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BRAND LOYALTY: CONTRIBUTION OF BEHAVIORAL AND AFFECTIVE BRAND COMPONENTS

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Brand Loyalty: Contribution of Behavioral and Affective Components

Ana L. Soares

Warrington College of Business - University of Florida

Dr. Richard J. Lutz

Marketing Department


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ABSTRACT: Brand loyalty is extremely desirable by brand managers since it offers unique

advantages such as greater trade leverage, ability to charge a premium, and greater market share.

It is important to consider how the affective and behavioral components of brand loyalty affect

consumers when they are making purchasing decisions. Through this thesis we analyze how

different purchasing conditions, such as low- and high-involvement, affect consumers and thus

call for brand managers to adapt accordingly. We also weigh the importance of these attributes

individually. Although this is by no means an exhaustive investigation of all the considerations

that need to be accounted for when working to instill brand loyalty, it is a proposed to be place to

start as managers work toward building strong brands.

Obtaining brand loyalty is highly desired by brand managers as it can bring in increased

revenue, allow brands to charge a premium, and help build brand equity. With this in mind,

through this paper we take time to define brand loyalty and then discuss some important factors

to be considered as brand managers work towards building consumer loyalty specifically

focusing on two brand loyalty aspects: behavioral and affective loyalty since it is significant to

consider how these components affect brand loyalty differently.

Through the analysis, comparison and contrast of two different aspects of brand loyalty—

behavioral and affective— we can learn how a brand may benefit from those behaviors which

have been identified as drivers of superior brand performance. According to Jacoby and Kyner

(1973) brand loyalty can be defined by six conditions that must be present and are collectively

sufficient. Conceptually, “brand loyalty is (1) the biased (i.e., nonrandom), (2) behavioral

response (i.e., purchase) (3) expressed over time, (4) by some decision-making unit, (5) with

respect to one or more alternative brands out of a set of such brands, and (6) is a function of


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psychological (decision-making, evaluative) processes” (p. 2). Consequently, brand loyalty is

comprised of behavioral as well as attitudinal components.

It is significant that brand purchases be biased because that factor is responsible for

making it predictable and controllable as opposed to a random event. Additionally, a biased

behavior is necessary because a mere verbal report of bias cannot be accepted as loyalty since a

person may claim to prefer brand A, but in fact consistently purchase brand B. This behavior

would render this consumer loyal to brand B despite a verbal statement of loyalty to brand A. As

alluded to in the example, loyalty can only be measured over time. One spontaneous act is not

sufficient evidence to determine loyalty (Jacoby & Kyner, 1973).

The fourth condition is also very important. Marketers must understand how consumers

make decisions and how the decision-making unit is structured. For example, car purchases are

often influenced by children even though the decision makers are the parents; similarly, it is

often the case that the decision maker is not the actual buyer. In this instance, it is important to

note that it is not the purchaser, but the decision maker who is displaying loyalty. This is

observed in decision-units such as families or organizations. Moreover, for the fifth condition to

be satisfied alternative products must be present, making choosing a specific brand a choice

(Jacoby & Kyner, 1973).

Although a consumer can be loyalty to multiple products within the same product

category, brand loyalty is essentially a “relational phenomenon” and an “acceptance-rejection

function” (Jacoby & Kyner, 1973, p. 2). The selection of one product signifies the rejection of

the other alternatives. Finally, brand loyalty is derived from an evaluative process. The consumer

has a set of criteria that he/she is looking for in the product and the optimal brand is chosen

based on how well it does in meeting these criteria in relation to the other available alternatives.


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It is also essential to realize that these criteria have varying importance weights, e.i, low price

may be more important than aesthetics. Similarly, although a customer may feel more affectively

inclined to brand A he/she could be loyal to brand B because it is cheaper. Likewise, a customer

may choose brand A entirely because it is dear or appealing to them regardless of the price

(Jacoby & Kyner, 1973).

After defining brand loyalty based on these six criteria, Jacoby and Kyner (1973)

conducted experiments to demonstrate that, “while brand loyalty and repeat purchasing behavior

may appear from overt purchasing data to be one and the same, the underlying dynamics are

indeed different, so that satisfying five or fewer conditions will result in nonloyal brand selection

behavior under conditions which test for loyalty” (p. 3). This was done by manipulating the

condition that there should be more than one brand available in the product category and the

condition that the choice should be expressed with a behavior, not only a statement of intent. The

results support their hypothesis that the underlying dynamics do in fact differ and that when the

six conditions were not satisfied the behavior could not be considered loyal. The experiment also

supports that one of the motivations for a consumer to develop relationships with brands and

brand loyalty is to avoid cognitive dissonance caused from having too many alternatives to pick

from. Brand loyalty can be adopted in this instance as a purchase strategy to avoid future

discomfort (Jacoby & Kyner, 1973). We will discuss this topic in more detail in later in the

paper.

