BUILDING BRAND LOYALTY WITHIN SELECTED SEGMENTS …
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BUILDING BRAND LOYALTY WITHIN SELECTED SEGMENTS OF THE SOUTH AFRICAN FAST MOVING CONSUMER GOODS MARKET ETIENNE TERBLANCHE SUBMITTED IN FULFILMENT OF THE REQUIREMENTS FOR THE DEGREE MAGISTER TECHNOLOGIAE (MARKETING) IN THE FACULTY OF COMMERCE AND GOVERNMENTAL STUDIES AT THE PORT ELIZABETH TECHNIKON PROMOTER: PROF. L RADDER JANUARY 2002
Transcript of BUILDING BRAND LOYALTY WITHIN SELECTED SEGMENTS …
BUILDING BRAND LOYALTY WITHIN SELECTED SEGMENTS OF THE
SOUTH AFRICAN FAST MOVING CONSUMER GOODS MARKET
ETIENNE TERBLANCHE
SUBMITTED IN FULFILMENT OF THE REQUIREMENTS FOR THE
DEGREE MAGISTER TECHNOLOGIAE (MARKETING) IN THE FACULTY
OF COMMERCE AND GOVERNMENTAL STUDIES AT THE PORT
ELIZABETH TECHNIKON
PROMOTER: PROF. L RADDER
JANUARY 2002
DECLARATION
I, Etienne Terblanche, hereby declare that:
• the work in this dissertation is my own original work;
• all sources used or referred to have been documented and recognised,
and
• this dissertation has not been previously submitted in full or partial
fulfilment of the requirements for an equivalent or higher qualification at
any other recognised educational institution.
________________
Etienne Terblanche
January 2002
In loving memory of Mom and Dad,
for all the years of support.
ACKNOWLEDGEMENTS
The successful completion of this research would have been impossible
without the support, advice, assistance and encouragement of others. My
sincere appreciation is extended to all those individuals who contributed to
the completion of this study.
In particular, the assistance of the following individuals are acknowledged:
• Professor L. Radder, my promoter, for unselfishly giving of her time,
professional advice, guidance and encouragement during the completion
of my dissertation.
• My wife, Margott, for her encouragement, support and patience during
the completion of this study and in particular, for typing this document.
• Ms Sandy Blunt, for editing the dissertation.
• Port Elizabeth Technikon for financial assistance.
• Jesus Christ, for the talent and opportunity given to me to complete this
study.
EXECUTIVE SUMMARY
The rapidly increasing competitiveness within the fast-moving consumer
goods (FMCG) market compels an organisation within this market to not only
entice consumers to purchase the organisation’s brand, but also to keep
these consumers purchasing the brand. It is therefore essential that an
organisation creates and maintains loyalty among consumers towards its
brand.
The objective of the research was to find out what strategies an organisation
could implement to achieve and sustain loyalty from current and prospective
consumers towards its brand in a highly competitive, FMCG market.
The main areas of focus were as follows:
• Establishing the basis on which consumers differentiate between
homogenous products.
• Determining what strategies an organisation could utilise to ensure that
consumers will differentiate its brand from those of competitors.
• Obtaining relevant information to find out what variables motivate
consumers to be brand loyal within the FMCG market.
• Ascertaining how an organisation could build a brand.
• Determining how an organisation could maintain brand loyalty from its
existing consumers.
The research included a study of relevant literature and an empirical study.
The aim of the literature study was to obtain a solid base of information and
opinions regarding the concepts of brands and building brand loyalty.
Making use of structured questionnaires and through performing personal
interviews, the empirical study consisted of two aspects. The one aspect
was a brand loyalty survey conducted among 303 respondents, and the
second aspect was a brand loyalty survey conducted with nine owners or
marketers of leading brands.
The following were the major findings of the research:
• Relying on being a leader in price and quality is not enough to ensure
that a consumer would continue purchasing an organisation’s brand.
• A brand is an experience and in order for a consumer to become loyal
towards a brand, the consumer should have a host of positive thoughts
regarding past experience with the brand.
• It is essential that organisations within the FMCG market proactively
develop and implement strategies aimed at creating and maintaining
loyalty towards their brands.
KEYWORDS: Brand
Brand loyalty
Brand building
Fast moving consumer goods market
TABLE OF CONTENTS
Executive summary i
Contents iv
List of tables x
List of figures x
CHAPTER 1
INTRODUCTION AND ORIENTATION
1.1 BACKGROUND TO THE STUDY 1
1.2 RESEARCH PROBLEM AND SUB-PROBLEMS 2
1.3 DELIMITATION OF THE RESEARCH 3
1.4 DEFINITION OF CONCEPTS 4
1.4.1 Brand 4
1.4.2 Brand loyalty 4
1.4.3 Marketing strategy 5
1.4.4 FMCG market 5
1.5 THE SIGNIFICANCE OF THE RESEARCH 5
1.6 A REVIEW OF RELATED LITERATURE 6
1.7 METHODOLOGICAL JUSTIFICATION 7
CHAPTER 2
BRANDS AND BRANDING
2.1 INTRODUCTION 10
2.2 WHAT IS A BRAND? 10
2.3 CHARACTERISTICS OF BRANDS 15
2.3.1 The brand states ownership 15
2.3.2 The brand is a product 15
2.3.3 The brand provides information 15
2.3.4 The brand denotes an experience 17
2.3.5 The brand is delicate 17
2.4 THE IMPORTANCE AND VALUE OF BRANDS 18
2.4.1 Consumers 18
2.4.2 Organisations 24
2.5 SUMMARY 27
CHAPTER 3
BRAND LOYALTY
3.1 INTRODUCTION 30
3.2 WHAT IS BRAND LOYALTY? 30
3.3 LEVELS OF BRAND LOYALTY 33
3.3.1 Potential loyals 34
3.3.2 Pseudo loyals 35
3.3.3 Active and committed loyals 35
3.4 PHASES OF BRAND LOYALTY 38
3.4.1 Cognitive loyalty 38
3.4.2 Affective loyalty 39
3.4.3 Conative loyalty 39
3.4.4 Action loyalty 39
3.5 DRIVERS OF BRAND LOYALTY 40
3.6 MEASURING BRAND LOYALTY 46
3.6.1 Guidelines for measuring brand loyalty 53
3.7 THE IMPORTANCE AND VALUE OF BRAND LOYALTY 54
3.8 BRAND LOYALTY AS AN ELEMENT OF BRAND EQUITY 59
3.9 SUMMARY 62
CHAPTER 4
BUILDING BRANDS AND BRAND LOYALTY
4.1 INTRODUCTION 65
4.2 BRAND PLANNING 66
4.2.1 Market definition 69
4.2.2 Market analysis 70
4.2.3 Brand analysis 70
4.2.4 Positioning 71
4.2.5 Setting aims and objectives 71
4.2.6 Combining the elements of a brand plan 71
4.3 CREATING BRAND PREFERENCE 72
4.3.1 Need association 72
4.3.2 Mood association 73
4.3.3 Subconscious motivation 74
4.3.4 Behaviour modification 75
4.3.5 Cognitive processing 77
4.3.6 Model emulation 80
4.4 METHODS AND STRATEGIES FOR BUILDING BRANDS 81
4.5 METHODS AND STRATEGIES FOR BUILDING BRAND
LOYALTY 92
4.5.1 Treat consumers right 93
4.5.2 Stay close to the consumer 94
4.5.3 Measure/manage customer satisfaction 94
4.5.4 Create switching costs 94
4.5.5 Provide extras 95
4.6 STRATEGIES FOR MAINTAINING BRAND LOYALTY 95
4.7 SUMMARY 98
CHAPTER 5
RESEARCH METHODOLOGY AND RESULTS
5.1 INTRODUCTION 102
5.2 RESEARCH METHODOLOGY 103
5.2.1 Research population 103
5.2.2 Sampling 104
5.2.3 Research technique 107
5.2.4 The questionnaire 108
5.2.5 The inspection and editing of the data 112
5.2.6 Coding 113
5.2.7 Transferring and analysis of data 113
5.3 RESULTS AND FINDINGS 114
5.3.1 Consumer survey 114
5.3.2 Survey of brand owners 129
5.4 SUMMARY 147
CHAPTER 6
SYNOPSIS, CONCLUSIONS AND RECOMMENDATIONS
6.1 INTRODUCTION 150
6.2 SYNOPSIS OF CHAPTERS 151
6.2.1 Chapter one 151
6.2.2 Chapter two 151
6.2.3 Chapter three 152
6.2.4 Chapter four 153
6.2.5 Chapter five 154
6.3 CONCLUSIONS 154
6.3.1 On what basis do consumers differentiate between
homogeneous products? 155
6.3.2 What variables motivate consumers to be brand loyal
within the FMCG market? 156
6.3.3 What strategies can an organisation within the FMCG market
utilise to create and maintain loyalty towards its brand? 156
6.3.4 How can an organisation go about building a brand? 161
6.4 RECOMMENDATIONS 163
LIST OF SOURCES 166
APPENDICES 171
LIST OF TABLES
Table 5.1: Age distribution 115
Table 5.2: Respondents’ agreement with the statement: “All brands
give me the same benefits.” 118
Table 5.3: Reasons for mayonnaise preference 123
Table 5.4: Purchases of other brands of regular packet soup 127
Table 5.5: Actions during out of stock situations for coffee 129
LIST OF FIGURES
Figure 2.1: Comparison of distinctiveness 13
Figure 2.2: The Bovril brand 16
Figure 2.3: The importance of added value 23
Figure 2.4: Importance of brands and branding 28
Figure 3.1: The three facets of brand loyalty 34
Figure 3.2: The loyalty pyramid 36
Figure 3.3: Brand value model 42
Figure 3.4: Framework for understanding what people buy 43
Figure 3.5: The satisfaction-loyalty relationship 45
Figure 3.6: The value of brand loyalty 55
Figure 3.7: Performance measures reflecting long term profitability 58
Figure 3.8: Brand equity framework 60
Figure 4.1: Marketing channels for consumer products 84
Figure 4.2: Broad factors that determine the success or otherwise of a
brand 85
Figure 4.3: D.R.E.A.M. model 89
Figure 4.4: Creating and maintaining brand loyalty 93
Figure 5.1: Income distribution 115
Figure 5.2: Gender split 116
Figure 5.3: Population grouping 116
Figure 5.4: Respondents’ agreement with the statement: “I like to try
new brands of mayonnaise.” 119
Figure 5.5: Respondents’ agreement with the statement: “I like to try
new brands of regular packet soup.” 120
Figure 5.6: Respondents’ agreement with the statement: “I like to try
new brands of coffee.” 121
Figure 5.7: Purchases of other mayonnaise brands 124
Figure 5.8: Reasons for soup purchases 125
Figure 5.9: Actions of respondents should their preferred brand of
regular packet soup be out of stock 126
Figure 5.10: Most purchased brands of coffee 128
LIST OF APPPENDICES
APPENDIX A: CONSUMER QUESTIONNAIRE 171
APPENDIX B: MAYONNAISE OPTIONS 180
APPENDIX C: REGULAR PACKET SOUP OPTIONS 184
APPENDIX D: COFFEE OPTIONS 187
APPENDIX E: BRAND LOYALTY SURVEY 191
CHAPTER 1
INTRODUCTION AND ORIENTATION
1.1 BACKGROUND TO THE STUDY
Due to increased competition, locally as well as internationally, organisations
need a distinguishing element that will keep consumers identifying and
buying their products. With competition increasing annually, the traditional
sources of competitive advantage no longer provide long term security for a
company, product or marketer. In other words, leadership in price and
quality is not enough to ensure the success of a product anymore.
Company executives are recognising that the true worth of the organisation
is not the tangible assets it owns, but the value ascribed to the brands it is
developing to satisfy the needs of the consumer (Sinclair, 2000).
Brands are among an organisation’s most valuable assets, and leading
organisations (as in the case of Coca Cola) today realise that capitalising on
their brands is more important than their tangible assets. Doing so can help
them achieve their growth objectives quicker and more profitably (Davis,
2000). Leading organisations know that brands are more than just products:
brands are also an indication of what the organisation does and, more
importantly, what the organisation is. Usually brands are why an
organisation exists; not the other way round (Davis, 2000).
However, most organisations are not maximising their potential financial
returns because they are not maximising the power of their brands. With
proper brand management, organisations can experience exponential
growth, but this will happen only if these organisations take advantage of the
most important growth weapon at their disposal: their brand (Davis, 2000).
Most organisations within the FMCG market believe that they operate in a
‘mature’ industry and therefore use little imagination in marketing and
branding their products. In order to distinguish its brand, an organisation
needs to be innovative. In this way imaginative organisations can rewrite
industry rules and create new futures for themselves (Wileman & Jary,
1997). In the FMCG market, sustainable growth can only be achieved by
companies that are successful in creating good, trusted brands (The
Encyclopaedia of brands and branding in SA, 1999).
1.2 RESEARCH PROBLEM AND SUB-PROBLEMS
Based on the foregoing discussion, the following question, which also
represents the main problem, arises: What strategies can an organisation
implement to achieve and sustain loyalty from current and prospective
consumers towards its brand in a highly competitive, FMCG market? From
the main research problem, the following sub-problems are derived:
• On what basis do consumers differentiate between homogenous
products?
• What strategy/strategies can an organisation utilise to ensure that
consumers will differentiate its products from those of its competitors in a
market where products in the same category are very similar in features,
attributes and benefits?
• What variables motivate consumers to be brand loyal within the FMCG
market?
• How can an organisation go about creating a powerful brand?
• How can an organisation in the FMCG market maintain brand loyalty from
its existing consumers?
1.3 DELIMITATION OF THE RESEARCH
In order to make the research manageable the focus is on consumers
purchasing consumer products within the Port Elizabeth FMCG market. It is
expected that the variables influencing the brand loyalty of these consumers
will be similar to those influencing consumers elsewhere in South Africa.
The focus is also on brand managers and advertising agencies that
represent leading FMCG brands in South Africa, irrespective of where they
are situated. Consumers and organisations outside the FMCG market, for
instance, financial, servicing and industrial industries are not included in the
research.
1.4 DEFINITION OF CONCEPTS
In order to gain a better understanding of the research, it is important to
define the following key terms:
1.4.1 Brand
Davis (2000) believes that a brand is an intangible but critical component of
what a product represents. It is a “set” of promises that implies trust,
consistency, and a defined number of expectations. The strongest brand in
the world “owns” a place in the consumer’s mind, and when it is mentioned,
almost everyone thinks of the same things. Davis (2000) believes that a
brand differentiates products that appear similar in features, attributes and
benefits. All these help bring the brand to life and into consumers’ streams
of consciousness, but in reality they are simply well executed marketing and
selling tactics (Davis, 2000).
1.4.2 Brand loyalty
Lamb, Hair, and McDaniel (1998) state that brand loyalty is “a consistent
preference for one brand over all other brands”.
