HOW DO YOU DEFINE AND EXPLAIN CONSUMER LOYALTY? WHAT IS THE EVIDENCE? HOW CAN MARKETERS USE CONSUMER LOYALTY?
...cantly influenced by Customer Relationship Management (CRM) Initiatives such as loyalty programs. However, it is perhaps unrealistic to focus on ‘true loyalty’. Oliver (1999) observes that ‘true loyalty, with emotional commitment to the brand, is rare’ (East et al, 2004). Also the evidence supporting the theories of consumer loyalty as an attitudinally based phenomenon is far from conclusive. Indeed there is little empirical evidence to validate or reject this perspective of consumer loyalty (Oliver, 1999). The conceptualization of consumer loyalty defined in terms of behaviour undoubtedly has more empirical evidence to support it, although this does not necessarily mean it’s any less controversial than the definition of consumer loyalty as an attitude based phenomenon. In this instance consumer loyalty is defined mainly with regards to the pattern of past purchases. Researchers have found that very few consumers are wholly monogamous (solely committed to one brand) or wholly promiscuous (no commitment to any brand) (Uncles et al.,2003). Instead the majority of consumers are polygamous. This means they purchase a portfolio of brands within a product category. This type of loyalty is defined as “an ongoing propensity to buy the brand, usually as one of several” (Ehrenberg and Scriven, 1999). This concept is certainly credible in a modern day market where many product categories have an abundance of brands which has led to a reduction in brand distinctiveness. This means that it is becoming increasingly difficult to create a brand with a unique personality and, therefore, increasingly difficult to create a meaningful relationship between consumers and a brand based on the consumers’ attitudes. Obviously attitudes may still form towards a certain brand over time but they will not be of primary importance. It is important to note that liking a brand does not preclude equally liking another brand. There are also those who claim that a better conceptualization of loyalty is to allow for the effect of contingency variables, such as the individual’s situation, on attitude and behaviour. This would mean that the contingency variables were primary co-determinants of consumer loyalty. These variables can be extremely diverse and range from time pressures upon the individual to the availability of certain stock within a purchase situation. Having looked at the various conceptualizations of consumer loyalty and the evidence for them we will now examine their outcomes and look at how they can be of use to a marketer. Essentially marketers want to enhance consumer loyalty and use this to increase profit. There is little doubt that consumer loyalty can be extremely informative for a marketer regarding where to target a specific initiative or what type of strategy should be used. To a certain extent each conceptualization of consumer loyalty offers a different course of action. We will first look at consumers who are thought to be loyal in the attitudinal sense. These consumers seem to be most prevalent in high-identity product categories, such as luxury goods, and also high-risk, non-frequently bought services, such as life insurance or credit cards. This is because they place greater importance on psychological and social value than functionality. For these consumers the attitudes of others towards a particular brand are also important. This, therefore, indicates the importance of recommendation, which often manifests itself as word-of-mouth. Researchers have found that a consumer’s relative attitude to a brand should predict their recommendation (East et al., 2004). The reason for this is that relative attitude and recommendation both have factors in common, for example “the reasons for liking one brand more than another are often the same reasons given when making a recommendation in favour of one brand rather than another” (East et al.,2004) Recommendation is often seen as an outcome of satisfaction, but this is rather simplistic. Paine (1995) sees recommendation as the outcome of relation management. His ‘Loyalty Ladder Model’ demonstrates that satisfaction occurs only when the consumer is highly satisfied. However, recommendation is effectively a method for acquiring customers, whilst relationship marketing normally emphasises the importance of relationship marketing. Consumer retention is undoubtedly very important. Reichheld (1996) claims that US corporations lose half their customers within five years. Research has also shown that the cost of gaining a new customer is much greater than the cost of retaining an existing customer. It can also be argued that as the consumer has already bought the product he or she is more worthy of the marketing effort. An example of this is the frequent flyer schemes offered to airline travellers. Ahluwahlia et al. (1999) have also shown that attitudinally loyal consumers are far less susceptible to negative information about brand than other consumers. All this suggests tat a great effort should be made to retain customers. However, East et al (2004) observe that retention is not predicted particularly well by relative attitude as th...