Having thoroughly defined brand loyalty, we can now discuss the role it plays, the

relationships we form with brands, and thus why it is a topic worthy of discussion. As argued in

the article The Chain of Effects from Brand Trust and Brand Affect to Brand Performance: the

Role of Brand Loyalty, written by Chaudhuri and Holbrook (2001), brand loyalty leads to


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superior brand performance in the market. Consumers are be more inclined to pay a higher

relative price for a brand because they believe that brand has some kind of unique value they are

unable to find in any other brands. Chaudhuri and Holbrook (2001) suggest this may be due to a

stronger sense of trust in the brand or a stronger positive affect generated through the use of the

brand. Brand loyalty thus plays a very significant role as the driver of “marketing advantages

such as reduced marketing costs, more new consumers, and greater trade leverage” (p. 81)

among others.

Chaudhuri and Holbrook’s (2001) study consists of four hypotheses with the intent of

exploring the relationship between brand trust, brand affect, and brand performance. For

clarification purposes, brand affect is defined as the “brand’s potential to elicit a positive

emotional response in the average consumer as a result of its use” while brand trust is “the

willingness of the average consumer to rely on the ability of the brand to perform its stated

function” (p. 82) Furthermore, purchase loyalty is “the willingness of the average consumer to

repurchase the brand” and attitudinal loyalty is “the level of commitment of the average

consumer toward the brand” (p. 83)

This can be represented with a brief example: in one scenario a consumer visits an

amusement park and evaluates it based on his/her set of criteria—which may include quality,

reliability, etc— and finds one that excels in these criteria causing him/her to develop trust for

that product. In an alternate scenario, the consumer may have derived positive feelings from

visiting the amusement park and developed an affect for the brand. These reactions will likely

result in a repeat visit and willingness to pay a premium for the experience. However, these

reactions could stretch even further and result in more regular visits to the park or urge the

consumer to find alternate motives for visits such a celebrating a birthday, wedding, or going on


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a family vacation. In this event, there will be a clear outcome for the brand: additional sales

(Chaudhuri & Holbrook, 2001).

The first two hypothese state that “brand trust is positively related to both purchase

loyalty and attitudinal loyalty” and “brand affect is positively related to both purchase loyalty

and attitudinal loyalty” (Chaudhuri & Holbrook, 2001, p. 84). Consumers form relationships

with brands. Brand trust, which leads to brand loyalty, is valued because of the exchange

relationship it produces. As we discussed previously, brand loyalty helps ease cognitive

dissonance by helping consumers feel less vulnerable in environments characterized by

uncertainty. In these instances, it is comforting and valuable to rely on a trusted brand. Since

trust and commitment are a large part of valued brand relationships, the first hypothesis was

formed under the rationale that a trusted brand will be purchased with greater frequency and

illicit greater attitudinal commitment. As for the second hypothesis, the authors noted that

magnitude and hedonic sign of the emotional relationship with the brand are also significant

factors and consumers would be more loyal and willing to purchase brands that evoke greater

positive affect (Chaudhuri & Holbrook, 2001).

The third hypothesis is very direct, “market share increases as purchase loyalty increases”

(Chaudhuri & Holbrook, 2001, p. 84). This is supported by the fact that it is expected that loyal

consumers make more repeat purchases. It is also important to take into account the double-

jeopardy theory which proposes “brands with smaller market share are at a disadvantage

compared with brands with larger market shares in two ways: First, they have fewer buyers;

second, they are purchased less frequently by these few buyers” (Chaudhuri & Holbrook, 2001,

p. 84). Finally, the fourth hypothesis is supported by the brand equity theory which states

“relative price increases as attitudinal loyalty increases” (Chaudhuri & Holbrook, 2001, p.84).