1.4.3 Marketing strategy
According to McCarthy and Perreault (2000), a marketing strategy specifies
a target market and a related marketing mix. It is a “big picture” of what a
firm will do in a certain market. Two interrelated parts are needed:
• a target market – a fairly homogeneous group of consumers to whom a
company wishes to appeal; and
• a marketing mix – the controllable variables which the company puts
together to satisfy the needs of this target group.
1.4.4 FMCG market
This is the market in which suppliers supply products, which are consumed
by consumers on an on-going, frequent basis.
1.5 THE SIGNIFICANCE OF THE RESEARCH
Due to the influx of global competitors into the South African consumer
market with products with homogenous features, attributes and benefits, it is
important for South African marketing managers and brand managers to
realise that their brands are their companies’ most valuable assets. As a
former chairman of Unilever, Sir Michael Perry, once said, “Buildings
become dilapidated, machines wear out, people die, but what live on are the
brands” (Sampson, 2000).
Database searches reveal only limited sources of information on brand
loyalty within the South African FMCG market. It is expected that the
literature and empirical findings resulting from this research together with
input from the researcher’s own experience will contribute greatly to the body
of knowledge on the topic.
1.6 A REVIEW OF RELATED LITERATURE
As a starting point, the researcher investigated the availability of published
sources of information so as to find a theoretical basis from which to launch
the study.
The Encyclopaedia of Brands and Branding in South Africa (1999) and an
insert that appeared in The Sunday Times newspaper (Top Brands, 2001)
were used to determine the top brands on which the study is based.
Information specific to branding within the FMCG market was obtained from
journals and magazines. Information on brands and branding, in general,
was found mainly in textbooks.
The literature study revealed two studies previously undertaken, namely, a
dissertation by Heyman (1997) entitled Winning strategies for National
brands to gain share leadership in fast moving consumer goods categories
dominated by private labels, and a dissertation by Embleton (1995) entitled
Factors influencing brand loyalty of fast moving consumer goods. The
former focuses mainly on the impact of private labels on the market share
the product enjoys, as well as on increasing market share through optimal
use of private labels. The latter focuses on whether brand loyalty factors
differ between products within the FMCG market and whether levels of
loyalty vary between product classes.
The current study attempts to identify factors that are important in brand
building in general, and to determine how brand building can enhance brand
loyalty and differentiate an organisation’s product from competitor products.
1.7 METHODOLOGICAL JUSTIFICATION
A combination of research methods was used during the study to enable the
researcher to achieve the research objectives. A detailed description of the
methodology used is discussed in Chapter five.
Historical data in the form of market share percentages, relevant historical
market information, product performance and figures related to the following
brands:
• Ricoffy coffee;
• Nescafé coffee;
• Simba chips;
• Crosse & Blackwell mayonnaise;
• Maggi range of products;
• Five Roses tea; and
• Bakers and Pyotts biscuits.
The above-mentioned brands were selected due to the fact that they are all
market leaders within their own segments of the total FMCG market.
The empirical research consisted of personal interviews with brand
managers involved with the above-mentioned brands as well as with
advertising agencies and members of the general public. The objective of
these interviews was to obtain the viewpoints of the brand owners with
respect to brand loyalty and brand building within the FMCG market.
The advertising agencies interviewed were as follows:
• Ogilvy & Mather;
• J. Walter Thompson;
• Optimedia South Africa;
• The Agency; and
• TBWA Hunt Lascaris.
Personal interviews were also conducted with 303 members of the general
public. The purpose of these interviews was to establish what factors
influence consumer loyalty towards a brand.
The information obtained from the research data was used to determine
what factors contribute to successful brand building, what motivates
consumers to become brand loyal and what strategies brand managers
implement to “build” their brands and create and maintain loyalty towards
their brands.
One problem encountered in the research was that there were only a limited
number of literature sources available on brand loyalty and brand building
within the FMCG market. Another problem was that the brand owners of the
leading brands in the South African FMCG market are widely dispersed and
it was not possible to interview all of them, due to cost restraints.
The main focus of chapter two is to investigate the meaning of the concept of
a brand, while chapter three examines the concept of brand loyalty. Chapter
four addresses the strategies used to build brands and loyalty towards
brands. Chapter five deals with the research methodology and results.
Chapter six contains a discussion of the findings, conclusions and
recommendations.
CHAPTER 2
BRANDS AND BRANDING
2.1 INTRODUCTION
According to Hart and Murphy (1998) “the use of brands has developed
considerably, especially in the last century. The words ‘brands’ and
‘branding’ are now such common currency that their original meaning is in
danger of being weakened”. It is therefore important to have a clear
understanding of the meaning of brands and branding, in order to determine
the various roles brands and branding play in today’s highly competitive
business environment.
This chapter commences with a discussion of different viewpoints regarding
the meaning of brands so as to create a clear understanding of these two
concepts. Furthermore, the chapter highlights the characteristics,
importance and value of brands and branding to consumers and
organisations.
2.2 WHAT IS A BRAND?
Much confusion exists about what is to be understood under the term
‘brand’. In this section, a number of interpretations of the concept are
explained. These include the brand as having a position in the consumer’s
mind; brands as a form of distinguishing between products, and brands as a
package of value.
Knapp (2000) comments that it “seems that everyone is talking about brand
this and brand that. Brand is becoming one of the most popular words used
today. But when you ask any group of people what a brand is, the answers
vary widely. Some think a brand is a name or a trademark. Some think it is
a product, or even a commitment”.
During research with thousands of executives, employees, entrepreneurs
and the general public, Knapp (2000) discovered that when most people use
the word brand, they are thinking of a brand name. The Random House
Dictionary of the English Language (in Knapp, 2000) defines a brand as a
“product or service bearing a widely known brand name”. The key aspect
regarding names is familiarity, but familiarity does not necessarily ensure
that a name will be distinctive. A brand name is not necessarily a brand.
Dunphy, business editor for The Seattle Times (in Knapp, 2000), maintains
that a “brand does not mean the same thing to everybody; some
organisations get the concept and others don’t. The key is whether an
organisation ‘walks the talks’ and really understands the necessity for a
brand to be distinctive in a manner that’s beneficial to its customer”. In fact,
it could be argued that many brand names might be well–known, yet not all
that distinctive in the consumer’s mind when compared to other brand
names in their industry. In order to be recognised as a brand, a product or
service must be characterised by a distinctive attribute in the consumer’s
mind (Knapp, 2000).
According to Knapp (2000), it is critical to understand that brands are not
simply the result of the advertising or message that an organisation places in
the market place. A brand is only that which is perceived by the consumer’s
mind (or what is thought of as the ‘mind’s eye’). The consumer’s mind’s eye
is influenced by thousands of impressions daily and changes just as often.
Not only must a brand monitor these impressions constantly; it also has to
occupy a distinctive position in the consumer’s mind to really be a brand.
Knapp (2000) is of opinion that the less distinctive or different a brand is in
the consumer’s mind, the more room there is for competitors to occupy a
position in the consumer’s mind’s eye, and the less genuine a brand
becomes.
Figure 2.1 shows the difference between genuine brands and brand names.
A genuine brand can be defined as the internalised sum of all impressions
received by consumers, resulting in it having a distinctive position in their
‘mind’s eye’ based on perceived emotional and functional benefits. The
primary objective of a genuine brand should be to add value to people’s
lives. A genuine brand is about benefiting the consumers, and the more
differentiated a brand is, the easier it is to communicate efficiently with the
consumer. However, differentiation needs to be focused on the benefits to
the consumer (Knapp, 2000).
Figure 2.1 Comparison of distinctiveness
RELATIVE BRAND DISTINCTION
GENUINE COMMODITIES BRAND NAME BRAND BRAND NO DIFFERENCE Well known Distinctive Perceived by EXCEPT PRICE but similar the consumer as unique
Source: Knapp, 2000: 7
Branding has been around for centuries as a means of distinguishing the
goods of one producer from those of another. The word “brand” is derived
from the Old Norse word “brandr”, which means, “to burn”, as brands were
and still are the means by which owners of livestock mark their animals to
identify them (Keller, 1998). According to the American Marketing
Association (in Keller, 1998), a brand is a “name, term, sign, symbol, design,
or a combination of the intended to identify the goods and services of one
seller or group of sellers and to differentiate them from those of the
competition.” Thus, the key to creating a brand, according to this definition, is
to choose a name, logo, symbol, package design, or other attributes that
identifies a product and distinguishes it from other brands. These different
components of a brand, which identify and differentiate a brand can be
called brand elements (Keller, 1998).
Keller (1998) also believes that these brand elements come in many different
forms. In some cases, the company name is essentially used for all products
(e.g. General Electric). In other cases, manufacturers assign individual
brand names to new products that are unrelated to the company name (for
example as with Procter & Gamble). The name given to products also
comes in many different forms. Brand names can be based on people (for
example Estee Lauder cosmetics), places (for example British Airways),
animals or birds (for example Dove soap), or other things or objects (for
example Carnation evaporated milk). Some brand names use words with
inherent product attributes or benefits (e.g. Beautyrest mattresses). Other
brand names are invented and include prefixes and suffixes that sound
scientific, natural, or prestigious (for example Compaq computers). Like
brand names, other brand elements such as brand logos and symbols may
be based on people, places, objects and abstract images. In creating a
brand, marketers have many choices in the number and nature of the brand
elements used to identify their products.
Mariotti (1999) defines a brand as a “shorthand” description of a package of
values upon which consumers and prospective purchasers can rely to be
consistently the same (or better) over long periods of time. The package of
values distinguishes a product or service from competitive offerings. A
brand is an important asset of a company, its products or services and its
marketing strategy. Often the brand will have a familiar logo associated with
it as its icon. When consumers see the logo (such as the Nike ‘swoosh’),
they think of the brand as the entire package of values and the promises it
carries.
2.3 CHARACTERISTICS OF BRANDS
According to Crainer (1995), a brand has the following characteristics:
2.3.1 The brand states ownership
Branding is a statement of ownership as can be seen in the trademark of
McDonald’s ‘M’. A trademark remains a highly effective prompt for a brand.
2.3.2 The brand is a product
Kotler (in Crainer, 1995) describes a brand as “a name, term, sign, symbol or
design, or a combination of these, which is intended to identify the goods or
services of one group of sellers and differentiate them from those of
competitors”.
2.3.3 The brand provides information
One of the main purposes of a brand is to provide information to consumers.
The information can be physical (the contents, ingredients, calorific content)
and/or abstract information (statements about the user, the associations, the
memories).
Figure 2.2 The Bovril brand
Tradition
Sentiment Physical appearance
Contents Information
Advertising Bold colour
Past experience
Source: Crainer, 1995: 15
Figure 2.2 shows a graphic representation of a brand (in this example,
Bovril). The jar of Bovril contains a large amount of information, which is not
all spelt out. Providing information can come in a variety of forms: the
packaging or physical appearance tells consumers something (Bovril is stout
and substantial, while being of a manageable size); as do consumers’
feelings or sentiment about the product (traditional, warming, savoury). The
Bovril brand, therefore, is a rich mixture of the product (tradition); the
advertising (surprising); the packaging (traditional but not dated); physical
appearance (robust) and consumers’ feelings and expectations.
Bovril
2.3.4 The brand denotes an experience
In today’s world the emphasis is more on the experience than on the item
itself when buying a product. This is illustrated when looking at retail brands
such as Sainsbury and Marks & Spencer in the United Kingdom. The total
Sainsbury and Marks & Spencer brand is made up of the store, its location
and contents as well as the quality of service, range of own-labelled
products, price-competitiveness and even trading hours. The brand
embraces all of these factors and is not only about the product itself. The
product is only part of what a consumer will experience of the total brand.
2.3.5 The brand is delicate
In 1985 Coca-Cola announced that it was replacing its traditional cola with
New Cola, conveniently overlooking the fact that the old version sold millions
of litres every day of the week. Coke’s arch rival, Pepsi, produced
advertising which was extremely gleeful, rubbing in the fact that ‘the real
thing’ remained unchanged. Realising that it was a mistake and a disaster,
Coke backtracked and reintroduced the original Coke.
The above example is an illustration that, nevertheless how big the brand
may be, an organisation must handle brands with care.
2.4 THE IMPORTANCE AND VALUE OF BRANDS
Any member of the general South African public can walk into any individual
Pick & Pay Supermarket or Spar outlet and they will be faced with about
12,000 square metres of product choice. The first challenge, for the
consumer, is to find the general area that has the kind of merchandise they
are looking for. Once the consumer has found the area with the
merchandise, the real selection process starts. Now the power of brands
and branding “takes hold of the individual’s mind (and wallet) like a wet
sponge and tries to wring out the desired behaviour” (Mariotti, 1999).
Contemplating the above scenario led the researcher to investigate the
importance and value of brands and branding (to both the consumer and the
organisation) in today’s highly competitive business environment.
2.4.1 Consumers
Keller (1998) believes that brands serve to identify the source or maker of a
product and allow consumers to assign responsibility as to which particular
organisation should be held accountable for the experience gained by using
the product. Because of past experience with a product and the marketing
programme over a period of time, consumers learn more about a brand.
Consumers collect information to help in the decision making process
regarding which brands satisfy their needs and which do not. As a result,
brands provide a shorthand device or means of simplification for making
product decisions.
Lambin (2000) concurs that a brand identifies the producer and, since the
brand owner commits himself to give a specific and constant level of quality,
it creates a long-term responsibility. A brand provides a simple way to
memorise the brand characteristics and to put a name to a certain
assortment of benefits. This makes routine purchase behaviour possible
and easier. This means that the time spent shopping will be reduced and
consumers attracted by more stimulating activities will prefer this.
In addition, Lambin (2000) feels that the potential buyer perceives the brand
as being a message containing a set of attributes that are both tangible and
intangible. The buyer uses the information contained in this message as a
guide in the decision-making process when being confronted by a needs or
consumption situation. The brand is therefore a signal to potential buyers
who can identify a set of solutions to their problems, at a low personal cost.
From another perspective, brands allow consumers to lower search cost for
products both internally (in terms of how much they have to think) and
externally (in terms of how much they have to look around). Based on what
consumers already know about a brand, such as its quality and product
characteristics, they can make assumptions and form reasonable
expectations about what they may not know about the brand (Keller, 1998).
The relationship between brands and consumers can be seen as a type of
bond or pact. Consumers offer their trust and loyalty with the implicit
understanding that the brand will behave in certain ways and will provide
utility through consistent product performance and appropriate pricing,
distribution and promotional programmes and actions. To the extent that
consumers realise the advantages and benefits from purchasing the brand,
and as long as they derive satisfaction from product consumption,
consumers will continue to buy the brand (Keller, 1998).
According to Kapferer (1999), brands can also serve as symbolic devices,
allowing consumers to project their own self-images. Consumers are social
animals who judge themselves on certain choices. This explains why a large
part of social identity is built around brands.
The brand’s function is to overcome any danger or risk to the consumer in
purchasing that particular brand. Certain brands are associated with being
used by certain types of people and thus reflect different values or traits.
Consuming certain products is a means by which consumers can
communicate to others – or even to themselves – the type of person they are
or would like to be (Keller, 1998).
