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The Relation Of Brand Loyalty And Age Marketing Essay

3056 words (12 pages) Essay in Marketing

5/12/16 Marketing Reference this

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Branding evolved from the times of the Industrial Revolution, when companies branded their products to differentiate them from other goods. Today brands are the focus of marketing strategies. And so are the consumers. Even so, brand-loyal consumers are the biggest assets of any corporation. Of the various factors affecting brand loyalty is age; brand-loyalty increases with age as the young like to experiment out with new brands and the older people stick to what their experience has proved to be good. The parameters for measuring brand loyalty were taken from the definitions of the word by Chestnut and Jacoby (1978) and Oliver (1999). Questions were based on these parameters and asked from three age groups of 400 individuals each: 1838 years, 3959 years and of and above 60 years. The results were recorded and our findings were consistent with our hypothesis: the young people are less brand-loyal and loyalty increases as age increases.

The success of a firm depends largely on its capability to attract consumers towards its brands. In particular, it is critical for the survival of a company to retain its current customers, and to make them loyal to the brand. This is even more important today, as corporations have directed their marketing efforts towards brand development and promotion. Today’s consumer is confronted with a plethora of choices, made available through fierce competition, globalization and the internet, which has drastically increased awareness on every aspect. Brand loyalty is therefore one of the most valuable assets. Former Ford vice president Basil Coughlan estimated that every percentage point of loyalty is worth $100 million in profits to his firm (Serafin and Horton (1994)).

Brand loyal consumers reduce the marketing costs of the firm as the costs of attracting a new customer have been found to be about six times higher than the costs of retaining an old one (Rosenberg and Czepiel(1983)). Moreover, brand loyal consumers are willing to pay higher prices and are less price sensitive (Krishnamurthi and Raj (1991); Reichheld and Sasser (1990)). Brand loyalty also provides the firm with trade leverage and valuable time to respond to competitive moves (Aaker (1991)).

Brand loyalty has been defined by different authorities over time. Two definitions are presented. Jacoby and Chestnut (1978, pg. 80) define it as “The biased, behavioral response, expressed over time by some decision making unit with respect to one or more alternative brands out of a set of such brands, and is a function of psychological (decision-making, evaluative) processes.” Oliver (1999) defines it as: “a deeply held commitment to re-buy or re-patronize a preferred product/service consistently in the future, thereby causing repetitive same-brand or same brand-set purchasing, despite situational influences and marketing efforts having the potential to cause switching behavior.”

2. Background

The history of branding is really as old as industrialization and the Industrial Revolution. It was here that mass produced products when exported to other countries or colonies abroad faced competition with local products. To gain the consumer’s confidence in the quality of the product and to familiarize them with it and to stand out from others, the products were branded e.g. “Lyle’s Golden Syrup,” which is also the oldest brand name in the world. Companies soon adopted slogans, mascots, and jingles that began to appear on radio and early television. By the 1940s, manufacturers began to recognize the way in which consumers were developing relationships with their brands in a social, psychological and anthropological sense. Manufacturers quickly learned to build their brand’s identity.

As brand development gained importance in marketing, so has the development of loyal consumers, because they are more valuable to a corporation. With our growing population and even more competition, companies would like to focus their energies and resources on that particular segment of the population which is more likely to respond positively. Today’s youth are more informed about the various brands and are likely to use services like the internet to find out more about a particular brand before purchasing it. Due to advances in medical sciences and the provision of better health facilities and quality of life, because of awareness has led to an increase in the proportion of middle and old aged individuals. This is created a challenge for companies marketing their brands, as these challenges have risen in the population segments. We were intrigued to find out which among them is the more brand loyal group, so that corporations should direct their efforts more towards that particular segment. This is the basis of our choice for selecting this particular topic.

3. Literature Review

i) “Determination of brand loyalty factors age group-18-24. (Survey)” Author: Srivastava, R.K. Published in: Academy of Marketing Studies Journal, 1st January, 2007.

ii) “The Development of Brand Loyalty: An Experimental Study.” Author: J. Douglar McConnell. Published in: Journal of Marketing Research, Volume V, February 1968.

iii) “An Empirical Analysis of the Relationship between Brand loyalty and Consumer Price Elasticity.” Authors: Lakshman Krishnamurthi and S. P. Raj. Published in: Marketing Science, Vol. 10 No. 2 Spring 1991.

iv) “From Brand Loyalty to E-Loyalty: A Conceptual Framework.” Authors: Marcel Gommans, Krish S. Krishnan and Katrin B. Scheffold. Published in: Journal of Economic and Scial Research 3(1) 2001, 43-58.

v) “A Review of Brand-Loyalty Measures in Marketing.” Authors: M. Mellens, M.G. Dekimpe and J. B. E. M. Steenkamp. Published in Tijdschrift voor Economie en Management. Vol. XLI, 4, 1996.

vi) “Loyalty-Based Management (HBR OnPoint Enhanced Edition).” Authored by: Frederick F. Reichheld (1993). Published in: Harvard Business Review, 71 (2), 64-73.