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Consumers are more willing to pay a premium in accordance with their attitudinal loyalty and

the brand’s price relative to others available in the marketplace. (Chaudhuri & Holbrook, 2001)

The study results support these four hypotheses and find that brand trust and affect not

only contributed to an increase in market share, but also relative prices. This finding justifies

marketing managers spending on design, communication, and merchandising strategies since

these efforts are proven to have profitable effects. From a relational standpoint, it is interesting to

note parallels between brand relationships and personal relationships (Chaudhuri & Holbrook,

2001). Both can be measured by factors including positive/negative and intensity and evoke

feelings of trust and emotions such as happiness, excitement, etc. Through the rest of this paper

we will delve deeper into the issue of brand loyalty by discussing psychological inferences,

contributing factors, and tools used.

Knowing the basics of brand loyalty and how it is affected by behavioral and attitudinal

factors is vital in allowing us to analyze and understand the consumer. A study by Yi and La

(2004) found these behaviors we have discussed are not the homogeneous to all consumers.

Instead there are fundamental differences between loyal customers and nonloyal customers. As

found by Yi and La (2004), tendencies such as “accommodation”, “tolerance/forgiveness”,

“biased partner perceptions”, “devaluation of alternatives”, and “attribution biases” (p. 360) are

some of the characteristics found in loyal consumers that set them apart from the non-loyal

consumers.

The idea that loyal and non-loyal consumers use different decision criteria to determine

their level of satisfaction and willingness to repeat purchase was the foundation for the study.

After analyzing the results, Yi and La (2004) found that non-loyal consumers are more sensitive

to disconfirmation— more satisfied or dissatisfied when products perform better or worse,


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respectively— than loyal consumers. This occurs because loyal consumers tend to purchase the

brand more often and thus have more dependable and consistent knowledge in regard to the

brand such that they are likely to disregard disconfirmation and view changes as a sporadic

failure or success that is merely momentary.

Expanding on the topic of cognitive dissonance, Yi and La (2004) also found that loyal

consumers tend to feel less dissonance than non-loyal consumers, are likely to link any

discrepancy with external factors, and consider those discrepancies temporary and fleeting. This

can be attributed to the fact that since loyal consumers repurchase the same brand often they

acquire experiential knowledge about the brand and thus consume it with higher confidence. In

the event of a discrepancy, the consumer uses the trust in the brand to resolve mental conflicts

that arise from when the experience contradicts his/her expectations. Non-loyal consumers are

more likely to give more weight to episodic experiences when deciding to repurchase while loyal

consumers’ attitudes are not easily altered by an episodic event. Thus it can be affirmed that

loyal consumers are more resistant to disconfirmation and their repurchase intention is less

affected by negative or positive events.

Furthermore, from a relationship marketing perspective Yi and La found, “loyal

consumers seem to be more relational to a particular brand than non-loyal consumers. In

contrast, non-loyal consumers seem to be relatively less relational, transaction oriented, and

short-term oriented” (p. 358). The strong consumer trust in the brand helps loyal consumers stay

positive longer and be less inclined to make expectation adjustments based on episodic factors.

Another important aspect of the consumer-brand relationship is commitment. Commitment is “an

enduring desire to maintain a valued relationship” (p. 359), it is also composed of “some form of

investment, an attitudinal component that may be described as affective commitment or


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psychological attachment, and a temporal dimension indicating that the relationship exists over

time” (p. 359). These two vital components of the brand loyal consumer relationship with the

brand lead to benefits such as decrease in price sensitivity and increase in resistance against

competitors.

Additionally, since the consumer has already invested time learning about a particular

brand and building a relationship with that brand, repurchasing it may make economic sense

since it eliminates the need for the consumer to spend additional time learning about a new brand

and investing in it. This gives the loyal consumer a high propensity to repeat purchase and a

higher consumer retention rate. Additionally, consumer satisfaction effects on repurchase are

higher for loyal consumers. This is very appealing since attracting new consumers is often more

expensive then retaining old ones. (Yi & La, 2004)

Before beginning a discussion about brand loyalty tools, it is important to touch on yet

another psychological factor: high involvement versus low involvement. When analyzing the

value of loyalty programs, Yi and Jeon (2003) found through their research specific differences

between high involvement and low involvement consumers. Highly involved consumers are

more active information seekers and more likely to be motivated by rewards that are directly

related to the product while low involvement consumers are swayed by attributes of the award

instead and not so much the product itself. In this case, other factors, such as reward timing,

become important and consumers prefer immediate rewards.