Central in a market economy is a diversity of taste and preference.
Organisations cater for this in differentiating products on both tangible and
intangible attributes. This product differentiation provides an opportunity to
consumers to claim their difference, demonstrate their originality and
express their personality through their brand choices. In this way,
consumers can also communicate their value system (Lambin, 2000).
Both Keller (1998) and Kapferer (1999) believe that there are three types of
qualities of brand characteristics that are important to consumers:
• Qualities that are noticed by contact before buying. That is, the brand’s
attributes can be evaluated by visual inspection (for example size, colour,
style and ingredient composition).
• Qualities noticed uniquely by experience, thus after buying. Actual brand
trial and experience is necessary (for example service quality, safety, and
ease of handling).
• Credence qualities that cannot be verified even after consumption and
which consumers have to take on trust.
Because of the difficulty in assessing and interpreting product attributes and
benefits through experience and with credence brands, brand names may be
particularly important signals of quality and other characteristics to
consumers.
De Chernatony and McDonald (2000) go one step further in arguing that a
brand is more than just the sum of its component parts. For the purchaser or
user, a brand embodies additional attributes which, while they might be
considered by some to be “intangible”, are still very real and in consumers’
minds, are seen as added values. The added value of a product is created
through the marketing mix of the product, packaging, promotion, price and
distribution and creates a distinctive position within the consumer’s mental
map. Competing products, because they are undifferentiated, occupy
virtually identical positions in the consumer’s mind and are substitutable.
The more distinctive a product position, the less likelihood there is that the
consumer will accept a substitute.
To illustrate the power of added value, consider the results of a blind test
(that is where the brand identity is concealed) in which Diet Pepsi was
compared with Diet Coke by a panel of consumers (De Chernatony &
McDonald, 2000):
• Prefer Pepsi 51 percent
• Prefer Coke 44 percent
• Equal/can’t say 5 percent
When the same two drinks were given as a matched sample in an open test
(that is where the true identity of the brands was revealed), the following
results were produced:
• Prefer Pepsi 23 percent
• Prefer Coke 65 percent
• Equal/can’t say 12 percent
This can only be explained in terms of the added value that was aroused in
the minds of consumers when they saw the familiar Coke logo and pack.
According to De Chernatony and McDonald (2000), the most effective
dimension of competition is the relative added value of competing brands.
Relative value is influenced by the core product and helps to create a
distinctive difference. As can be seen in Figure 2.3, the “core” product is
simply the tangible feature of the offering. The added values that augment
the product and where distinctive differences can be created are to be found
in the “product surround”. The larger the “surround” in relation to the core
product the more likely it is that the offering will be strongly differentiated
from the competition, and vice versa.
Lambin (2000) is of the opinion that, in wealthy societies, the basic needs of
consumers are largely met and there exists a need for change, novelty,
surprise and stimulation. Brands like Swatch, Club Med, Marlboro, Cartier
and Coca-Cola contribute to the fulfilment of those needs through their
branding policies, in the process providing added value.
Figure 2.3 The importance of added value
Source: De Chernatony and McDonald, 2000: 12
2.4.2 Organisations
According to Keller (1998), brands are not only beneficial to consumers, but
also to organisations.
Brand names enable the organisation to simplify product handling and
tracing of brands. Furthermore, brands also assist the organisation in
organising inventory, accounting and other operational functions.
A brand can also offer the firm legal protection regarding its unique features
or aspects. A brand can retain intellectual property rights and give legal title
to the brand owner. Intellectual property rights ensure that the organisation
can safely invest in the brand and reap the benefits of a valuable asset
(Keller, 1998). The brand name can be protected through registered
trademarks, the manufacturing process can be protected through patents,
and packaging can be protected through copyright and designs.
Lambin (2000) agrees with Keller that property rights such as patents, trade
marks and copyrights provides clear legal title and enable the brand owner
to protect the brand names against counterfeiting or imitations.
The influence and power of large retail chains have increased dramatically
over the last ten years. This means that the world’s leading grocery
manufacturers would have been at the mercy of these retail chains had it not
been for their brands that enabled the grocery manufacturers to
communicate directly with end-consumers regardless of the actions of the
middlemen (Lambin, 2000).
A brand also signals quality levels to satisfied consumers. At Volvic, 10
percent of the buyers of this brand of mineral water are regular and loyal
consumers and represent 50 percent of the brand’s sales. The image of
superior quality and added value is justified by the purchase reputation of its
consumers and also reflects a source of demand and lasting attractiveness
(Kapferer, 1999). It therefore appears that brands can signal a certain level
of quality so that satisfied consumers can easily choose the product again.
This brand loyalty provides predictability and security of demand for the
organisation and creates barriers of entry that make it difficult for other
organisations to enter the market (Keller, 1998).
In today’s highly competitive business environment, the manufacturing
processes and product designs are very similar and easily duplicated.
Lasting impressions in the consumers’ mind from years of marketing activity
and product experience may not be so easily reproduced. Branding can be
seen as a powerful tool to secure a competitive advantage (Keller, 1998).
Furthermore, Lambin (2000) feels that a brand gives the organisation the
opportunity to position itself within the market and to claim its distinctive
characteristics. The brand is therefore a competitive weapon, which
contributes to increasing the market transparency. This is particularly useful
in markets where comparative advertising is legalised.
According to Kapferer (1999), financial value can be added to an
organisation as a result of additional revenues that are generated by the
presence of a strong brand. Consumers may be attracted to a product which
appears identical to another, but which has a brand name with a strong
reputation. The strong brand may command a premium price in addition to
providing an added margin due to economies of scale and market
domination.
Brands are also seen as being of strategic importance to organisations and
are increasingly regarded as assets in their own right, and subject to
investment and evaluation in the same way as other organisational assets.
Just as other organisational assets can be bought and sold, brands’ features
occupy centre stage in some of the biggest public transactions. Nestlé, for
example, paid £5 billion for the Rowntree brand in 1988, a price that was five
times the disclosed net assets and twice the previous market capitalization
of the company. The reason for the high premium was the desire for
ownership of such famous brands as Aero, Smarties and Kit-Kat, brands
which Rowntree could not afford to exploit adequately on its own (Blackett &
Boad, 1999).
The brand provides a method of capitalising past advertising investment put
into the brand as well as the capital of satisfaction generated by the brand. It
therefore introduces stability into businesses, allowing planning and
investment in a long-term perspective (Lambin, 2000).
Crainer (1995) believes that a strong brand can make a positive contribution
towards the credibility of a new product introduction or a line extension. A
good reflection of Crainer’s belief is when a brand like Microsoft Windows
introduces a new version of the product. People line up well before the new
version goes on sale.
As can be seen from the above discussion of the importance and value of a
brand, it is clear that a brand is a valuable asset to an organisation and an
aid to the consumer. A brand is a capital to be managed, maintained and
developed, as the result of the perception of consumers and the signals
produced by the brand owner.
2.5 SUMMARY
This chapter has focused on the meaning of brands and branding in order to
create a clear understanding of the concepts. The latter part of the chapter
explained the characteristics, importance and value of brands and branding
to consumers and organisations.
During the research study, the researcher discovered that many definitions
and meanings of brands and branding exist. A brand is more than a logo, a
name or an advertisement, it refers to the total experience and mental picture
a consumer has of a product. A brand is a promise, an expression of
potential benefits (both tangible and intangible), a distillation of beliefs and
values of the product and has the following characteristics:
• The brand states ownership.
• The brand is a product.
• The brand provides information.
• The brand is an experience.
• The brand is delicate.
Brands and branding are important to both consumers and organisations.
Once consumers have decided to purchase a particular type of product, they
then have to decide on the brand. Figure 2.4 summarises the advantages
consumers and organisations derive from the existence of brands and
branding.
Figure 2.4 Importance of brands and branding
CONSUMERS
• Identification of product source • Assignment of responsibility to product manufacturer • Providing guidance in the decision-making process • Risk and cost reducer • Promise, bond or pact with product manufacturer • Symbolic device • Signal of quality • Added value • Fulfilment of specific needs ORGANISATIONS
• Simplify handling or tracing of products • Legally protects unique features • Direct communication with consumers • Signal of quality level to satisfy consumer needs • Secure competitive advantage • Positioning tool • Ensure source of financial returns • Preserve organisational assets • Provides credibility for further brand development
As the meaning of the concept of a brand was discussed in this chapter, it
establishes a base from which to go further to obtain an understanding of the
meaning of brand loyalty, which is the main focus of chapter three.
CHAPTER 3
BRAND LOYALTY
3.1 INTRODUCTION
In chapter two the meaning of brands and branding and its characteristics,
value and importance were discussed. The purpose of chapter three is to
examine the concept of brand loyalty and also provide useful insights into
various issues related to brand loyalty.
Chapter three begins with an explanation of what brand loyalty is and, with
the aid of theoretical and commercial models, discusses various important
components of brand loyalty. The chapter concludes by explaining the
concurrence between brand loyalty and brand equity.
3.2 WHAT IS BRAND LOYALTY?
Literature on branding and brand loyalty contains many different approaches
to defining the concept of brand loyalty. These range from preference, to
repeat purchase, to various degrees of commitment.
Keller (1998) maintains that loyalty is a distinct concept that is often
measured in a behavioural sense through the number of repeat purchases.
Consumers may be in the habit of buying a particular brand without really
thinking about why they do so. Continual purchasing of a preferred brand,
may simply result because the brand is prominently stocked or frequently
promoted.
When consumers are confronted by a new or resurgent competitor providing
compelling reasons to switch, their ties to the brand may be tested for the
first time. The attachment a consumer has to a brand is a measure of brand
loyalty and reflects how likely the consumer is to switch to another brand,
especially when the brand is changed, either in price or product features
(Aaker, 1991).
If consumers purchase a brand repeatedly without attachment it is then
called behavioural loyalty. When a consumer purchase repeatedly and with
attachment then the consumer is both behaviourally and attitudinally loyal
(Hofmeyr & Rice, 2000).
Loyalty towards buying or using a specific brand of product is created when
a brand becomes a consumer’s preferred choice. Consumer brand loyalty is
what makes brands worth millions or billions of dollars (Mariotti, 1999).
Many top brands have been market leaders for years despite the fact that
there undoubtedly have been many changes in both consumer attitude and
competitive activity over a period of time. Consumers have valued these
brands – what they are and what they represent – sufficiently enough to stick
with them and reject the overtures of competitors, creating a steady stream
of revenue for the firm. Academic research in a variety of industry contexts
has found that brands with a large market share are likely to have more loyal
consumers than brands with a small market share (Keller, 1998).
Aaker (1991) believes that it is relatively inexpensive to retain consumers;
especially if they are satisfied with and/or like the brand. In many markets
there is substantial inertia among consumers even if there are relatively low
switching costs and low consumer commitment to the existing brand. It is
expensive for any business to gain new consumers in today’s highly
competitive business environment. Some authors define brand loyalty
further by stating that brand loyalty can also be defined in terms of
commitment.
Oliver (1999) defines loyalty in this context as “a deeply held commitment to
rebuy or repatronize a preferred product or 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 behaviour”. According to Keller (1998) “the bottom line is
that repeat buying is a necessary, but not sufficient condition for being a
brand loyal buyer in an attitudinal sense”. In other words, someone can
repeat-buy but not be brand loyal in a literal sense.
Researchers define brand commitment as the “clinch facet” of brand
preference and brand loyalty as the “attitudinal facet’. Commitment though
is a stronger expression of brand preference and brand loyalty. Someone
may favourably evaluate a brand and repeat - buy the brand, but still not be
truly committed to the brand (Keller, 1998).
Oliver (1999) describes the consumer who fervently desires to rebuy a
product and will have no other product. At still another level, he posits a
consumer who will pursue this quest “against all odds and at all costs”. This
latter condition defines ultimate loyalty.
“Following years of cruel captivity, one of the Beirut hostages stumbled down
the road after being released by his captors in the middle of the war-torn city
and was eventually picked up by a passing car. He explained who he was
and added: ‘I could really do with a Heineken’” (Crainer, 1995). The point
being focussed on in the above quote is that after being held captive for a
lengthy period, the former hostage still remembered the brand name. All
thoughts of the product were secondary to the brand name. This can be
regarded as a triumph for Heineken. The foregoing example illustrates the
ultimate aim of brand loyalty.
3.3 LEVELS OF BRAND LOYALTY
Kapferer (1999) believes that there are three levels of brand loyalty (see
Figure 3.1).
Figure 3.1 The three facets of brand loyalty
Source: Kapferer, 1999: 167
3.3.1 Potential loyals
According to Kapferer (1999) particular brands may receive favourable
attitudes from consumers. These consumers are potentially loyal to a
specific brand. Potential loyal consumers are loyal only if a tailor-made
programme is devised to increase their rate of purchase of a particular
brand.
3.3.2 Pseudo loyals
Pseudo loyals, also known as repeat-buyers, do not hold strong attitudes
towards a brand and only purchase a brand because of the brand’s price or
availability. Reinforcement of choice and increased perception of the
brand’s superiority will ensure brand preference by a consumer.
3.3.3 Active and committed loyals
Kapferer (1999) comments that “active and committed loyals should be
induced to try more and more new products, whether line or brand
extensions”.
Aaker (1991) follows a somewhat different approach to describing the levels
of brand loyalty (see Figure 3.2). The bottom level of the pyramid in Figure
3.2 represents the price buyers or switchers. The brand name does not
influence the purchase decision of these consumers and each brand is
perceived to be adequate to satisfy the consumer’s need. The consumer
purchases whatever is on sale, or is convenient to purchase. This particular
level consists of non-loyal buyers who are completely indifferent to the
brand.
Figure 3.2 The loyalty pyramid
Source: Aaker, 1991: 40
The second level consists of habitual buyers, which includes consumers who
are satisfied, or at least not dissatisfied with a brand. There is no degree of
dissatisfaction that is sufficient to stimulate a change especially if the change
involves effort. Loyalty of consumers who form part of this level can be
vulnerable to competitive offerings especially if competitors can create a
benefit that is visible to the consumer. If the benefit is not visible,
competitors may find it difficult to reach the habitual buyers since there is no
reason for these buyers to be on the lookout for more alternatives as these
alternatives do not show more visible benefits if compared with the existing
brand.
Level three represents satisfied buyers (also known as switching-cost
loyals). Should the satisfied buyer consider switching to another brand it will
be coupled with switching cost, that is, cost in terms of time, money or
performance risk. For competitors to convince a satisfied buyer to switch a
brand, the competitive brand needs to overcome the switching cost by
offering an inducement to switch or by offering a benefit large enough to
compensate.
The fourth level of Aaker’s pyramid is made up of those consumers who truly
like the brand. The consumer’s preference may be based upon an
association such as a symbol, experience, or perceived high quality.
Sometimes consumers struggle to identify reasons why loyalty exists toward
a brand, especially if the relationship has been a long one. Sometimes just
the fact that there has been a long-term relationship can create a powerful
effect, even in the absence of a friendly symbol or other identifiable
contributor to liking.