vii) “Consumer Loyalty: Toward an Integrated Conceptual Framework.” Authored by: Dick, Alan S. and Kunal Basu (1994). Published in: Journal of the Academy of Marketing Science, 22 (2), 99-113.

viii) “Why Customers Stay: Measuring the Underlying Dimensions of Services Switching Costs and Managing Their Differential Strategic Outcomes.” Authored by: Jones, Micheal A., David L. Mothersbaugh, and Sharon E. Beattt (2002). Published in Journal of Business Research, 55, 441-50.

ix) “The Effect of Service Price Increases on Customer Retention: The Moderating Role of Customer Tenure and Relationship Breadth.” Authored by: Dawes, J. Published in: Journal of Service Research, Vol. 11, 2009.

x) “Brand Loyalty: Measurement and Management.” Authored by: Jacoby, J. and Chestnut, R.W. (1978). Publishers: John Wiley & Sons, New York.

4. Development of Theoretical Work

Our hypothesis is alternative directional, in which there is a positive relationship between brand-loyalty and age.

5. Nature of Study

The nature of our study is hypothesis testing, in which we know that there is a positive relationship between brand-loyalty and age. We will test for the validity of this relationship in our research.

6. Time Spent

We took around a week to select the topic of our research, a week to plan, devise the questionnaire and structure our research. Our study took around 2 months to complete and another week to compile the results.

METHODOLOGY

1. Sample

We conducted cluster random sampling. The clusters were based on the age groups in the population: Group A of 400 individuals of the age of 1838 years, Group B of 400 individuals of 3959 years of age and Group C of 400 individuals of an age of and more than 60 years. The essential pre-requisite was that the participants by smokers since a year at least and smoke a minimum of 10 cigarettes a day, so that they are well orientated with the different cigarette brands available in the market locally and have experience enough to establish their own set of preferences at the time of participation. They are also more likely to be using a particular brand more regularly.

2. Measuring instruments: validity and reliability

This section is written from material taken from “A Review of Brand-Loyalty Measures in Marketing.” Authors: M. Mellens, M.G. Dekimpe and J. B. E. M. Steenkamp. Published in Tijdschrift voor Economie en Management. Vol. XLI, 4, 1996.

Brand loyalty is a nebulous term and hence can’t be quantified. We therefore set out to define this term and try to quantify them. As previously mentioned in the introduction, the term “brand-loyalty” has been defined by Jacoby and Chestnut (1978, pg. 80) as “The biased, behavioral response, expressed over time by some decision making unit with respect to one or more alternative brands out of a set of such brands, and is a function of psychological (decision-making, evaluative) processes.” Oliver (1999) has defined it as: “a deeply held commitment to re-buy or re-patronize a preferred product/service consistently in the future, thereby causing repetitive same-brand or same brand-set purchasing, despite situational influences and marketing efforts having the potential to cause switching behavior.”

If we take out the common criteria from the definitions written above, the following important aspects are evident: it is a “biased” decision, “deeply held commitment to re-buy or re-patronize” and is “expressed over time” “consistently in the future” in the presence of “one or more alternative brands” and “despite situational influences and marketing efforts having the potential to cause switching behavior.” These parameters in effect are the essence of brand-loyalty.

Our research is based on finding out the attitudinal measures in contrast to the behavioral measures. The attitudinal measures are based on stated preferences, commitment and purchase intentions of the consumers. The behavioral measures are those which measure brand loyalty in terms of the actual purchases observed over a certain time period. Even though this is advantageous in certain ways that it is based on actual behavior and is easy to collect, but it does not reflect the true commitment in the consumer towards the brand. Also, repeat buying cannot be distinguished or separated from true brand-loyalty. This is an important component of brand-loyalty, as is evident by the definitions of Jacoby and Chestnut and Oliver. Hence we went forward for the attitudinal measure.

We devised a questionnaire covering each of the above mentioned aspects in the form of a question, to make it valid. The questions are designed to be simple, easy to understand, yet comprehensive so that we can ensure the reliability of our research. A large number of participants were taken so that the results are reliable. The literate individuals in our research were given the questionnaire and those who could not read were read out the questions and their responses were recorded. The answers are arranged in a range of ‘strongly agree,’ ‘agree,’ ‘neutral,’ ‘disagree’ and ‘strongly disagree’ so that the responses of the participants could be recorded to a greater degree of accurately.

Our apparatus is the questionnaire. To test our apparatus, we used test-retest reliability. We gave the questionnaire at one location which was a cigarette stall, to a group of 20 people, incidentally of the 1838 year age group. The results which we got from around 15-20 individuals of the same age group were similar to another cigarette shop, located in a posh area. Hence our apparatus is reliable.

3. Method of Data Collection

A questionnaire was made with 10 questions in it. The questions were such that the participant would respond back to them with whether he or she agreed or disagreed and to what extent did they do so. To translate the qualitative responses, each response was given numerical marks, so that the results could be quantified. The questions were designed with respect to the definitions of brand loyalty given by Jacoby and Chestnut (1978) and Oliver (1999), which have been mentioned in the paragraphs before.