When conducting loyalty programs— a brand loyalty tool we will further discuss

shortly— it is also important to note that the level of consumer involvement can potentially lead

to program loyalty instead of brand loyalty. Yi and Jeon (2003) found that in high involvement

situations where “perceived value of the loyalty program has a positive effect on brand loyalty”


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(p. 234), the value of a reward is likely to lead to brand loyalty, not program loyalty, because

consumers believe their behavior was induced by the product, not external factors. In low

involvement situations, in the other hand, it is possible to generate brand loyalty through

program loyalty because consumers behaviors and induced primarily by the reward. Consumers

become loyal to the loyalty program because they find it valuable, which in turn has a positive

effect on brand loyalty. In this case, the deal is more valuable than the brand and it is the primary

driver for the brand choice which is a dangerous thing.

Loyalty programs are a widely employed brand loyalty tool and worth expanding on. We

can discuss this highly relevant topic in more detail using the article The Role of Loyalty

Programs in Behavioral and Affective Loyalty by Gomez, Arranz and Cillan (2006) as our guide.

Loyalty programs are “a marketing strategy based on offering an incentive with the aim of

securing customer loyalty to a retailer” (p. 387). The main goal of these programs is to build

consumer loyalty. From a behavioral loyalty perspective, loyalty program participants are more

loyal to a company that offers the loyalty program than those who are not participants. This

loyalty is due to program participants’ increased visit frequency and decreased interpurchase

period as opposed to nonparticipants. Another behavior of loyalty program participants is

displaying less loyalty to competitors, which is also a program goal. This objective is achieved

by creating switching costs for the consumer and a feeling that competitors charge more since

consumers are not offered loyalty program incentives at those locations. However, as

competitors begin offering loyalty programs these advantages become more subtle. Thus it is

advantageous to capitalize on first mover advantages when it comes to offering these programs

so switching costs can be established early on.


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From an affective loyalty perspective, they found that the repeat purchases elicited by

program rewards are achieved when the consumer holds a positive attitude towards the company

so it is fair to assume that loyalty program participants hold positive attitudes towards the

company offering the program. Secondly, program participants are more satisfied with the

company in comparison to nonparticipants. Loyalty programs have been noted to increase

consumer satisfaction and decrease dissatisfaction when there are company failures.

Additionally, being offered rewards translates to positive feelings towards the company and

these feelings lead to a more satisfying experience which, consequently, leads to an increase in

repurchase intentions. Thirdly, we consider the trust component of affective loyalty. Loyalty

programs create the opportunity for customers to build a relationship with the brand and the

increased amount of contact between the consumer and the brand allows for the consumer to

acquire more reliable information about the brand. These factors are contributors to the building

of trust between the consumer and brand. Finally, program participants are more committed to

the brand. The commitment comes from switching costs and can be exemplified by positive

word of mouth by loyal consumers (Gomez, Arranz & Cillan, 2006).

In summary, when using loyalty programs as a brand loyalty development tool, it is

important to know that participants are in fact more behaviorally and affectively loyal to the

brand than are nonparticipants. However, if purchase behavior remains unchanged— consumers

purchase habitually before enlisting in loyalty program and express intentions to continue

purchasing despite of program changes— then this tool should be aimed at retention of already

loyal consumers and strengthening of affective links (Gomez et. al., 2006).

Having a basic understanding of how brand loyalty incentives relate to the two loyalty

concepts we initially set out to analyze— affective and behavioral— it is important to learn more


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about how brand loyalty is achieved in the long run and we will do so by discussing two factors:

promotion and advertising. By long term we are considering effects that are accumulated over

several years. After conducting research, Mela, Gupta, and Lehmann (1997) found that the effect

advertising has in the long run is decreasing the price sensitivity of consumers along with the

size of the non-loyal segment. Price promotions, however, have the opposite effect and increase

both loyal and non-loyal consumer’s price sensitivity. Price promotions also induce consumers to

search for deals, and these effects are nearly four times larger for non-loyal consumers. Non-

price promotions, conversely, have different effects on consumers contingent on loyalty. For

loyal consumers, promotions function as advertising and decrease price sensitivity. Non-loyal

consumers, on the other hand, become more focused on price through these efforts. In summary,

non-price promotions ultimately “reduce price sensitivity of loyal consumers but significantly

increase the price sensitivity of non-loyal consumers” (Mela, Gupta, & Lehmann, 1997, p. 258).

Also, it is important to note that the effect is nearly twelve times larger on non-loyal consumers.