Finally, the top level of the pyramid represents the committed buyers who
are proud users or discoverers of a brand. The brand is very important to
them either functionally, or as an expression of whom they are. The
consumer possesses so much confidence in the brand that the brand will be
recommended to other consumers.
Aaker (1991) notes that there will be consumers who will exhibit some
combination of the above five loyalty levels, and other consumers who might
have profiles somewhat different from the above levels. The five levels do,
however, provide a feeling for the variety of forms that loyalty can take and
how it impacts upon brand equity.
3.4 PHASES OF BRAND LOYALTY
Oliver (1997) argues that there are different attitudinal phases of loyalty and
that consumers can become “loyal” at each attitudinal phase of the attitude
development structure. In theory, consumers first become loyal in the
cognitive sense, followed by loyal in the affective sense, then by loyal in the
conative manner and finally, in the behavioural sense. The final stage is
also called “action inertia”.
3.4.1 Cognitive loyalty
In this stage loyalty is based on brand belief only. The brand attribute
information available to the consumer determines whether one brand is
preferred above its alternatives. Loyalty to the brand in this stage is
therefore based on the brand’s attribute performance levels and the
available information about the brand. This loyalty is, however, of a very
shallow nature and applies mostly to transactions of a routine nature, for
example, utility provision trash pick-up. During these routine transactions
satisfaction is hardly ever processed and the depth of loyalty is no deeper
than mere performance. If satisfaction is processed, it becomes part of the
consumer’s experience and begins to take on affective overtones.
3.4.2 Affective loyalty
At this phase of loyalty development, a number of satisfying usage
occasions results in the development of a liking, or attitude towards the
brand. The consumer becomes loyal due to the pleasurable satisfaction
derived from using the brand. Whereas cognition is directly subject to
counter argument, affect is not easily dislodged. However this form of loyalty
remains subject to switching, as evidenced by data that show that large
percentages of brand defectors claim to have been previously satisfied with
their brand. It would be more desirable, for the organisation, if consumers
were loyal at a deeper level of commitment.
3.4.3 Conative loyalty
Conation, by definition, implies a brand - specific commitment to repurchase.
This stage of loyalty is brought about by repeated episodes of positive affect
towards the brand. Conative loyalty is a loyalty state that, at first, appears to
result from a deep commitment to rebuy. However, this commitment is more
to the intention to rebuy the brand and not to the brand itself.
3.4.4 Action loyalty
In the action loyalty phase, the motivated intention in the previous loyalty
state is transformed into readiness to act. In addition to the intention to
rebuy the brand, the consumer is also motivated by a desire to overcome
obstacles that might prevent the action. If this is repeated, an action inertia
develops, thereby facilitating repurchase.
The various phases of loyalty can therefore be summarised as follows:
cognitive loyalty focuses on the brand’s performance aspects, affective
loyalty is directed towards the brand’s likeableness, conative loyalty is
experienced when the consumer focuses on wanting to rebuy the brand, and
action loyalty is commitment to the action of rebuying.
3.5 DRIVERS OF BRAND LOYALTY
Once consumers have decided to buy a particular type of product, they have
to decide on the brand. Consumers typically consider only a restricted set of
brands out of the many available (known as a consideration set). By
identifying the factors that influence consumer brand loyalty, suppliers and
marketers will have a clear understanding of a consumer’s consideration set,
and can nurture their loyalty and attract new consumers based on it (Davis,
2000).
Davis (2000) has identified a list of factors that is important in driving the
brand loyalty of consumers. Accordingly, a brand deserving of loyalty:
• Provides high-quality performance.
• Performs dependably and consistently.
• Ensures the brand has been used for a long time.
• Provides high value for the price.
• Fits the consumer’s personality.
• Effectively solves the consumer’s problems.
• Delivers unique benefits.
• Supports the brand with good customer service.
The above list of factors indicates that the benefits and values consumers
receive from a brand are the major drivers of brand loyalty and will ultimately
lead to a premium price for a brand (Davis, 2000).
Consumers that are considering purchasing a brand, scan the brand options
and develop a consideration set. Within the consideration set, consumers
develop a hierarchy of brands based on their own value assessment and
then select the brand at the top of the value hierarchy (Neal, 1999).
Srinivason, Kamakura and Russel (in Neal, 1999) developed the brand value
model (see Figure 3.3) that can serve as a key tool for developing a deeper
understanding of what will keep consumers loyal to a brand. The value
model has three elements, namely, price, the bundle of tangible deliverables
(product attributes) and the bundle of intangible attributes (imagery drivers
as seen in Figure 3.3). Collectively they are called the brand equity. Brand
equity is discussed in detail in section 3.8. Each element and sub-element
of this model can be viewed as having a weight. Each individual purchaser
has his/her own set of weights that is called their preference structure, or
more accurately, their value structure. Each purchaser has a unique
valuation equation for each product or service category in which they have
some experience. This valuation equation provides the purchaser with a
preference structure in order to make a choice among a set of competing
products or services. Rational purchasers would choose the best value. It is
therefore clear that choice is driven by value. If the organisation knows the
purchaser’s value equation, it can very accurately predict their choice among
a set of competing products/services in a category.
Figure 3.3 Brand value model
VALUE
Price Product/Service Company/Brand
deliverables equity
Purchase price Attribute 1 Image driver 1
Operating cost Attribute 2 Image driver 2
Attribute 3 Image driver 3
Source: Neal, 1999: 23
Davis (2000) concurs with Neal (1999) that value is the most simple and
accurate answer to what drives consumers to be brand loyal. Incremental
improvements in consumer satisfaction may improve consideration, but there
is overwhelming evidence that they do not improve loyalty - value does.
Marketers could make use of the model (Figure 3.3) to predict the drivers
that create consumers’ loyalty towards a brand.
Desire and availability also drive brand loyalty. Years ago Coca-Cola
formulated a slogan saying that Coke should always be within an arm’s
length of desire. Both desire and availability were important to Coke.
(Hofmeyr & Rice, 2000).
Two more drivers of brand loyalty include relationship and market presence.
According to Hofmeyr and Rice (2000) “relationship and market presence
lead to lots of loyalty and they establish a framework for understanding what
drives people to buy what they do”. Figure 3.4 highlights these factors and
their elements.
Figure 3.4 Framework for understanding what people buy
What a consumer buys
Relationship with each brand Each brand’s market presence
Everything the consumer associates Distribution, size of sales force,
with, thinks or feels about each brand share of voice, relative price,
in-store position.
Source: Hofmeyr & Rice, 2000: 90
(a) Relationship
The relationship between a consumer and a brand will determine to what
extent a consumer will consider purchasing the same brand over and over.
Consumers will develop a desire to purchase the brand or to use the brand.
This desire may be of varying strengths based on the different options that
are available in the consumer’s mind. This will then lead to a psychological
attachment between the consumer and the brand that will result in a positive
or negative relationship (Hofmeyr & Rice, 2000).
(b) Market presence
The market presence of a brand is everything about the brand that is
external to the consumer’s mind, namely, distribution, in-store position,
relative price, et cetera. It does not help a brand if the consumers are looking
to purchase a brand, but it is unavailable (Hofmeyr & Rice, 2000).
Mariotti (1999) lists a few more factors that drive brand loyalty. These
include:
• value (price and quality);
• image (both the brand’s own personality and its reputation);
• convenience and ease of availability;
• satisfaction;
• service; and
• guarantee or warranty.
Lambin (2000) believes there is a link between satisfaction and loyalty and
illustrates this by using the real-life example of research conducted at Rank
Xerox. According to conventional wisdom, the relationship between
satisfaction and loyalty should be a simple linear one: as satisfaction
increases, so does loyalty. A research conducted at Rank Xerox and
replicated by Jones & Sasser (in Lambin, 2000) showed a much more
complex relationship.
Figure 3.5 The satisfaction-loyalty relationship
Source: Lambin, 2000: 221
The two extreme curves of Figure 3.5 are representative of two different
competitive situations:
• In non-competitive markets – the upper-left zone – satisfaction has little
impact on loyalty. This is typical in markets where regulated monopolies
exist, such as electricity supply, telecommunications and transport; or in
markets where the switching costs are very high. The consumers do not
have a choice. This situation changes dramatically when the source of
monopoly disappears.
• In competitive markets – the lower-right zone – where competition is
fierce and switching cost is low, there is a big difference between the
loyalty of ‘satisfied’ consumers (score of 4) and ‘completely satisfied’
consumers (score between 4 and 5). This was the discovery made at
Rank Xerox: the totally satisfied consumers were six times more likely to
repurchase Rank Xerox products over the next 18 months than its
satisfied consumers (Jones & Sasser in Lambin, 2000).
This has profound implications in that it is not enough to merely satisfy
consumers who have the freedom to make choices, but that the only truly
loyal consumers are totally satisfied consumers.
3.6 MEASURING BRAND LOYALTY
Previously in this chapter the concept, levels, phases and drivers of brand
loyalty were explained in detail in order to provide a clear understanding.
Once there is a clear understanding of brand loyalty, it is important to know
how to measure brand loyalty.
According to Aaker (1995), one of the most valuable assets of an
organisation is the loyalty of the consumer base the organisation serves.
The measurement of market share and sales is very useful for an
organisation, but is an incomplete indicator of how consumers really feel
about a brand. Furthermore, Aaker (1995) believes that “such measures
reflect market inertia and are noisy, in part, because of competitor actions
and market fluctuations”. Measures of consumer brand loyalty are much
more sensitive and provide diagnostic value to an organisation.
Mariotti (1999) concurs with Aaker’s belief that brand loyalty measurement is
a very important exercise. Mariotti (1999) highlights the different
measurement tools used to determine consumer loyalty towards a brand:
• Point-of-sales (POS) systems: building POS databases that collect data
regarding consumers’ purchasing patterns, for example, recording repeat
purchases of the same brand.
• Post-purchase surveys: checking consumers’ brand loyalty via an online
registration, a mail-in survey card (included in the product), or via a
personal follow-up.
• Non-specific retail audits: providing data regarding a consumer’s loyalty
towards a brand.
The total market can be divided into three, namely, consumable goods
market including fast moving consumer goods; durable goods market and
service market. The measurement of brand loyalty will be determined by the
nature of the market that is being measured. It is important to determine the
market type because the nature of the market affects the measurement
period and the type of measurement used. Another reason to determine the
market type is due to the differences in purchasing and the drivers of loyalty
(Rundle-Thiele & Bennett, 2001).
Attitudinal and behavioural measures should be included in all brand loyalty
research as they are both complementary aspects of the one construct.
Normally only one of the above measures can be included, due to resource
and logistical constraints. In consumable markets, where the market is
stable and where there is high switching and low involvement and risk,
behavioural measures are appropriate for predicting brand loyalty levels
(Rundle-Thiele & Bennett, 2001).
Aaker (1991) divides brand loyalty measurement into five components:
(a) Behaviour measures
Actual purchase patterns are one of the direct ways to determine a
consumer’s loyalty towards a brand. These can be measured in three ways:
• Repurchase rates, for example, what percentage of Nescafé users
purchase Nescafé on their next coffee purchase?
• Percentage of purchases, for example, of the last five purchases made
by a consumer, what percentage went to each brand purchased?
• Number of brands purchased, for example, what percentage of coffee
buyers bought only a single brand? Two brands? Three brands?
The nature of a product and the number of competing brands can influence a
consumer’s loyalty widely among some product classes.
Aaker (1991) points out that although behaviour data is objective it still has
limitations. Mariotti (1999) concurs noting the limitations, as a preferred
brand may be out of stock, a competing brand may be selling at a lower
price, or the competing brand may not be merchandised at the same store.
(b) Switching cost
Switching cost indicates the cost involved should a consumer switch to
another brand. The extent to which switching cost provides a base for
consumers’ brand loyalty can be determined via an analysis of switching
cost. Two types of switching costs are involved, namely, the risk (of the new
brand not meeting your needs) to change and cost involved in changing to
another brand. An organisation should value the switching cost that it enjoys
and should work on increasing the dependence of its consumers upon its
brands.
(c) Measuring satisfaction
Measuring consumers’ satisfaction toward a brand can be seen as a key
diagnostic of every brand’s loyalty levels. It is not just satisfaction that needs
to be measured, but very importantly, the dissatisfaction with a brand. When
satisfaction or dissatisfaction is measured it is important that it should be
current, representative and sensitive.
The following key questions can be asked to determine the satisfaction or
dissatisfaction levels of consumers towards a brand:
• What problems are consumers having?
• What are the sources of irritation?
• Why are some consumers switching brands?
• What are the precipitating reasons?
(d) Liking the brand
Receiving positive feedback from the following questions can reflect
resistance to competitive entries or the unlikelihood of consumers switching
to opposition brands. Do consumers like the brand? Is there a feeling of
warmth towards the brand? Are there feelings of respect or friendship
towards the brand? Do consumers perceive the brand as reliable or
trustworthy?
Sometimes consumers like a specific brand without explaining completely
their perceptions and beliefs regarding its attributes. Attributes of brand
liking can be determined from these questions and from the concepts below:
• respect;
• friendship; and
• reliability/trust.
Another measure of liking resulting in high brand loyalty is when consumers
are prepared to pay a premium price for their preferred brand. The
dollarmetric method is one way to determine what a consumer would pay to
get the preferred brand. This means that this method measure the amount a
consumer is prepared to pay in order to obtain the preferred brand.
(e) Commitment
The strongest brands will have a large number of committed consumers.
High brand commitment can be manifested in various ways: consumers will
talk about the brand, recommend the brand to others, and will also find the
brand useful and enjoyable to use.
De Chernatony & McDonald (2000) confirm that there are numerous ways to
measure consumer loyalty towards a brand. Their first measurement tool
concurs with Aaker’s (1991) concerning the actual purchasing behaviour
measurement over a period of time which reflects the degree of satisfaction
existing consumers derive from a brand. By asking the following questions
consumer loyalty can be measured:
• Next time you buy this product category, would you buy this brand again?
• Thinking about the few brands in this product category that you often buy,
is the brand one of your more frequently bought brands?
• If someone were thinking of buying this product, which brand would you
recommend?
It is important to remember that the response to the above questions may be
influenced by the following (De Chernatony & McDonald, 2000):
• past behaviour rather than intended future behaviour; and
• the favourableness of replies may be more a reflection of brand size than
loyalty.
Another tool used to measure consumer brand loyalty is a concept called
Share of Category Requirement (SCR) (De Chernatony & McDonald, 2000).
In the SCR the volume of a specific brand is expressed as a share of the
total category volume during a specific period. An alternative is to establish
the consumer’s purchasing patterns by determining whether the consumer
will buy the same brand at the next purchasing opportunity. The analyses
should also include data on price variations, as most patterns are strongly
influenced by promotions.
Market share and distribution data is the third measuring tool suggested by
Davis (2000) and De Chernatony and McDonald (2000). “A good approach
for this metric is to ask consumers what other brands they considered
purchasing since their last purchase and then why they chose your brand”
(Davis, 2000).
