A test for brand loyalty

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: Is there a loyalty ‘Rs 20 off’ can’t buy?

Ravi Kiran

Customer loyalty is a complex subject during the best of times. Every marketer wants its own customers to stay loyal and buy repeatedly from it, while at the same time it wants to encourage experimentative behaviour in its rivals’ customers. This means a brand wants to stimulate fundamentally conflicting behaviour in people.

Often, loyalty that can be loosely defined as a customer’s willingness to choose a brand more often over a period than its rivals, is dependent on the price of the product, the level of involvement, the level of competitive marketing activity (including but not limited to advertising), and the number of brands available with similar perception of value delivery.

Often, as in the case of low choice categories, there may be natural barriers to brand switching, even where competition is stiff. In mobile telephony, for example, many post paid customers tolerate unsatisfactory service for fear of having to lose touch with people, if they were to switch their operator. This may give brands a false sense of loyalty, on classical metrics. Similarly, in packaged goods, given our retailing structure led by kirana stores and small, owner-operated super markets, customers are often loyal to the store, instead of to a brand. They move quite easily between brands within their basket, based on retailer push and often promotional offers. Modern format retailing encourages experimentative behaviour anyway and poses further threat to loyal behaviour.

What happens when times are tough? As customers juggle to fulfil competing needs within limited resources during stressful times, their value consciousness scales new peaks. In fact, the definition of value shifts during challenging times. People prefer simple price offs over cross promotions, which they decode as attempts to get them to buy what they either don’t need or could easily buy at a later date.