Therefore, one can assume that in the long run adverting has positive effects while

promotions have negative effects on consumer brand loyalty. This is because, according to self-

perception theory, promotions might cause the consumer to feel he or she is purchasing solely

due to the promotion and not because of brand preference, and it is hard for a customer to

develop brand loyalty when he or she believes that the key differentiating factor of the brand is

the price. However, learning theory presents the idea that promotions could have the opposite

effect since they offer an opportunity for the consumer to build a relationship and acquire more

knowledge about the brand, but this effect is likely trivial for mature product categories since

consumers already have experience with brands in that category (Mela et. al., 1997).


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When analyzing a product category as a whole, an increase in promotion and reduction in

advertising makes the consumer more sensitive to the price. Companies react to this by offering

even more promotions with short-term gain in mind. Nevertheless, as the competitors engage in

the same promotions, consumers become more price sensitive towards to entire category. In the

long run this levels the playing fields and lowers profits as competitors match promotions (Mela

et. al., 1997).

In their efforts to maintain brand loyalty, marketers encounter many obstacles; in the

coming pages we will focus on two types of obstacles, service failures and shopbots—an

obstacle that has emerged with new technological advances— and the role affective loyalty plays

when overcoming these obstacles. In her paper, The Impact of Service Failures on Customer

Loyalty, Mattila (2004) investigates the negative impact of service failures on loyalty. Mattila

(2004) found that consumers with low affective commitment to brands will, in a successful

service recovery condition, display lower negative attitude change as opposed to high affective

consumers. This means brands able to provide a successful recovery, in the short-run, will be

fare better with consumers that display low affective commitment as they are less emotionally

involved with the brand. Consumers who are more involved, or display a high affective

commitment to the brand, are more likely to feel “betrayed” (p. 135) by the brand and thus

display lower attitudes post-failure. Nevertheless, in the event of a poor service recovery,

attitudes of high and low affective consumers alike will not alter significantly.

Moreover, affective commitment has an important role in how consumers process

information. As we have previously discussed, consumers who have a high affective

commitment to a brand are known to rely on past positive experiences and not waver in their

opinions because of a failure— they regard these as episodic events. In the context of


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overcoming failures, this translates to less spillover effects on behavioral intentions due to

negative information. Low affective consumers, however, register less favorable loyalty

intentions after a service failure. In short, in spite of the recovery outcome, high affective

consumers will have more loyal post-failure intentions then will low affective consumers.

(Mattila, 2004)

Poor service recovery also affects attitudinal ambivalence. These unstable attitudes are

undesirable because they are poor predictors of future behavior with the attitude-behavior

relationship weaker in consumers with high ambivalence. Service recovery then becomes

increasingly important as it regulates the level of ambivalence. A poor recovery “represents a

‘double deviation’ in that both the initial experience and the recovery are failures” (Mattila,

2004, p. 138). In this situation, consumers that had positive pre-failure attitudes will be left with

ambivalent post-failure attitudes. A successful recovery, on the other hand, minimizes the

negative attitude ambivalence effects. In short, post-failure attitudes after a successful recovery

are expected to be less ambivalent than those after a poor recovery (Mattila, 2004).

In summary, when dealing with a service failure as an obstacle, it is important to know

that the emotional bond a consumer has with the brand regulates his or her response. In the high

affective situation, although the negative effects are overstated in the short run, they do not spill

over to behavioral responses as they do with low affective consumers. In other words, the

affective commitment is responsible for “mitiga[ting] spillover effects of service failures on

customer loyalty” (Mattila, 2004, p. 144 ). High affective consumers do, however, make it more

difficult to achieve a recovery successfully since they have a limited “zone of tolerance” for

failures. Contrastingly, for a consumer with low affective commitment, a recovery that combined

an apology and compensation caused negligible change of attitude, but this “forgiveness” effect


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was limited to successful recoveries only. A poor recovery is of most concern if the marketer is

trying to predict future behavior as poor recoveries result in ambivalent brand attitudes in both

types of consumers (Mattila, 2004).

Shopbots are “agent-based services that aggregate information of products and vendors,

and make product brokering easier” (Pedersen & Nysveen, 2001, p. 146). The advantage to

consumers of using these shopbots is that they can more easily locate relevant product

information about product attributes, making comparing across alternatives and selection easier.