In order to generate realistic results it is important to define the market and
the competitor from the consumer’s perspective and to recognise that market
share indicators are often distorted by short-term price and promotional
activities. Through the use of brand-driven customer retention and loyalty
metrics it is possible to measure the number of consumers who have been
lost as a result of not implicating a brand asset management strategy.
Davis (2000) says, “a good approach for this metric is to ask consumers
what other brands they considered purchasing since their last purchase and
then why they chose your brand”.
3.6.1 Guidelines for measuring brand loyalty
Aaker (1995) identifies four guidelines in order to measure consumer brand
loyalty:
• Firstly, organisations should identify the problems and causes of
dissatisfaction that motivate consumers to change brands.
• Secondly, an exit interview should be arranged with consumers who have
switched brands. Often sensitive and insightful information comes from
these exit interviews.
• Thirdly, the size and intensity of the consumer group whom truly “likes” a
brand should be known.
• Lastly, measures should be tracked over a period of time and compared
with those of competitors.
3.7 THE IMPORTANCE AND VALUE OF BRAND LOYALTY
Kapferer (1999) and Aaker (1995) confirm the importance and value of brand
loyalty:
• “Many firms have taken their consumers for granted, only to see them
dissipate when competitors attack” (Aaker, 1995).
• “A brand can only be strong if it has a strong supply of loyal consumers”
(Kapferer, 1999).
• “With a high level of brand loyalty, a firm can allow itself the luxury of
pursuing a less risky follower strategy” (Aaker, 1995).
Kapferer (1999) believes that an existing base of loyal consumers provides
important, sustainable, competitive advantages to an organisation, because:
• Loyal consumers are more profitable.
• Loyal consumers spend more.
• Loyal consumers are less sensitive when it comes to the price they
should pay for the brand.
• Loyal consumers are also a positive word-of-mouth source.
• Loyal consumers are five times less costly to contact than non-
consumers.
Figure 3.6 shows several ways in which brand loyalty contributes as a
strategic asset to an organisation should it be managed and exploited
properly (Aaker, 1991).
Figure 3.6 The value of brand loyalty
Reduces marketing costs
Ensures trade leverage
BRAND LOYALTY
Attracts new consumers:
• Brand awareness created
• Reassurance to new
consumers
Allows time to respond to
competitive threats
Source: Adapted from Aaker, 1991: 47
(a) Reduces marketing cost
It is well known that the higher the consumer’s brand loyalty towards and
satisfaction with a brand, the easier it is to retain the consumer. The high
level of brand loyalty and satisfaction, in turn, leads to a reduction in
marketing costs. This is due to the fact that prospective consumers are
reluctant or lack motivation to change and it will thus be costly to try and
persuade them to change to another brand. It is thought to be much less
costly to retain existing consumers. However, should the problems and
concerns of existing consumers not be addressed, the risk is that they will
switch to other brands. The challenge an organisation faces is to reduce this
risk.
The loyalty of existing consumers also represents a substantial entry barrier
to competitors. The profit potential for an entrant can be reduced because of
the resources required to convince a loyal or satisfied consumer to switch.
Thus, signals of strong consumer loyalty, such as advertisements about
documented customer loyalty or product quality, can be useful, if sent to
consumers.
(b) Trade leverage
Products such as Ricoffy, Coca-Cola and Simba Chips receive preferred
shelf space in supermarkets mainly because of the strong loyalty consumers
have towards these brands. This brand loyalty leads to trade leverage with
the support of supermarkets in providing leading brands with preferential
shelf space because supermarkets are well aware that the leading brands
are on the shopping lists of consumers. Consumers are likely to shop at the
supermarkets that stock the brand to which these consumers are loyal.
(c) Attracting new consumers
A decision to purchase by a new consumer will always be accompanied by
uncertainty and/or risk. A satisfied consumer base can reduce uncertainty
and risk, because it provides proof that a brand is accepted, successful and
enduring.
A customer base can also provide brand awareness. To see a brand on the
supermarket shelf, or in action, or being used by a friend or colleague can
also generate brand awareness that can attract new consumers.
(d) Time to respond to competitive threats
Customer brand loyalty creates a breathing space for the producers of
existing brands should a competitor introduce or launch a new brand onto
the market. This brand loyalty would allow an organisation the time needed
for the new brand’s improvements to be matched, or neutralised. With a
high level of brand loyalty, an organisation can allow itself the luxury of
pursuing a less risky follower strategy.
According to Burgess and Harris (1998), the value of brand loyalty is also
found in an organisation’s profitability and long term survival dependence on
the level of loyalty the organisation’s brand receives from consumers.
Aaker (1995) concurs with Burgess and Harris (1998) that brand loyalty is
one of the factors that helps an organisation in its current performance and
results in long term profits. Figure 3.7 shows those performance measures
that affect long term profit.
Figure 3.7 Performance measures reflecting long term profitability
Source: Aaker, 1995: 138
Figure 3.7 can be best explained in terms of an example. It is assumed that
Sara, now 70, drinks a Coke (costing R2-50) a day and started drinking
Coke when she was fifteen years old. It is also assumed that a Coke cost
fifty cents when she was fifteen. Every year she spends R913 on Coca-
Cola. This is a seventy-year habit, so she has spent R63,910 over that time.
In addition, as a parent she has reared another two Coke drinkers whose
lifetime value may be similar, giving a total of R191,730. Moreover, Coke
has consistently raised its price so that R191,730 is actually R210,000.
According to Davis (2000) ”the lifetime value of a customer illustrates the
importance of keeping consumers loyal to your brand and the power they
may have in influencing others to become loyal to your brand too”.
Customer Satisfaction/ Brand Loyalty
Product/Service Quality
Brand/Firm Associations
Relative Cost
New product activity
Manager/Employee Capability and Performance
CURRENT PERFORMANCE
LONG-TERM PROFITS
3.8 BRAND LOYALTY AS AN ELEMENT OF BRAND EQUITY
Now that the term brand loyalty has been discussed in detail, it is important
to understand in what way brand loyalty fits into the bigger picture of brand
equity. Aaker (1991) defines brand equity as “a set of brand assets and
liabilities to a brand, its name and symbol, that add to or subtract from the
value provided by a product or service to a firm and/or to that firm’s
consumers. For assets and liabilities to underlie brand equity they must be
linked to the name and/or symbol of the brand”.
Brand equity consists of five categories of assets (see Figure 3.8) and it
creates value for both the consumer and the organisation (Aaker, 1991).
Brand loyalty is an important element in the brand equity framework, both as
an influencer of brand equity and as a method of enhancing value.
Figure 3.8 Brand equity framework
Perceived
Quality
Name Brand
Awareness Associations
Brand Other Proprietary
Loyalty Brand Assets
Source: Aaker, 1991: 17
Keller (1998) quotes from The Market Facts that “brand equity is the
willingness of someone to continue to purchase your brand or not. Thus, the
measure of brand equity is strongly related to loyalty and measure segments
on a continuum from entrenched users of the brand to convertible users”.
BRAND EQUITY
Name Symbol
Provides value to customer by enhancing customer’s: • Interpretation/
Processing of information
• Confidence in the purchase decision
• Use satisfaction
Provides value to firm by enhancing: • Efficiency and effectiveness of marketing programs • Brand loyalty
• Prices/Margins • Brand extensions • Trade leverage • Competitive advantage
Without any prior purchase and use experience there cannot be any brand
loyalty. Brand loyalty is qualitatively different from the other dimensions of
brand equity in that it is tied more closely to the use experience. All brand
equity dimensions are dependent on each other and has causal
interrelationships. Brand loyalty is a basis of brand equity that is created by
many factors, chief among them being the use experience (Aaker, 1991).
Brand equity would not exist if there is loyalty towards a product but no
loyalty towards a brand (Aaker 1991). The example below illustrates this
statement.
During the 1980s, Perrier Mineral Water experienced intense loyalty: in 1989
it held a share of nearly 50% of the market for bottled water. This loyalty
was particularly strong in the restaurant market. In February of 1990, Perrier
recalled its product worldwide after it was found to be contaminated by
traces of benzene, a suspected carcinogen. This resulted in Perrier being
off the shelves for five months. Even with aggressive price promotions, the
market share dropped to below 20% in late 1990. The image of the brand
was affected by the fact that people did not see it as a premium brand any
longer and by the fact that it was no longer stocked in the finest restaurants
and bars. However, the biggest fact was that the habit of ordering Perrier
had been broken. For a period of five months, consumers were forced to
order alternative products and realised that Perrier had little real product
advantages. Therefore, such a break in supply disrupted its customer base
by disrupting the loyalty towards the brand. Perrier may never regain the
market share it had before the interruption in the use experience of the brand
by consumers.
3.9 SUMMARY
Brand loyalty exists where a brand has become a consumer’s preferred
choice, and where there is a deeply held commitment to rebuying the brand
or service, sometimes against all odds and at all costs. However, pure
habitual buying cannot always be seen as brand loyalty. The vulnerability of
a consumer base to competitive action reduces as brand loyalty increases
and it is therefore becoming more and more important to be able to measure
brand loyalty. The various ways to measure brand loyalty were therefore
discussed.
An existing base of loyal consumers provides enormous sustainable
competitive advantages to an organisation such as increased spending,
increased profitability and increased word-of-mouth advertising. Brand
loyalty adds further value to an organisation such as in reduced marketing
costs, trade leverage and attraction of new consumers. Marketing costs are
reduced because it is less costly to persuade an existing customer to
purchase a brand. Brand loyalty brings about trade leverage in that brands
that have a large existing customer base are given better shelf space
compared with brands that have a smaller customer base. New consumers
are also attracted by the positive image a satisfied customer base projects
about the brand.
The various factors, or elements that drive brand loyalty were discussed.
These elements are mainly the benefits consumers receive from a brand.
Such benefits include value, image, convenience, satisfaction, service and
guarantee. The relationship between satisfaction and loyalty was also
highlighted and it was noted that only totally satisfied consumers are truly
loyal.
The researcher found that various levels of brand loyalty exist. Potential
loyals have favourable attitudes towards the brand, but the loyalty is
insufficient to inhibit switching. Pseudo loyals do not have strong attitudes
towards the brand, but price and availability are very important to them.
Committed loyals are committed to buying the brand at all costs. The
different levels of brand loyalty were depicted at different levels of a pyramid.
At the bottom level of the pyramid are the switchers and price sensitive
buyers who are indifferent. No brand loyalty exists at this level. At the top
level are the committed buyers who are highly loyal.
Phases of brand loyalty were also discussed. Consumers possibly move
through different attitudinal phases depending on the attitude towards the
brand. Cognitive loyalty is mainly based on information that is known about
the brand. Affective loyalty is also about knowledge but stems from
repeated satisfying usage and even liking of the brand. Conative loyalty has
in it a commitment to rebuy due to repeated episodes of positive affect
towards the brand. In the action loyalty phase, the consumers are prepared
to take action to overcome obstacles to buy the brand in addition to an initial
intention to buy it. It is in the latter stage where action inertia exists, while
switching happens very easily in the very first phase, namely, the cognitive
phase.
Brand loyalty was described in relation to brand equity. The basis of brand
equity consists of five categories of assets of which brand loyalty is one.
Without any prior purchase and use experience there cannot be any brand
loyalty. Brand loyalty is qualitatively different from the other dimensions of
brand equity in that it is tied more closely to the use experience. Brand
loyalty is a basis of brand equity that is created by many factors chief among
them being the use experience.
As this chapter has provided a better understanding of the concept of brand
loyalty, the next chapter goes on to provide information on how brands and
brand loyalty are built.
CHAPTER 4
BUILDING BRANDS AND BRAND LOYALTY
4.1 INTRODUCTION
Consumers are attracted to the certainty of knowing that what they buy will
be good value for money or will perform a particular task effectively. The
majority of consumers are cautious and easily disappointed, but their loyalty
is key to business success (Crainer, 1995).
Brands can provide some certainty and safety to an organisation. This will
happen when the brand has a base of loyal consumers, who, when seeing
the product, experience a host of positive thoughts so the product is bought.
According to Crainer (1995), “success is all about enticing and retaining
customers.” This sounds simple and achievable, but the key is the second
part of the equation, namely, ensuring that the customer remains a
customer.
If an organisation has a disciplined brand planning process, it becomes
easier to develop a brand building strategy (Knapp, 2000). According to
Randall (2000), there are six steps in the brand planning process and those
steps are included in this chapter.
An essential part of an organisation’s brand loyalty strategy is to build
preference for its brand. Alreck and Settle (1999) outline six methods by
which to build brand preference.
The discussion on building brand preference is followed by a summary of
various methods and strategies that can be employed by an organisation to
build its brand, to build brand loyalty and to maintain brand loyalty.
4.2 BRAND PLANNING
When constructing a building the architects draft a blueprint to enable the
building contractors to build either a simple one-storey dwelling, or a huge
office block. According to Knapp (2000) “brands are no different”. Having
observed the brand building process over and over, Knapp believes that to
develop a brand building strategy is easier said than done, especially if the
organisation does not have a disciplined brand planning process. In 1996
the mighty Guinness brand admitted that their sales and profits suffered due
to the fact that they were guilty of insufficient brand planning and short-
termism when they cut advertising support for the brand (Randall, 2000).
Due to the fact that strong brands are at the centre of the survival of many
organisations, branding must be at the centre of the board’s corporate
strategy (Randall, 2000). De Chernatony and McDonald (2000) believe that
brand planning is a very important activity that can result in a clear vision of
how resources can be employed to sustain the brand’s differential advantage
and increase profits. However, in today’s highly competitive business
environment there is still only a minority of organisations that undertake
thorough brand planning. Without a well-documented strategic brand plan,
an organisation is creating its own obstacles to success.
The following are some characteristics that can hinder the success of a
brand (De Chernatony & McDonald, 2000):
• Brand planning is normally based on little more than extrapolations from
the previous few years.
• Brand investment (i.e. advertising, market research, and the like) gets cut
if at any time it does not seem as if the annual budget is going to be
reached.
• The marketing manager is too involved in tactical issues and unable to
delegate responsibility.
• Brand managers view their current positions as good training grounds for
no more than two years.
• The only strategic thinking that is done for the following year’s brand
plans is a retreat once a year for the advertising agency and sales
managers.
• A profitability analysis for each customer is rarely undertaken.
• New product developments consist mainly of changes in pack sizes and
‘me-too’ offers.
• The promotional budget is focused on below-the-line promotional activity
rather than on advertising.
• The advertising agency is rarely provided with the marketing
documentation.
Knapp (2000) supplies organisations with guidelines to ensure that the brand
planning process is implemented successfully. According to him:
• One of the senior officials of the company must buy in and be involved in
the process on a regular basis. This can either be the chief executive
officer, president, chairman or the chief operating officer.
• One executive must take responsibility for the development of the brand
strategy. The executive team must designate this person.
• A small cross-functional brand team should be put together to participate
in the development of the brand strategy.
• Objectivity should be maintained and guidance should be obtained from
an independent brand advisor.
