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18/07/2023 09:09:41 AM

THE BRAND LOYALTY OF CUSTOMERS

1. Brand

There are various perspectives and definitions surrounding this term. The American Marketing Association (1995) provides the concept that “A brand is a name, term, symbol, design, or a combination of these elements that identifies or differentiates a seller's goods or services from those of competitors”. From this approach, the concept of branding is approached from a product-oriented perspective and focuses on visual cues that serve as identifiers and differentiators. “A brand is a name associated with one or more products within a product line, used to identify the origin and characteristics of those products” (Kotler, 2000). Kotler (2000) refers to the brand as a part of the product. According to Keller (2003), a brand has a simple and clear function as an identification tool. The traditional perspective suggests that a brand is only a part of the product, consisting of symbols and signs used to identify and differentiate a business's products from those of competitors. Davis (2003) argues that a brand is a set of attributes that provides the target customers of a business with the values they demand. Aaker (1991, p. 110) defines, “A brand is a differentiated name and/or symbol that identifies a seller's goods or services from those of competitors. A brand is a valuable asset to a business, as products can be imitated by competitors, but a brand is unique. Products may become outdated, but a successful brand will not become outdated”

According to Kapferer (2012, p. 12), the definition of a brand is as follows: “A brand is a symbolic representation of a long-term attachment, effort, or commitment to a unique set of values, associated with products, services, and behaviors that make an organization, individual, or product stand out or excel”.

 2. Loyalty

Many researchers have provided different definitions of customer loyalty. Each study was conducted in different periods and under different economic conditions, leading to variations in the definition of customer loyalty. One of the earliest concepts of customer loyalty was proposed by Brown (1952), stating that “Customer loyalty is the repeated purchasing behavior of the same brand” In their study, Dick and Basu (1994) suggest that customer loyalty is manifested through the strength of the relationship between relative attitude and frequent repatronage. According to Oliver (1999), loyalty is understood as a strong commitment to consistently purchase a preferred product/service in the future and engage in repeated buying behavior for that brand, regardless of situational influences and marketing efforts aimed at changing that purchasing behavior. According to Caruana (2002), customer loyalty is when customers engage in repeated purchasing behavior from a specific product or service provider, hold a positive attitude towards that provider, and only consider that provider when they have a need for those products or services. In this study, the author utilizes the concept of customer loyalty from Oliver (1999), stating that “loyalty is understood as a deep commitment to consistently purchase preferred products/services in the future and engage in repeated purchasing of that brand despite situational influences and marketing efforts aimed at changing such purchasing behavior”. The study also concludes that “customer loyalty is an asset to the bank. When customers are loyal, they will continue to use the bank's services and may refer the products to potential customers. Furthermore, when they have a need for other services, they will consider the bank first, even though they are aware that there may be better alternatives in terms of utility or pricing at another bank”.

3. Brand loyalty

According to the American Marketing Association, brand loyalty is a situation where consumers consistently purchase products or services from the same manufacturer over time, without buying from multiple suppliers within the same product category. Brand loyalty is the core of brand value (Aaker, 1991). Brand loyalty measures the customer's attachment to the brand. When brand loyalty is high, customers are less likely to switch to another brand based solely on price, and loyal customers also make more frequent purchases (Bowen & Shoemaker, 1998). The presence of loyal customers reduces opportunities for competitors, making them discouraged in their efforts to attract customers due to the high cost and low effectiveness. Furthermore, loyal customers bring significant benefits to the company through their word-of-mouth referrals of the company's products to other customers (Assael, 1995). Anderson & Srinivasan (2003) defined electronic loyalty as "the customer's satisfaction attitude towards an electronic business leading to repeated purchase behavior." Studies have identified electronic loyalty as a commitment to consistently access a specific website brand for shopping without switching to other websites (Cyr, 2008). In theory, brand loyalty has been divided into two types: behavioral loyalty and attitudinal loyalty (Keller, 1993). Another indicator of loyalty is when customers are willing to pay a higher price for a brand compared to another brand that offers similar benefits (Aaker, 1996). Aaker (1991) defines brand loyalty as the attachment of customers to a brand; it is the commitment of customers to consistently use a brand when they have a need for a particular product or service. According to Dick, Alan S. & Kunal Basu (1994), brand loyalty consists of consumer commitments to purchase or continue using a brand, and it can be  demonstrated through repeat purchases of a product or service, or other positive behaviors such as word-of-mouth advocacy that helps promote the brand's product or service. From the definitions above, we can conclude that brand loyalty is the attachment of consumers in repeatedly choosing products from a particular brand instead of opting for products from competing brands.

4. The role of the brand loyalty of customers

Brand loyalty is the foundation of a business and the result of successful brand management. The greater the level of loyalty, the lower the marketing costs because loyal customers themselves become the best and most effective brand advocates. Furthermore, they serve as a means to introduce and promote products to other potential customers. When satisfied with a company's products and services, loyal customers willingly share their positive experiences with others, recommending the company's goods. Such word-of-mouth referrals are invaluable to the company and prove to be the most efficient and effective way to acquire new customers, surpassing the company's own search efforts. Moreover, these recommendations serve as a completely free and fantastic promotional channel for the company. Brand loyalty also acts as a barrier against new competitors entering the market. Brand loyalty is the key asset of the brand. According to a study by the Gartner Group, just 20% of existing customers can generate 80% of a business's profits, and profitability tends to increase with customer loyalty. On average, current customers are willing to spend up to 67% more than new customers. Many businesses strive to attract new customers to increase revenue, but the reality is that the revenue comes from existing customers. When lacking the skills and resources to acquire new customers, companies must focus on retaining their current ones. Loyal customers incur lower service costs compared to new customers because transactions are carried out according to familiar routines, and they have fewer demands from the company. They speak positively about the company and its products or services and pay less attention to competing brand labels or advertisements. Considering the benefits of brand loyalty, it becomes evident that building customer loyalty is crucial for businesses today. The questions then arise: how to build and maintain loyalty? Especially, where to find resources to invest in increasing loyal behavior, nurturing loyalty, and simultaneously generating profits is a concern for every business. Loyal customers not only contribute to higher revenue than regular customers but also provide longterm stable profitability through repeat purchases. Moreover, once they are loyal, customers tend to increase their purchases and easily buy additional products or services from the company. Loyal customers are also the most challenging for competitors to attract, as they remain loyal even during difficult times. Additionally, loyal customers help companies increase profitability by reducing costs such as advertising, customer acquisition, building new databases, understanding buying behavior, reducing service costs, and saving transaction time.