We will be discussing shopbots from a perspective of facilitating information gathering and as

basis for our discussion, we will use research from Pedersen and Nysveen (2001). In their

research they analyze consumer loyalty through the attitudinal approach in which loyalty is

“inferred from the customer’s attitude and behavioral intention toward the attitude object”

(Pedersen & Nysveen, 2001, p. 147). The attitudinal approach identifies loyalty as having three

factors including cognitive loyalty, which is loyalty based on the product information the

consumer has. The other two factors are behavioral (conative) intention and affective, factors we

have analyzed throughout this paper (Pedersen & Nysveen, 2001).

We can now explore how this cognitive element, facilitated by shopbots, impacts

consumers’ behavioral and affective loyalty to a product. Pedersen and Nysveen used financial

services in their research, because the product by nature has many bits of information (interest

rate, fees, etc). They then divided the consumers into switchers or non-switchers, people who

have changed their financial providers and those who have not, respectively, with the intention of

finding how shopbots affect the loyalty of these two groups. They found that non-switchers

display more cognitive, affective, and behavioral loyalty to their financial service providers as

compared to switchers. This is because the consumers that switched providers showed rational


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behavior in doing so; they found a provider with better rates and made the switch. With that said,

they were less cognitive loyal and prone to switching again. Affectively they possibly did not

have the opportunity to develop a relationship with the provider (Pedersen & Nysveen, 2001).

It was also found that shopbots did not exert any effects on affective and conative loyalty.

Pedersen and Nysveen believe this to be the case because these behaviors are deeply rooted in

the consumer and therefore hard to sway. Additionally, shopbots did not have effect on

behavioral loyalty. This is reasoned to be because affective loyalty and behavioral intentions

predict behavioral loyalty more accurately than cognitive loyalty. Comparing switchers who use

shopbots with those who do not, they found that those who use shopbots are less cognitively

loyal because shopbots decrease cognitive loyalty in switchers. Non-switchers, however, did not

display cognitive loyalty differences based on use of shopbots (Pedersen & Nysveen, 2001).

Furthermore, use of shopbots does not have effects on affective and behavioral loyalty

because there are many more factors other than availability of information that contribute to

those deeper forms of loyalty. This lack of difference applies to switchers and non-switchers

alike. In summary, shopbots are not an obstacle to providers who have satisfied consumers, but

they are an obstacle to those with unsatisfied consumers considering switching. Additionally,

shopbots are not an obstacle in the sense that they do not pose a threat to deeper forms of loyalty.

As a closing thought Pedersen and Nysveen (2001) propose the idea of shopbots being used as a

tool to build trust, as consumer may feel that a brand offering this type of service is an honest

one. Trust, as we have previously assessed, is a significant aspect of building brand loyalty.

In order to maintain strong brand loyalty, an important topic to understand the

relationship between brand loyalty and consumer price elasticity, a topic worth expanding on.

Krishnamurthi and Raj (1991) analyzed this relationship in their paper, An Empirical Analysis of


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the Relationship Between Brand Loyalty and Consumer Price Elasticity and used research data

from BURKE’s panel data of a regularly purchased product and caffeinated ground coffee

scanner data from IRI. In this article, the authors began by suggesting that the purchase decision

is comprised of two factors, the “brand choice decision” and the “purchase quantity decision”

(Krishnamurthi & Raj, 1991, p. 172).

Through their research they found price elasticity between loyal and non-loyal consumers

to vary contingent on these two purchase decision dimensions. More specifically, Krishnamurthi

and Raj (1991) found that loyal consumers possess “high quantity elasticities” and non-loyal

consumers possess “high choice elasticity” (Krishnamurthi & Raj, 1991, p. 173). These different

types of elasticities are considered to be responsible for the inconsistencies that previous research

has found regarding whether consumer brand loyalty have a negative or a positive relationship to

price elasticity. Loyal consumers are thought to be quantity elastic because although their

preference for the brand means that they chose that brand more often than their non-loyal

counterpart, they take advantage of the price by regulating the quantity they purchase—

depending on whether the brand has a promotional price or is fully priced. Non-loyal

consumers, nonetheless, are more sensitive to the price of the brand and that price is a factor in

the decision to buy the product, which is why they are considered to be brand choice elastic. The

quantity they purchase, however, is not sensitive to the price. It is important to note also that

non-loyals have dramatically high levels of elasticity rendering the choice decision more elastic

(Krishnamurthi & Raj, 1991).

Managerial implications that can be derived from these dissimilar elasticies include

evidence that price promotions will be effective in getting consumers to switch brands, but as we

discussed before, in the long run these effects will not provide an advantage as competitors


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engage in similar activities. The price promotion, nevertheless, is likely to motivate loyal

consumers to purchase (Krishnamurthi & Raj, 1991).