• A timetable and work plan should be in place with monthly updates and
progress reports. These progress reports should be presented to the
executive team on a regular basis.
• The brand strategy should be completed, in writing, by the conclusion of
the process. It should be updated annually.
De Chernatony and McDonald (2000) concur with Randall (2000) that the
brand planning process should be communicated to all employees within the
organisation to ensure widespread understanding of the brand building
process.
A brand planning process can apply to new and existing brands. Existing
brands need to be reappraised on a regular basis. The more successful the
brand, the more brand planning is necessary to prevent the trap of
complacency. The analysis may not need to be repeated in depth every
year, but it does need to be updated (Randall, 2000).
Randall (2000) identified six steps in the brand planning process:
4.2.1 Market definition
During this step organisations analyse the market in such a way that the
organisation knows how consumers see the competitor brands, what
consumers spend their money on, when consumers use the brand and what
they use it for. The whole purpose is to define the total market within which
the organisation operates.
4.2.2 Market analysis
Analysis of the market should include analysing:
• buyers and users;
• segments;
• competitors;
• channels;
• drivers; and
• critical success factors.
4.2.3 Brand analysis
Organisations must make use of unstructured discussions, projective
techniques and any other aids available to improve their understanding of
brands. An analysis will contain information on the brand identity, brand
values and brand essence. Market research will also reveal information
such as how consumers respond to a concept and how the consumer really
views the brand as opposed to how the organisation would like the
consumer to view the brand.
4.2.4 Positioning
Positioning concerns the way consumers see the organisation’s brand and
the placing of the organisation’s brand in the consumer’s mind space in
relation to competitors. Positioning also helps the organisation to point out
the difference between its brand and that of its competitors.
4.2.5 Setting aims and objectives
The board should set the aim of the organisation’s brand. For example, the
enduring aim could be to deliver superior consumer value. The position the
brand aims to take in the future must be set in terms of short- and long-term
goals. Long-term planning should guide short-term planning.
After short- and long term planning have been set, the organisation needs to
set quantitative objectives such as sales targets, market share growth and
profits. The organisation needs to be careful so that short-term profits do not
create havoc over longer-term brand development plans.
4.2.6 Combining the elements of a brand plan
The brand plan should bring together all of the following brand plan
elements:
• product variants and size;
• product/brand name;
• packaging;
• price;
• advertising plans and actions; and
• evaluation and control.
Randall (2000) believes that “the main purpose of a brand planning process
is to ensure that the managers concerned think through what it is they are
trying to accomplish, and to make sure that the plan is consistent and
coherent”.
4.3 CREATING BRAND PREFERENCE
Alreck and Settle (1999) are of the opinion that an essential part of an
organisation’s brand loyalty strategy is to build preference for its brand and
outline six methods for building brand preference:
4.3.1 Need association
Need association occurs where the product or brand is linked to a need
through repeated association. Two aspects are important here, namely,
constant repetition and brand name awareness. The essence of constant
repetition as a brand preference-building mechanism is to present the
product or brand name and a particular need, simultaneously and
repeatedly. Those consumers exposed to this conditioning eventually learn
to associate the brand with the need.
Advertisers who adopt this strategy abandon the use of long, elaborate
messages in their advertising and replace them with shorter messages that
are constantly repeated.
This simple brand preference-building method is effective for creating brand
name awareness, but it does very little else. Although brand name/need
pairings would cause a consumer to immediately think of a brand that they
associate with the need whenever the need arises, it tells the consumer little
about how effectively the brand will satisfy the need. Consequently, few
advertisers depend solely on this method, which is more often used in the
introductory stage of the life cycle of a brand.
4.3.2 Mood association
Mood association occurs where the mood is linked to the product or brand
through repeated association. The objective of this method is to link the
brand name to a positive aura. This method also employs constant
repetition, but instead of associating the brand with a need, it associates the
brand with a particular form of a pleasant hedonistic state, for example,
leisure, recreation, relaxation, achievement or companionship. Achieving
the association of pleasant moods or feelings with a product or brand
requires more than hundreds of thousands of brief messages: it requires
consistency and repetition. It would not prove effective if the brand was
paired with several, distinctively different moods, or with one type of feeling
in one message and a different type in another.
Mood association continues to be a popular method for building consumer
preference for many brands of small-ticket, frequently-purchased,
consumable goods as well as for some brands of consumer services.
Slogans that strongly suggest a certain feeling are supplemented by
advertising messages that convey the same basic mood. The Hallmark
slogan “When you care enough to send the very best” is a perfect example.
If this kind of conditioning is effective, consumers will experience a pleasant
feeling each time they are exposed to the brand.
4.3.3 Subconscious motivation
Subconscious motivation is associated with suggestive symbols that are
used to excite customers’ subconscious motives. In the 1950s and 1960s,
Freudian psychoanalytic theory captured the attention and interest of many
in the advertising community. The view is adopted that consumers’ drives
and motives for preferences are situated within the subconscious mind and
that consumers do not consciously know why they prefer a certain brand.
Subconscious motivation requires an advertising message to: use
appropriate words and symbols to excite hidden drives and desires; while
the product or service should serve as a surrogate for the actions that are
inhibited by the consumer’s super ego. Since consumers may be prohibited
from expressing their innermost urges and desires directly, they can express
them symbolically through the purchase and consumption of goods and
services.
Unlike need association and mood association that are both confined to
promotion of small-ticket, consumable goods, preference-building through
subconscious motivation is viewed as being applicable to large- and small-
ticket items alike. However, the majority of advertisers have moved away
from subconscious motivation as a method to build consumer preference of
a brand.
4.3.4 Behaviour modification
Behaviour modification is employed where manipulating cues and rewards
are used to condition consumers to buy the brand. Behaviour modification
through instrumental conditioning first caught the attention of marketers and
advertisers in the 1950s. The four main elements of a behaviour
modification programme are drive, cue, response and reinforcement.
Marketers work with drives (the basic needs of the consumer) such as
hunger or thirst. They then attempt to condition responses such as purchase
and/or consumption, using cues or marketing stimuli such as
advertisements, signs, logos, or packages. The reward (or possible
punishment in that the brand may not satisfy the needs of the consumer) that
results for the consumer constitutes the reinforcement.
There are a number of principles that advertisers and promoters of goods
and services have to consider in order to use preference-building techniques
effectively. There are four basic ground rules:
• The stronger the drive, the more quickly and completely the conditioning
will be. On the other hand, in the absence of a drive, the consumer may
not respond to the cues at all.
• The cues should be as distinctive as possible. If this is not the case,
consumers might purchase other brands because they generalised the
cues.
• The consumers should be able to respond easily. It will not be easy for
consumers to respond easily if prices are too high and if purchases are
too difficult to make.
• The reinforcement should be a strong, positive reward: being punished
will lead to a situation where consumers are likely to learn not to buy or
use the product or brand.
Behaviour modification works best for products that provide strong, sensory
satisfaction such as those that contain substantial amounts of sugar, alcohol,
caffeine, or nicotine. Products that contain these substances have strong
reward value and also tend to generate the drive state, leading to the next
conditioning cycle. The “high” that results from consuming these products is
followed by a “slump” that encourages the user to return for another bite, sip
or drag. The effectiveness of this kind of behavioural conditioning is evident
in the high levels of brand loyalty for products such as sweets, chewing gum,
beer, coffee, cola, and cigarettes.
Quality control and assurance are of great importance in building
preferences through behaviour modification. Initial conditioning takes place
much less rapidly if the rewards are only sporadic, rather than being highly
consistent. A product failure that results in punishment for the unfortunate
consumers, rather than reward, is very likely to condition them negatively.
Their behaviour is thus modified to avoid the product or brand, rather than to
seek it. This is the worst possible situation, since these consumers will
never know that the problem has been corrected because they are not likely
to try the same product or brand again. This could cause a brand to be
retired should a large number of consumers be “turned off” the actions of the
marketers.
4.3.5 Cognitive processing
Cognitive processing takes place where perpetual and cognitive barriers are
penetrated to create favourable attitudes. This method is likely to apply to
products where the buyer is highly involved in the purchase decision
process. The more important the purchase is to the consumer, the more
likely the buyer’s preferences will result from cognitive processing. (Blythe in
Alreck & Settle, 1999).
This method of brand preference-building is used by organisations that
market large-ticket consumer products such as cars or appliances, and
those who provide and sell important services such as medical care or
higher education. The objective is to create positive attitudes toward
products or brands. These attitudes are composed of two main parts:
• the consumer’s knowledge or beliefs about the product; and
• their positive or negative evaluation of it.
Knowledge and beliefs are created by informative messages. However,
such advertising or promotion has to overcome several, strong
communication barriers, namely:
• Selective exposure, where consumers choose the media to which they
are exposed. Therefore, only part of the audience will be exposed to the
message.
• Selective attention, where some consumers will be exposed to a
message, but would choose to ignore it.
• Selective perception, where some consumers will pay attention, but will
ignore some elements of the message, some elements will be distorted,
and others will be added.
• Selective retention, where some or all of the information that is perceived
will be lost, rather than being retained in the memory.
• Selective recollection, where only some of the information retained will be
remembered and perhaps no information will be recalled.
• Selective application, where the consumer will act differently after
ignoring the information that was recalled.
The advertisers must ensure that as much information as possible gets
through intact and is recalled successfully. Careful organisation, frequent
repetition, and reference to familiar cues are provided to improve recollection
of the information at the time of purchase.
But despite all the measures taken to ensure successful recollection of as
much information as possible, the consumer can still decide to act differently
and buy another brand. Whether or not they apply what they have come to
know or believe depends heavily on their evaluations, the other component
of their attitudes.
Marketing communication therefore also needs to include persuasive
messages to develop positive evaluations of the goods or services.
Prospective buyers compare what they know or believe about a product or
service with what they value. The evaluation is positive if their knowledge or
beliefs correspond to their values. If what they know or believe contradicts
their values, the evaluation will be negative.
The objective of persuasive communication would therefore be to establish
positive links between what the consumers know and believe about a brand
and the various values they hold.
4.3.6 Model emulation
In the case of model emulation, idealised, social lifestyle models are
presented for consumers to emulate and learn from. This method has
become very popular and increasingly effective for creating consumer
preference. Model emulation is a simple, easy way to make a choice, which
is why consumers find it attractive.
However, as the audience becomes more and more diverse, it gets
increasingly difficult to find suitable models that most people would want to
emulate.
When consumers adopt a new role pattern, they do not do so
instantaneously. Instead, they go through a four-step, social role adoption
process, consisting of:
• Anticipation – the consumer develops an idealised image of the social
role, based on observation of media stereotypes.
• Acquisition – the consumer learns the essential ingredients of the new
social role through early experience in the role.
• Actualisation – the consumer becomes familiar with the role’s basic
requirements through day-to-day experience.
• Accommodation – the consumer tailors the role to his or her own
personal tastes in order to re-establish individual, personal identity.
Consumers build their preferences in a different way at each step in the
process.
The key to a brand is becoming firmly established as an inherent feature of a
particular social role is to provide those at the anticipation stage of adoption
with models they can emulate. At this stage, consumers are most sensitive
to media stereotypes. As consumers become more mature, they become
less sensitive and responsive to media models.
4.4 METHODS AND STRATEGIES FOR BUILDING BRANDS
Building a brand is complicated: it takes time, thought and money (Mariotti,
1999). The literature study revealed that there is no golden recipe for
success when it comes to building a brand, but some of the following
elements are likely to appear in the brand building strategies of
organisations.
One of the first elements in the brand building process is to discover what
the consumer knows about the brand, for example, what the brand
represents. Randall (2000) believes that an organisation should develop a
clear and deep understanding of the consumer. To develop this
understanding the organisation could make use of market research tools
such as the focus group and the personal interview. Another way in which
an organisation can get to understand consumers is by placing itself in the
shoes of the consumers, that is, trying to see the world the way consumers
do, understanding consumer problems and using the product in the way
consumers will.
With the information collected from the market research, the organisation
can then decide how to position the brand (Mariotti, 1999). According to
Davis (2000): “A strong brand position means the brand has a unique,
credible, sustainable and valued place in the consumer’s mind.” The brand
position also separates the various brands in such a way that consumers
remember the brands according to credible commitment and promises.
Davis (2000) identifies the following as being necessary to ensure a well-
constructed position:
• Defining the target market for the brand.
• Defining the type of business, industry, or category the organisation
operates in.
• Stating the organisation’s key points of differentiation and benefits to the
consumer.
Product differentiation is the positioning strategy that organisations use to
differentiate various competitive brands from each other. Differentiating
between competitive brands can be real, or perceived. Organisations make
use of brand names, packaging, colour and secret additives to ensure a
clear difference between competing brands. Products like soaps, bleaches
and aspirins are known for using such tactics (Lamb et al., 2000).
Another major factor to consider when building a brand is its distribution.
There is a saying within the FMCG industry that: “consumers can’t buy a
brand if they can’t find the brand.” Mariotti (1999) confirms that distribution is
one of the main ways to build a brand successfully.
Lamb et al. (2000) define distribution as a structure of interdependent
organisations that has the purpose of moving products to the final consumer
by reaching from point of product origin to the consumer. Within the
distribution channels there are different types of organisations that are
involved in ensuring that the final consumers can purchase their preferred
brands, irrespective of the location.
Within the FMCG industry there are various distribution channel structures
(see Figure 4.1) that ensure that the brand reaches the final consumer,
ready to be purchased. The structure that the organisation selects will
depend on (Lamb et al., 2000):
• market factors;
• product factors; and
• producer factors.
Figure 4.1 Marketing channels for consumer products
Source: Lamb et al., 2000: 412
The success of a brand further depends on two broad areas as illustrated in
Figure 4.2. These are customer equity and market equity.
Figure 4.2 Broad factors that determine the success or otherwise of a
brand
Source: Hofmeyr and Rice, 2000: 34
Hofmeyr and Rice (2000) believe that many new brands are not strong when
it comes to the consumer’s commitment, but due to excellent distribution that
creates high visibility at point of sale (market equity), the brand enjoys good
sales. For consumers who do not have high commitment loyalties towards
any specific brand (low levels of customer equity), the well-distributed brands
are the easiest choices to make. The well-distributed brands come to mind
first and occupy the lion’s share of shelf facings in stores. Sheer shelf
visibility is a significant contributor towards the success of a brand.
Kapferer (in Hofmeyr & Rice, 2000) confirms that organisations that are not
in control of their distribution are a major handicap to the success of their
brands.
What a consumer buys
Customer equity
‘Relationship with each brand’
Everything the consumer associates with, thinks or
feels about the brand.
Market equity
‘Each brand’s market presence’
Distribution, size of sales
force, share of voice, relative price, in-store
position, et cetera
The third strategy in building a brand is to ensure that the consumer knows
what the brand represents and that it is on the market. A well-developed
advertising strategy and promotion achieve this.