For the literate people participating in our survey, we handed over them the questionnaire. They had to choose from a particular age group which was provided to them, as also mentioned earlier: of and between 1838 years, 3959 years and of and more than 60 years of age. Since this study is concerned only between the relationship of brand-loyalty and age, we did not include and did not require them to reveal their sex or other personal details. To facilitate the illiterate subjects, we read the, out the questions, translating them to a language they were comfortable with and recording their response, asking them to indicate the extent to which they agreed or disagreed, to fulfill our requirement in marking the accurate response for them. They were asked to be honest and to take as much time as they needed to fill out the form at ease, to ensure greater accuracy of the study. Cross-questioning or consultation with others was not allowed so that the response would reflect the personal opinions more accurately than influenced ones.

For each question, brand-loyalty was reflected when the individual responded with “agree” or “strongly agree,” so they were given positive marks of +1 & +2 respectively. If the individual replied with “neutral,” such a reply was given a 0. The responses “disagree” and “strongly disagree” are indicative of brand-disloyalty and are awarded -1 & -2 respectively. This is done to facilitate the researchers in data collection, analyzing and interpreting the score. A more positive result is a measure of greater brand-loyalty and a more negative score is reflective of greater brand-disloyalty.

The total score for each paper was calculated by adding the numbers assigned to each response. After that the mean for the 700 people of a particular group was calculated, by adding the total score of a group of 700 people and dividing it by 700.

4. Statistics

The mean of Group A (age 1838 years) is -0.98, which shows that they do not exhibit much brand-loyalty and can be called brand-switchers, i.e. they try new brands. The mean for Group B (ages 3959 years) is +0.23. The mean for Group C (age of and more than 60 years) is +1.6, showing that they exhibit brand-loyalty.

RESULTS

Through the research that we conducted, we have found out that youngsters try out new brands and they are brand-switchers. Brand loyalty comes with age: with middle aged being more brand-loyal and the old aged being most brand-loyal.

DISCUSSION

Brand loyalty is certainly one of the most important assets of any corporation today, for a consumer loyal to a brand will always select that brand in the face of competition from other brands and will not be enticed by the marketing efforts made by other corporations. Brand loyalty is dependant on many factors, but our research looked into one aspect of brand-loyalty: age. This was intriguing as the population of today has a higher proportion of old aged people because of advances in medical sciences and increased awareness of better healthier lifestyles. Awareness has played an important role in changing the outlook of the youth especially and those of the middle aged people, who are beneficiaries of the internet revolution. We thus hypothesized that this segment would be less brand-loyal and it was evident in our research as well.

The marketing departments of corporations should therefore focus more on the teenagers and middle aged population, for if they are more likely to experiment with newer bands and have greater potential as consumers. They are also harder to retain and so efforts should be made to ensure that the consumers are not lost.

ACKNOWLEDGEMENTS

We would like to extend our sincere thanks and gratitude to Dr. Humair Hashmi for guiding us throughout our research. We also sincerely thank all those people who participated in our study.

REFERENCES

i) “Determination of brand loyalty factors age group-18-24. (Survey)” Author: Srivastava, R.K. Published in: Academy of Marketing Studies Journal, 1st January, 2007.

ii) “The Development of Brand Loyalty: An Experimental Study.” Author: J. Douglar McConnell. Published in: Journal of Marketing Research, Volume V, February 1968.

iii) “An Empirical Analysis of the Relationship between Brand loyalty and Consumer Price Elasticity.” Authors: Lakshman Krishnamurthi and S. P. Raj. Published in: Marketing Science, Vol. 10 No. 2 Spring 1991.

iv) “From Brand Loyalty to E-Loyalty: A Conceptual Framework.” Authors: Marcel Gommans, Krish S. Krishnan and Katrin B. Scheffold. Published in: Journal of Economic and Social Research 3(1) 2001, 43-58.

v) “A Review of Brand-Loyalty Measures in Marketing.” Authors: M. Mellens, M.G. Dekimpe and J. B. E. M. Steenkamp. Published in Tijdschrift voor Economie en Management. Vol. XLI, 4, 1996.

vi) “Loyalty-Based Management (HBR OnPoint Enhanced Edition).” Authored by: Frederick F. Reichheld (1993). Published in: Harvard Business Review, 71 (2), 64-73.

vii) “Consumer Loyalty: Toward an Integrated Conceptual Framework.” Authored by: Dick, Alan S. and Kunal Basu (1994). Published in: Journal of the Academy of Marketing Science, 22 (2), 99-113.

viii) “Why Customers Stay: Measuring the Underlying Dimensions of Services Switching Costs and Managing Their Differential Strategic Outcomes.” Authored by: Jones, Micheal A., David L. Mothersbaugh, and Sharon E. Beattt (2002). Published in Journal of Business Research, 55, 441-50.

ix) “The Effect of Service Price Increases on Customer Retention: The Moderating Role of Customer Tenure and Relationship Breadth.” Authored by: Dawes, J. Published in: Journal of Service Research, Vol. 11, 2009.

x) “Brand Loyalty: Measurement and Management.” Authored by: Jacoby, J. and Chestnut, R.W. (1978). Publishers: John Wiley & Sons, New York.

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