Chinese consumers

Abstract

Chinese marketing is evolving, and this is having a dramatic influence on the incomes and spending patterns of consumers. Set against these longer-run trends, the contribution of this paper is to examine the year-on-year persistence of brand purchasing and behavioural brand loyalty in packaged goods markets in China. Revealed preference data for two product categories (toothpaste and soy sauce) in two contrasting cities (Shanghai and Xi'an) are analysed, with particular attention being paid to whether brand purchasing and behavioural brand loyalty are invariant over a five-year period. Conceptually, the NBD-Dirichlet model of brand choice and purchase incidence is employed. Analysis shows that patterns found in the Chinese data are quite similar to those reported previously for Western markets, with invariant results over time – notwithstanding supply-side and demand-side changes over the study period. In particular, the double jeopardy effect and multi-brand loyalty are consistently observed in the toothpaste and soy-sauce markets in both cities over the full five-year period. Results distinct to the Chinese market are also identified: exclusive brand loyalty appears to be declining in favour of multi-brand loyalty, and there are between-city differences in the magnitude of this decline.     

Correlates of first‐brand loyalty

A mail survey of British supermarket customers shows that the factor most strongly associated with claimed brand loyalty is household income Brand loyal customers also claim to spend more, are more concerned about quality and less about price, are slightly more store loyal and make more use of large out‐of‐town stores Brand loyalty is also related to age; those aged under 25 years and 65 + years are less loyal

There is little difference between those who are primarily loyal to store brands and those who are primarily loyal to manufacturer brands, and there is little evidence that store patronage is raised by loyalty to store brands     

How Differing Demographic Factors Impact upon Customer Loyalty Towards National or International Fast-Food Chains: A Comparative Study in Emerging Markets

ABSTRACT

The aim of this paper is to study differing demographic factors affecting fast-food customers loyalty towards national or international fast food chains. A variety of variables used to gain a holistic view, which includes factors such as quality, price, food and demographic profile of consumers affecting loyalty of fast food chains. The study adopts the theory and method of the trust-commitment-loyalty explanation chain and examines the consumer survey adapted from Fast food by Sahagun et.al (2014). The present analyses 542 filled questionnaires in which systematic sampling is used. Indians prefer global fast food chains compared to Indian fast food chains. Loyalty towards global brands is higher than that for Indian brands because they are found to be of better quality which leads to higher frequency of visit and recommendation of the brands to their friends and colleagues. There is ethnic variation towards global and Indian fast food chains.     

The effects of 2-tier store brands’ perceived quality,perceived value,brand knowledge,and attitude on store loyalty

This paper divides store brands into generic ones versus individual ones. Accordingly, two types of store brand loyalty are discussed, namely general versus individual brand loyalty. It also analyzes perceptions of 2-tier store brands in terms of perceived quality and value, and explores the respective effects of consumer knowledge and brand attitude on store loyalty. Results show that both low-priced and medium-priced store brands are able to build individual store brand loyalty and store loyalty among customers. Managerial implications are also provided.     

Service quality dimensions and superior customer perceived value in retail banks: An empirical study on Mexican consumers

This study concerns the service quality topic in the retail bank sector. A sample of 209 retail bank clients was taken, measuring the performance of service quality attributes of their principle retail bank. Behavioral performance variables such as satisfaction, loyalty and customer perceived value were also measured. In a factor analyses the attributes were separated into three factors. These three independent factors explain a considerable amount of variability of a satisfaction–loyalty factor. On the other hand, they could not explain the superior perceived value; and no differences between the service quality performances of the bank brands were found. In conclusion, regardless of the degree of satisfaction and loyalty, the customer is not willing to pay more for banking services at his regular bank than he would at other brands. This implies that superior perceived value is not being achieved via service quality, which suggests a lack of differentiation between brands in this sector.     

The effects of store brand loyalty on store loyalty: evidence from the Spanish market

This article studies the impact of retailers' store brands on store performance. Specifically, we analyze the extent to which store brands contribute to store loyalty. On the one hand, a positive relationship between customers' familiarity with and loyalty to the retailer's own brand and customers' loyalty to the retailer should result from the potential of the store brand to differentiate the retailer. On the other hand, an negative relationship between customers' familiarity with and loyalty to the retailer's own brand and customers' loyalty to the retailer may result from store brands' association with more price-sensitive customers, who have a higher propensity to buy at different stores that offer the best bargain. The empirical analysis, conducted with a sample of customers of leading retailers in the Spanish detergent market, shows no relationship between store brand loyalty and loyalty to the retailer. Although the purchase of store brands relates positively to higher loyalty to the retailer, this relationship deteriorates with the degree of exclusivity of store brands within the customer's shopping basket.     

A comparison of brand loyalty between on the go and take-home consumption purchases

This paper compares consumer brand purchase loyalty for food products bought either ‘on the go’ (OTG), or for take-home consumption. The study uses two UK consumer packaged goods datasets. The first dataset comprises consumers' purchasing of brands in three product categories: soft drinks, crisps, and savory snacks for on the go consumption. The second contains consumers' purchasing of the same brands for take-home consumption. Analysis uses the polarization index as a behavioral loyalty measure, estimated from the Beta Binomial – Negative Binomial Distribution. This measure controls for the difference in purchase rate and brand market share across on the go and take-home. The study finds that consumer loyalty to brands is markedly higher in purchasing for on the go consumption than for take-home consumption; and that the effect is even stronger for larger brands in on the go.