The extent of consumer preference for a brand in comparison to close substitutes.
Brand loyalty, as exemplified through consumer preference for the brand and an associated commitment to repurchasing the brand, is recognized by marketers as an important indicator of a brand’s value. While repurchase behavior is clearly associated with brand loyalty, repurchase behavior does not in and of itself demonstrate brand loyalty, as a brand’s repurchase may be due to convenience rather than loyalty, for example. In this context, many firms may have loyalty programs that encourage repurchase, but even frequent repurchases do not necessarily indicate that consumers are brand loyal to any degree.
Marketers aiming to achieve strong brand loyalty among the firm’s customers should seek to understand the extent of consumer preference for the firm’s brand(s) in ways that go beyond examining repeat purchase behavior. Such an understanding can enable marketers to benefit from and make strategic use of brand loyalty in ways that include lowering the cost to serve loyal customers and leveraging loyalty to help attract new customers. (See loyalty ripple effect.)
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