According to Lamb et al. (2000), advertising can be defined as “impersonal,
one-way communication about a product or organisation that is paid for by a
marketer.” Advertising is a persuasive communication process through the
medium of television, newspapers, posters, cinemas and radio. It is normally
called ‘above the line’ communication by the marketing departments of
organisations (Randall, 2000). All the above mentioned media are traditional
methods. Contemporary marketers, however, also use various new and
exciting ways to send out a message, such as:
• transit cards on taxis;
• internet;
• computer modems; and
• fax machines (Lamb et al., 2000).
One of the main benefits of advertising is the number of people who can be
reached. Advertising can reach a large number of people at one time, or it
can be micro-targeted to small groups of potential consumers through point
advertising in a specific trade magazine. The cost per contact is normally
low, but the total cost to advertise is very high (Lamb et al., 2000).
Mariotti (1999) is of the opinion that it is important for an organisation to give
a consumer a good reason to purchase the organisation’s brand. To
achieve this objective an organisation can make use of promotions.
“Promotion is communication by marketers that informs, persuades and
reminds potential buyers of a product in order to influence their opinion or
elicit a response” (Lamb et al., 2000). Randall (2000) sees promotions as
being where an organisation designs activities such as gifts, extra products
or competitions to encourage consumers to trial, or to use the brand. In
addition, promotions offer consumers an incentive to purchase the brand.
Lamb et al. (2000) as well as Randall (2000) distinguishes two main types of
promotions:
• Trade promotions are aimed at distributors and stockists of the brand.
The trade promotion is created to encourage the distributor to stock the
brand and the stockists to give the brand more prominence on the
shelves and in the outlet. This strategy is ideal in the case of a new
brand, but can also be useful and effective in the case of an existing
brand.
• Consumer promotions are aimed directly at consumers to encourage
them to change their choice, quantity and time of purchase.
De Chernatony and McDonald (2000) believe that promotions are created to
achieve short-term results, and advertising, on the other hand, is viewed as
a long-term, brand building investment.
Randall (2000) believes that advertising and promotions are both important
in building a brand, but the two elements (advertising and promotions) must
be integrated. Americans call the integrated process ‘Integrated Marketing
Communications’. If advertising and promotion are to achieve synergy and
build a cumulative effect in consumers’ minds, they must be mutually
consistent. The main reasons for integration are that it creates synergy
between advertising and promotion and also gives the consumer a coherent
message. Jones (in Randall, 2000) comments that the average advertising
elasticity is around 0,2, but when advertising and promotion run jointly, the
elasticity goes up to 1,6 that is, eight times the effect.
Knapp (2000) believes that to build a brand successfully, an organisation
could also use the D.R.E.A.M strategy. (see Figure 4.3).
Figure 4.3 D.R.E.A.M. model
Source: Knapp, 2000: 13
The D.R.E.A.M. model is made up of five points that are believed to
influence brand perception. These are differentiation, relevance, esteem,
awareness and the mind’s eye.
According to Knapp (2000), “Differentiation should be the first step if a brand
is to cut through the clutter in the marketplace and occupy a distinctive
position in a target audience’s mind.” Successful differentiation requires
distinguishing a brand from that of competitors on an attribute that is
meaningful, relevant and valuable to consumers. A good example of the
above is the Gillette razor that has evolved from one to two to three blades
(attribute), with each additional blade increasing the closeness of the shave
without compromising comfort.
Kapferer (1999) identifies five ways in which an organisation can differentiate
its brand from that of competitors:
• Firstly, the organisation can upgrade the brand to the current level of
expectations and renew the brand on a regular basis. Detergent
manufacturers renew their brands by making minor adjustments every
two years, and major changes in the formulas every five years, in an
effort to maintain their qualitative leadership.
• A second method of differentiation is to integrate new and emerging
needs while holding onto the same position. An example of this is
Nestlé Pelargon Milk Formula, a biologically acidified formula for full term
infants with mild gastro-intestinal disturbances or risk of and/or frequent
diarrhoeal disease. This product is now also being recommended for
babies whose mothers are HIV-positive, as breastfeeding is not an
option for mothers with this condition.
• Organisations constantly need to confirm their brand’s superiority on one
particular variable. A shampoo that treats hair loss should rapidly be
followed by line extensions covering the different needs of people
suffering from the problem of hair loss. Extensions could be creams or
lotions.
• Differentiation could result from consistent strengthening of the brand's
reputation. The strengthening process can be supported with the help of
advertising, word-of-mouth reports from experts or opinion leaders, and
public opinion.
• Finally, differentiation can be maintained if innovation is allocated
according to the strength of the brand. In most situations, a strong
innovation will not sell under a weak brand. It is therefore necessary to
give to the stronger brand either the most innovation or the priority. This
type of innovation is possible for an organisation like Nestlé, because
instant coffee is a very technical brand and different levels of quality are
possible.
A brand that is being created without being built into something meaningful
does not have much value and money is being wasted in the process
(Mariotti, 1999). The example of Swatch watches illustrates how a brand
was built and how this re-established the Swiss watch-making community
(SMH) as a major role player in the watch-making industry.
SMH manufactured either low-cost, time-measurement devices (which the
Japanese attacked successfully), or high-cost, jewellery grade investments.
SMH defined Swatch as a low-cost watch of excellent Swiss quality, but with
a stylish, fun, youthful and trendy “personality”. The concept was as fresh
and new as the Swatch designs: owners could purchase a different watch for
a different mood, style or occasion. Giant watches hanging from buildings,
outlandish publicity stunts and major event sponsorships were among the
strategies used to launch the brand.
Swatch supported events that were supported by its target market, such as
Freestyle World Cup Skiing, World Break-Dancing Championships,
Alternative Miss-World Contests, and the like. The company often linked
new designs to specific events. It soon became popular to collect unique
Swatch watches and a customer membership club tied these efforts together
into one of the most brilliant new brand launches of the eighties and nineties.
4.5 METHODS AND STRATEGIES FOR BUILDING BRAND LOYALTY
Crainer (1995) confirms that loyalty is an important key to the success of a
business. In today’s highly competitive business environment managers
tend to focus so much on beating the opposition, negotiating prices, securing
orders and delivering the product that managers forget to ensure that
customers remain customers. Failure to retain and attract customers can
cost businesses huge amounts of money annually. Research in the United
States of America has shown that a 5% decrease in the number of defecting
consumers led to a profit increase of between 25% and 85%.
In order to build brand loyalty it is important that organisations implement a
brand loyalty strategy. The researcher’s study of the relevant literature has
shown that organisations implement various types of brand loyalty
strategies, depending on the situation. These strategies can include
creating, maintaining and reinforcing brand loyalty.
A number of strategies that organisations can implement to create and
maintain loyalty among their regular consumers are shown in Figure 4.4. A
discussion of these strategies follows the figure.
Figure 4.4 Creating and maintaining brand loyalty
Treat the customer right
Stay close to the customer
Measure/manage BRAND LOYALTY
customer satisfaction
Create switching costs
Provide extras
Source: Aaker, 1991: 50
4.5.1 Treat consumers right
Consumers should be treated with respect. The objective should be to
ensure that there is a positive interaction between the organisation and the
consumer. The medical representatives from Nestlé train the staff at
hospitals on what nutritional products would by applicable for the different
types of patients. If the hospital provides the correct nutritional product, it
ensures that the patient will have a positive experience with the brand.
4.5.2 Stay close to the consumer
Organisations with strong consumer cultures will always find ways to stay
close to their consumers. Good examples are executives at Disneyland who
work on stage, in the park, for at least two weeks per year. This ensures
that Disneyland comes into close contact with its customers. Another good
example is Nestlé that sends out letters to the mothers of all new-born
babies offering assistance and support. Regular consumer contact by the
organisation sends a signal that the consumer is valuable to the
organisation. If consumers feel that they are valued, they are likely to
remain loyal to the organisation and its brands that make them feel
important.
4.5.3 Measure/manage customer satisfaction
Regular marketing research regarding consumer satisfaction or
dissatisfaction is particularly useful in understanding how consumers feel
and how they adjust their brand choices. It is, however, important for the
market research to be timely, sensitive and comprehensive.
4.5.4 Create switching costs
One way to create switching costs is to create solutions to customers’
problem that may involve redefining the business. Drug wholesaling once
went through a period where all the drug distributors, each with its own sales
force, negotiated prices that confused the end consumer. Drug suppliers
then decided to install computer terminals for the drug distributors to provide
them with inventory control and automated ordering services. By doing this,
suppliers created enormous switching costs for the distributors, and
transformed the entire drug business.
Loyalty programmes are another approach used to reward consumers for
their brand loyalty. Lamb, et al. (2000) concur with Aaker (1991) that brand
loyalty programmes help the organisation to keep its valuable consumers
loyal and profitable. The loyalty programmes reward loyal consumers for
making multiple purchases of a specific brand with the objective of building
long term, mutually beneficial relationships between the organisation and its
key consumers.
4.5.5 Provide extras
A sample from the bakery, or a cooking recipe is sometimes all that is
needed to change a consumer’s behaviour from tolerance to enthusiasm. It
is all about providing a few unexpected extras and making a good
impression on the consumer about the brand.
4.6 STRATEGIES FOR MAINTAINING BRAND LOYALTY
According to Kapferer (1999), there are two actions that an organisation can
take to keep consumers loyal.
Firstly, an organisation can apply a defensive strategy to ensure that the
consumer has no reason to leave the organisation’s brand for that of the
opposition. For the organisation to be successful using the defensive
strategy, it is essential to identify the causes of disloyalty, and dissatisfaction
among consumers. One of the worst situations that a brand can find itself in
is when a consumer is dissatisfied, and then spreads negative stories among
friends, family and colleagues without giving the negative feedback to the
brand representative. That is why it is so important to treat complaints with
diligence, care and respect.
Kapferer (1999) discusses the example of L’Oreal Coiffure to illustrate the
importance of seeking client satisfaction in attempting to maintain brand
loyalty. L’Oreal Coiffure is nowadays a company with an innovative and
conquering spirit as it launches one new product after another. The
company knows the needs of its consumers; and hairdressers like its
products. However, the company forgot about keeping their customers
happy by making sure that deliveries were on time and that there was
always enough stock. A hairdresser would for example not know whether the
tube of light golden brown colouring ordered on Tuesday would arrive on
time for the client’s appointment on Friday. This caused the sales of the
company to level off for a while. To ensure client satisfaction, the service
and the product is equally important.
Organisations can also keep consumers loyal by adopting an offensive
strategy. The objective of an offensive strategy is to create a personalised
relationship with the consumer. To ensure the success of the offensive
strategy, the brand must become a landmark of personal attention. It is
important to remember that a loyal consumer wants to be recognised.
Therefore the consumer has to be identified, a direct bond has to be
established and the consumer has to be the focus of special attention. This
is why relationship-marketing uses databases, consumer clubs and
collective events which unite the best consumers of the brand. An example
of a good relationship between a brand and its consumers is that of Nestlé,
which offers its consumers a dietician’s services per telephone.
Another strategy that an organisation can make use of to maintain brand
loyalty is to create brand loyalty at a very young age. “With billions of dollars
at their disposal and a say in how parents spend household income –
tweens and younger kids are increasingly the targets of brand building
efforts by marketers of everything from cereal to air travel.” (Rosenberg,
2001). Brand loyalty can be maintained if the young consumer is made to
feel that there is a special relationship between him/herself and the brand.
A popular method to create and maintain brand loyalty among young
consumers is that organisations are adding new ingredients to familiar
brands and lend the organisation’s brand name to a wide range of
merchandise from TV programmes to pyjamas. A good example is that the
kids will go to Burger King because of the Nickelodeon toys they receive with
the food (Rosenberg, 2001).
According to Rasmussen and Cohen (2000), another strategy to maintain
brand loyalty is to form an emotional link with consumers.
Kathman (in Rasmussen & Cohen, 2000), president of Libby Perszyk
Kathman, a brand identity organisation, concurs with Rasmussen and Cohen
“that a brand is ultimately a relationship, and that customer experiences
shape that brand.” Consumers care more about a brand when they can
define the brand for themselves. In creating a culture around the brand the
organisation helps in developing that relationship. It is also very important
for the organisation to refresh the brand and its image, in the consumer’s
mind. An example of a brand with culture is the Starbucks Coffee Shop
franchise that promotes its coffee as a lifestyle.
Another brand loyalty strategy is to promote the organisation’s values.
Organisations should promote their values in advertising by confirming their
support towards charities and community events. A good example of this
exercise is Elizabeth Anne’s baby products who donates 10 cents to the Avril
Elizabeth Home for the Mentally and Physically Disabled for every product
sold (Kathman in Rasmussen & Cohen, 2000).
4.7 SUMMARY
It is fairly simple to attract new customers. The key, however, is to retain
them. In order to achieve this, an organisation needs to build brand loyalty
towards its brand. Building brand loyalty involves continuing to serve the
customer in a satisfactory way.
In order to achieve success with a specific brand, a well-documented,
strategic brand plan is essential. Various viewpoints on brand planning were
discussed. Among others, a brand plan should include steps such as market
definition, market analysis, brand analysis, brand positioning, brand aim and
objectives, and a brand plan.
Six methods of building brand preference as seen by Alreck and Settle
(1999) were discussed and this included need association, mood
association, subconscious motivation, behaviour modification, cognitive
processing and model emulation.
The importance of a brand building strategy was highlighted and discussed.
A proper brand building strategy starts off with creating a clear
understanding of the consumer and the market. Distribution and shelf
positioning are important factors in a brand strategy. It is also essential that
the consumer knows what the brand represents and that it is present in the
market. It was found that advertising and promotions in its various forms are
key elements of a brand strategy.
Building brand loyalty is greatly affected by brand perception and the factors
that influence brand perception were discussed, namely, differentiation,
relevance, esteem, awareness and mind’s eye.
Three main sequential steps in building brand loyalty were set out. Firstly,
consumers need to be made aware of the brand, then the consumer must
develop a preference for the brand as a result of past favourable experience,
word-of-mouth or the perception created by advertising and promotions.
Finally, repeated purchase of the brand could possibly lead to the consumer
choosing the brand again and again, and over competing brands. That is
when brand loyalty comes into existence.
Brand loyalty strategies were discussed and the importance thereof to the
success of a brand was highlighted. The viewpoints of various authors on
this were discussed. Aaker (1991) was one of them and he included five
strategies in the process of creating and maintaining brand loyalty, namely,
treating the customer right, staying close to the customer, measuring and
managing customer satisfaction, creating switching costs, and providing
extras. The viewpoint of Kapferer (1999) was discussed and this included
following a defensive or an offensive strategy. The former being a process
of identifying what causes disloyalty and dissatisfaction and taking steps to
rectify the situation. The offensive strategy involves creating a personalised
relationship with the customer.
From the information that was discussed in this chapter, it became clear that
the success of a branding strategy is distinctly linked to the base of loyal
customers the brand has. It also became evident that organisations can
employ various methods and strategies to build brand loyalty. The process
of building brand loyalty is not an easy one, but it is an essential ingredient
for the success of an organisation, as the brand of an organisation that has a
solid base of loyal consumers is the key element that will ensure that
success.