Although we have already touched on consumers’ use of brand loyalty as a risk aversion

strategy, in efforts to sustain brand loyalty it is important to understand more in depth how they

do so and how risk aversion is related to the two main forms of loyalty— brand affect and brand

trust— we have continuously alluded to throughout this paper. Matzler, Grabner-Krauter and

Bidmon (1971) suggest that consumer risk aversion is related to brand trust and loyalty and, as

previously mention, is a strategy used by consumers to reduce perceived risk. It is also noted that

“brand risk is a significant antecedent of brand commitment, which implies a positive causal link

between brand risk and consumer loyalty” (p. 154) and that more risk-averse consumers are

inclined to be more loyal. Risk is composed of two components: “uncertainty of an outcome and

the importance of negative consequence associated with the outcome of a choice” (p. 155). How

consumers perceive product class risk depends on the type of risk that product class could

present. Some types of risks are social, financial, and performance among others. The influence

that risk aversion will exert on the consumer depends on the type of risk involved.

New brands are risky because performance is unknown, which causes risk-averse

consumers to be hesitant to try them. These consumers avoid ambiguous situations by remaining

with brands that are established and they are familiar with. They could lessen risk through

information search, but brand loyalty offers a cheaper and simpler alternative. In a setting where

there is unreliable or little information, risk-averse consumers may avoid risk by opting for

higher-priced brands. In other settings where there is limited information, brand trust can serve

as a heuristic to diminish uncertainty. Clearly, if the perceived risk is high, these uncertainty

reduction techniques become even more important. Moreover, in countries characterized by


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high-uncertainty-avoidance credible brands which have a lower perceived risk and information

cost are more valuable (Matzler et. al., 1971).

From the perspective of affective loyalty, risk-averse consumers are likely to feel more

positive feelings when using the known brand, and there is a positive relationship between brand

affect and risk aversion while brand affect and brand trust also display a positive relationship

with behavioral and affective loyalty. This is because brands that extract more positive emotions

from consumers yield a higher level of behavioral and affective loyalty. Another reason for this

conclusion is that brand trust, as previously presented, is a considerable building block for valued

long-term relationships. Therefore, risk aversion is indirectly related to brand loyalty and

moderated by brand trust and affect (Matzler et. al., 1971).

Satisfaction has a significant role in building brand loyalty, but it alone is not sufficient to

keep consumers loyal. There is evidence that even consumers who claim to be highly satisfied

often defect. Loyal consumers are usually satisfied; however, the opposite is not true. (Oliver,

1999) According to Oliver (1999), satisfaction should be thought of as “the beginning of a

transitioning sequence that culminates in a separate loyalty state… loyalty may become

independent of satisfaction so that reversals in the satisfaction experience (i.e. dissatisfaction)

will not influence the loyalty state” (p. 34). Therefore, it is important to understand that

satisfaction is but a component of brand loyalty and not equivalent to brand loyalty.

Oliver (1999) suggested four loyalty strategies based on the dimensions of individual

fortitude and social support. He defines fortitude as “the degree to which the consumer fights off

competitive overtures on the basis of his or her allegiance to the brand and not on the basis of

market generated information” (p. 37). In the “product superiority” state the consumer believes

the product is a quality product and possesses low fortitude and low social support. In the


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“determined self-isolation” state the consumer shows low social support, but high consumer

fortitude. He or she thus believes that the product is superior and is determined to buy it.

“Village envelopment” is a state in which the consumer is raised to use a specific brand and

protected from outside influences. These consumers display low individual fortitude and high

social support. Finally, when a consumer shows both high community support and individual

fortitude, he or she will be in the “immersed self-identity” state. Here the consumer chooses to be

part of a social environmental because it is supportive of his or her brand choice and strongly

desires the product and to be associated with it— religious institutions, fan clubs and alumni

organizations are good examples of this.

Considering the overpowering influence of the internet in today’s brands, it is imperative

to dedicate some time to the discussion of online brand loyalty. The web is unique in the sense

that it allows for many-to-many communication and for the consumer to be involved in the

marketing process. However, the web is growing and more sites are sprouting every day which

increases the importance of consumer retention in the online environment since obtaining new

ones is rather expensive and the competition is fierce. Holland and Baker (2001) conducted

research on website brand loyalty and found methods for increasing loyalty.

It is important to note that websites have multiple purposes and the difference between

those purposes can affect the development of brand loyalty towards those websites, but more

prominently, understanding the fact that consumers navigate the web for different reasons—

task-oriented or experimental— is also important. Holland and Baker (2001) use the term

stickiness, which means the website’s ability to keep the consumer on the site rather than

navigating elsewhere, to measure the consumers interaction with the site and the brand loyalty

achieved from that interaction. Stickiness constitutes visit duration, depth of visit and repeat


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visits. Depending on consumers’ reasons for visiting, stickiness can be developed in different

ways. For instance, when thinking about depth of visit, a consumer with an experimental

orientation may highly value a site with depth and breadth of content and view multiple pages,

while a task-oriented consumer might prefer fewer clicks to fulfill their needs and consider that

an efficient transaction.

In efforts to increase brand loyalty, Holland and Baker (2001) offered multiple methods

which include allowing for personalization, welcoming feedback, and adding games, but focused

primarily on personalization and building online communities. Personalization is vital because it

offers a form of product differentiation and builds brand loyalty in both task-oriented— since it

could help with more efficient goal achievement— and experimental consumers. It works to

increase brand affect by generating positive attitudes about the brand and those positive attitudes

are reflected through behavioral loyalty as consumers return to the website. Personalization also

creates switching costs since a consumer who has invested time in personalizing a site does not

want to have to invest additional time to do the same at another site. However, personalization

must be something desired and valued by the consumer in order for it to produce brand loyalty.

Holland and Baker (2001) emphasized the power of mass customization by arguing, “Just as

mass production was the hallmark of yesterday’s Industrial Age, mass customization has the

potential to dominate the Information Age” (p. 40).

Community building also offers benefits to both the task-oriented and the experimental

web visitor. For task-oriented consumers these communities might offer a source of information

not found anywhere else or valuable recommendations similar to word-of-mouth. This could

expedite goal achievement and create brand affect. Experimental consumers, on the other hand,

derive even deeper brand affect from online communities as they allow for a medium of


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expression. For effective community building it is necessary to have a “critical mass of users

with a sense of collaboration, loyalty, and social trust” (Holland & Baker, 2001, p. 41). These

methods of online brand loyalty have been found by companies to decrease churn rate by

satisfying consumers along with attracting new visitors and keeping them on the website for

longer (Holland & Baker 2001).

To conclude this thesis it is valuable to recap some of the highlights of the discussion.

Brand equity can be defined as “the set of associations and behaviors on the part of a brand’s

customers, channel member, and parent corporation that permits the brand to earn greater

volume or greater margins than it could without the brand name” (Leuthesser, 1988, p. 31).

Brand loyalty and brand equity share many parallels including allowing for marketing

advantages such as charging premium prices for the brand. Furthermore, brand equity has been

defined as the “price premiums associated with a given brand name across a range of product

categories” (Chaudhuri & Holbrook, 2001, p.84). Moreover, Keller (1993) argues, “consumers

with a strong, favorable brand attitude should be more willing to pay premium price for the

brand” (p. 9). From our discussion throughout this paper it is fair to assume that brand loyalty is

one of the factors that helps build brand equity because of the shared parallels, which makes

understanding this concept extremely important to marketing managers who are looking to build

strong brands.

As we discussed before, behavioral and affective loyalty both play important roles in

building overall brand loyalty and it is often the case that one leads to the other. A consumer

could chose a soft drink initially because it was the one available at a restaurant and end up

building affective loyalty towards to drink because the experience was enjoyable and elicited

positive emotions. In the future, this customer may develop behavioral loyalty to the soft drink


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by regularly choosing it over other available alternatives. Hence, Coca-Cola’s advertisement

“Open Happiness” and Coke’s strategy of selling the popular cola as a drink that elicits positive

emotions. This loyalty, in retrospect, can be instilled through loyalty programs, advertisements,

promotions, and in the online environment, specifically, communities and personalization.

Regardless, in order to instill brand loyalty one must first seek to understand the needs of the

consumer.

Brand managers can be better prepared to nurture brand loyalty once they have a

thorough understanding of it and how the components of behavioral and affective loyalty affect

it. We now know how conditions such as low and high-involvement, brand loyalty instilment

tools such as loyalty programs, and the relatively new online environment can influence the

consumer when he/she is making purchasing decisions. These are important considerations since

strategies may need to be adapted respective to the situation. Although this is by no means an

exhaustive investigation of all the factors that go into brand loyalty building it is a good place to

start and example of which types of factors need to be considered.


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