The following chapter addresses the research methodology employed to
achieve the objectives of the study as well as a discussion of the results of
the research.
CHAPTER 5
RESEARCH METHODOLOGY AND RESULTS
5.1 INTRODUCTION
This chapter provides details about the empirical research process that was
followed to solve the research problem and sub-problems. The aim of the
empirical study was, firstly, to determine which factors influence the buying
preferences of consumers and ultimately influence their brand loyalty, and
secondly, what strategies organisations who own leading brands, employ to
create and maintain loyalty towards these brands.
The information on factors influencing the buying preferences and brand
loyalty of consumers was obtained through personal interviews with a
sample of consumers from an identified target population. The information
regarding the strategies organisations currently employ to create and
maintain loyalty towards their leading brands was obtained through personal
interviews with a sample of brand managers and advertising agencies from
an identified target population. The method of determining the target
populations and samples as well as the questionnaires used during the
personal interviews will be described in this chapter.
The research results and findings as well as the conclusions on these follow
the discussion of the research process.
5.2 RESEARCH METHODOLOGY
A properly designed research project should ensure the systematic planning,
gathering, recording, analysing and interpreting of data for application to
specific marketing decisions (Nel, Rädel & Loubser, 1988). These elements
are addressed below
5.2.1 Research population
Martins, Loubser and Van Wyk (1996) state that the population is the
aggregate of elements from which the sample is drawn. Aaker, Kumar and
Day (1998) concur, but add that it is important to determine the target
population.
In the case of the interviews conducted with consumers, the target
population was identified as being consumers who were responsible for, or
involved in the grocery buying process of their households. Furthermore,
these consumers also needed to be regular buyers of one or more of
mayonnaise, regular packet soup and coffee.
In the case of the interviews conducted with the brand managers and
advertising agencies, the identified target population consisted of the
organisations owning leading brands with seemingly large bases of loyal
customers.
5.2.2 Sampling
Martins et al. (1996) identify the following steps in the sampling process:
a) Defining the population. This was explained and the applicable target
populations in this research study identified in 5.2.1.
b) Identifying the sample frame. A sample frame is a record of all the
sample units available for selection at a given stage in the sampling
process. A frame may be a telephone directory, a register of industries,
or a list of brands.
In the case of the target population of consumers that had to be
interviewed, there was no recorded sample frame. In this case the
interviewers needed to visually identify consumers who could potentially
be interviewed.
A sample frame for selecting the sample of brand managers and
advertising agencies interviewed, was a list of well-known brands
obtained from The Encyclopaedia of Brands and Branding in South Africa
(1999) and an insert that appeared in The Sunday Times (Top Brands,
2001).
c) Selecting the sample. This entailed deciding on an appropriate sampling
method as well as selecting the sample elements.
Various sampling methods exist, such as random sampling, systematic
sampling and stratified sampling. Systematic sampling was used in
selecting the sample of consumers to be interviewed. The interviewers
were stationed at the entrances to retail chain stores and selected every
third customer entering the store. These customers also needed to be
part of the target population, that is, be responsible for or involved in the
grocery buying process of their households and be regular buyers of one
or more of mayonnaise, regular packet soup and coffee. This was
determined right at the outset of the interview process. If the respondent
approached was not part of the target population, the interview was
terminated immediately and another respondent was selected until
someone from the target population was found.
Judgement sampling was used in selecting the sample of brand
managers and advertising agency respondents. Judgement sampling is
used when a specialist provides a list of respondents whom he/she sees
as being representative of the target population. The Encyclopaedia of
Brands and Branding in South Africa (1999) and an insert that appeared
in The Sunday Times (Top Brands, 2001) were used to determine the top
brands on which the study was then based. This list was made up of
seven leading brands that seemingly had large bases of loyal customers.
The following step is to select the sample elements. In systematic
sampling, the sample elements are selected according to a
predetermined method. The sample of consumers selected was made
up of every third consumer entering the retail chain store who also
formed part of the target population.
In judgement sampling the researcher uses his/her own judgement as to
which units and elements he/she considers representative of the study
population. The target sample elements were selected using judgement
as to whether the brand manager or the advertising agency of the leading
brand would be able to provide useful and relevant information on
building brand loyalty.
d) Determining the sample size. Although there are statistical formulae
available to compute a specific sample size to yield a given level of
confidence for a single variable, they are of little value even to
experienced researchers (Nel, et al., 1988).
The calculations require fairly accurate estimates of population variance,
which is seldom known in advance. In addition, most surveys include
many variables and it is often not possible to calculate variances in
advance for each variable. If such calculations were performed and the
largest required sample size used, the sample size might very likely be
larger than required for all but a few variables (Nel, et al., 1988). After
discussion with a statistician (D.J.L., Venter. personal communication.
September, 3. 2001), a sample size of 303 was deemed appropriate.
5.2.3 Research technique
The researcher decided to collect data using verbal communication due to
the fact that more accurate information could be obtained. Written
communication would not have made it possible to initially identify
respondents from the target population. Written communication would also
have been more time consuming than personal interviews and a lower
response rate normally results.
Nel, et al. (1988) discusses two methods of verbal communication, namely,
the personal interview and the telephone interview. Personal interviews
were used in the data collection process of the current study.
It was the interviewer’s task to approach the respondents, ask the questions
and record the answers. In the case of the consumers, the interview
environment was retail chain stores selling the three products included in the
research. In the case of the interviews with brand owners, the environment
could not be selected by the researcher as the interviews were conducted in
the offices of the various brand managers and advertising agencies
interviewed.
Personal interviews were used based on an evaluation of the pros and cons
of this method. The guidelines for conducting personal interviews as
suggested by Martins, et al. (1996) and Aaker, et al. (1998) were followed.
The advantages listed by Aaker, et al. (1998) include:
• Face-to-face situations that arouse interest and therefore increase the
rate of participation and continuing rapport.
• High degree of flexibility, as the interviewer can prompt the respondent if
necessary.
The disadvantages associated with personal interviews are:
• Time-consuming nature.
• Administrative difficulty.
• Costly nature, as interviewers need to be compensated.
The interviewers used in the consumer survey were experienced field
workers employed by Research Surveys (Pty) Ltd. All of the interviewers
have been working as market research field workers for a number of years
and receive ongoing training. Prior to the execution of the survey, the
researcher briefed the interviewers. The researcher conducted the personal
interviews with the brand owners.
5.2.4 The questionnaire
Martins, et al. (1996) believe that questions contained in the questionnaire
should be concise and simple but should not be prompting for the desired
answer or be embarrassing.
Various types of questions that can be used (Martins et al., 1996).
Structured questions of which structured and unstructured responses are the
most common.
Structured questions could include:
• Dichotomous questions, consisting of only two fixed alternative answers
(Yes/No, Male/Female, Agree/Disagree).
• Multiple-choice questions with single answers where the response is
restricted to one of the given alternatives.
• Multiple-choice questions with multiple answers (tick one or more). This
type of question allows for more than one response.
• Checklists. A checklist typically lists attributes that the respondent is
required to rate in terms of given criteria such as importance or
applicability.
• Rankings. The respondent is asked to rank a set of items in terms of a
given criterion.
• Scaled questions. In this type of question, the respondent is required to
mark a point on a scale.
In the questionnaires used in the interviews with the consumers (See
Appendix A), the researcher used dichotomous questions, multiple choice
questions with single answers, multiple-choice questions with multiple
answers, rankings and scaled questions.
Researchers could also use open-ended questions as part of personal
interviews. According to Martins, et al. (1996), open-ended questions have
several advantages:
• They are ideal in situations where all possible answers to a given
question are not known.
• The researcher can usually deduce the reason for a particular response.
• Open-ended questions encourage the respondent to think about the
questions before answering.
• Open-ended questions may be the only ones to use if the number of
possible responses is very great.
• The respondent is allowed to answer in his/her own way.
Martins, et al. (1996) also highlight the following disadvantages of open-
ended questions:
• These questions could possibly elicit much irrelevant information.
• They lengthen the interview.
• They make coding and processing more difficult.
• The interviewer sometimes invalidates the responses in his efforts to
probe for relevant information.
Structured questions with unstructured or open responses were used during
the interviews with the brand managers and advertising agencies of the
sample of leading brands.
The appearance and layout of the questionnaire are very important factors
and essential in ensuring that relevant data is collected. Martins, et al.
(1996) feel that there should be sufficient space to record answers, the
questionnaires should not appear overly long, as this may put off both the
interviewer and the respondent and discourage them from being totally
committed to complete the questionnaire as efficiently as possible. The
questionnaire should also have a neat appearance.
Martins, et al., (1996) feel strongly that pre-testing is essential if the
researcher is to be satisfied that the questionnaire will perform its various
functions in the interview situation.
The pre-test was conducted following the proposed interview procedure and
ten housewives were interviewed. After the results of the pre-test were
processed and analysed, minor adjustments to the questionnaire were
made.
The pre-testing of the questionnaire ensured its acceptability (time taken to
complete, clarity of questions and options provided). The interviewers were
trained to ensure they understood the objectives of the research and so that
they would be able to conduct the interviews efficiently.
5.2.5 The inspection and editing of the data
“Editing entails a thorough and critical examination of a completed
questionnaire in terms of compliance with the criteria for collecting
meaningful data and with questionnaires not duly completed” (Martins, et al.,
1996).
Aaker et al. (1998) identify the role of data editing as identifying omissions,
ambiguities and errors in responses.
All questionnaires completed during the research process were subjected to
the editing process to ensure that the data collection procedure was
performed properly and to eliminate questionnaires that did not comply with
the criteria. Each completed questionnaire was inspected to determine
whether it was usable. There were no questionnaires with an unacceptably
large number of blank answers that could render the questionnaire unusable.
5.2.6 Coding
Coding is the process whereby codes are assigned to all responses to
prepare for the tabulation of the data (Martins, et al., 1996).
The researcher in preparation for the tabulation process coded all the
responses.
5.2.7 Transferring and analysis of data
”Data capturing is the transfer of data from acceptable data-collection
instruments/questionnaires into the computer” (Martins, et al., 1996).
The Department of Statistics at the University of Port Elizabeth performed
the data capturing process. The programme used to analyse the data was a
BMDP Statistical software package.
The results of the interviews with brand owners were in narrative form and
were analysed by the researcher without the use of a computer package.
5.3 RESULTS AND FINDINGS
After analysis of the data resulting from the personal interviews with 303
consumers, five brand managers and five advertising agencies, the following
results and findings came to the fore.
5.3.1 Consumer survey
Appendix A shows the questionnaire that was used during the personal
interviews conducted with 303 respondents within the FMCG market, who
buy mayonnaise, regular packet soup and coffee on a regular basis.
The questions on the demographic profile of the 303 respondents were
included in the latter part of the questionnaire, but is presented first.
The respondents were handed an income card (see Show card three in
Appendix A) with various income categories that the respondents had to
place their households in. Figure 5.1 reflects the income distribution of the
respondents interviewed.
Figure 5.1 Income distribution
The income profile was followed by the age group distribution of the
respondents. Once again the respondents had to choose an age category
they fitted into. Table 5.1 indicates the age distribution of the respondents
interviewed.
Table 5.1 Age distribution
Age categories % Distribution
18 – 25 years 13,2%
26 – 35 years 35,3%
36 – 45 years 25,7%
46 – 55 years 13,2%
56 – 65 years 8,9%
66 years and older 3,7%
0% 10% 20% 30% 40% 50%
% Distribution
1
2
3
4
5
Inco
me
1 = Below R3 999 per month, 2 = From R4 000 - R7 999 per month, 3 = From R8 000 - R11 999 per month, 4 = R12 000 and more per month, 5 = Refused
The final two questions regarding the demographic profile of the respondents
were based on the gender and population grouping. In both these questions
no prompting was involved. Figure 5.2 indicates the gender split and Figure
5.3 reflects the population grouping.
Figure 5.2 Gender split
Figure 5.3 Population grouping
The first question the interviewers asked the respondents was whether they
were responsible for, or involved in the grocery buying process in their
Male37%
Female63%
0.7%
40.9%
20.5%
34.3%
3.6%0%
10%
20%
30%
40%
50%
Asian Black Coloured White Undecided
Race
% D
istr
ibu
tion
households. If the answer was yes, the interview continued and if the
answer was no, the interview was terminated.
With the second question, the researcher determined how many
respondents bought mayonnaise, regular packet soup or coffee on a regular
basis. The results were as follows:
• 235 (77,6%) of respondents bought mayonnaise regularly;
• 219 (72,3%) of respondents purchased regular packet soup on a regular
basis; and
• 270 (89,1%) of respondents frequently purchased coffee.
The question was structured in such a way that if the respondents indicated
that they did not purchase at least one of mayonnaise, regular packet soup
or coffee on a regular basis, the interviews were closed.
Following the above questions were three statements related to mayonnaise,
regular packet soup and coffee, and the objective was to determine the level
to which the respondents agreed or disagreed with each of the statements.
The respondents were handed an agreement scale and they had to indicate
to what level they agreed or disagreed with each statement regarding the
products bought by them. The agreement scale had the following options:
1 = strongly disagree
2 = disagree
3 = neither agree nor disagree
4 = agree
5 = strongly agree
The first statement presented to the respondents was: “All . . . brands give
me the same benefits.” Table 5.2 shows the respondents’ opinions
regarding the statement as it relates to each of the products.
Table 5.2 Respondents’ agreement with the statement: “All brands
give me the same benefits.”
Product
Strongly
disagree Disagree
Neither
agree nor
disagree
Agree Strongly
agree
Mayonnaise
No.
respondents
%
respondents
31
13,1%
106
45,1%
54
23,0%
34
14,5%
10
4,3%
Regular packet
Soup
No.
respondents
%
respondents
16
7,3%
88
40,2%
55
25,1%
40
18,3%
20
9,1%
Coffee
No.
respondents
%
respondents
41
15,2%
143
53,0%
35
13,0%
36
13,3%
15
5,5%
An analysis of Table 5.2 indicates that across all three products
(mayonnaise, regular packet soup and coffee) the proportion of respondents
who disagreed and strongly disagreed with the statement far exceeded
those who were in agreement. This figure was highest in the case of coffee,
where a total of 68,2% of respondents indicated that all brands do not
provide the same benefits.
With the second statement, “I like to try new brands”, the researcher
attempted to determine to what extent the respondents would like to try new
brands of mayonnaise, regular packet soup and coffee. Figures 5.4
(mayonnaise), 5.5 (regular packet soup) and 5.6 (coffee) provide a visual
picture of the responses received from the respondents.
Figure 5.4 Respondents’ agreement with the statement: “I like to try
new brands of mayonnaise.”
0%5%
10%15%20%25%30%35%40%
% D
istr
ibu
tio
n
Stronglydisagree
Disagree Neither agreenor disagree
Agree Stronglyagree
Agreement level
From Figure 5.4 it is evident that the majority of the respondents either
disagreed (33,6%) with the statement, implying and that they did not like to
try new brands of mayonnaise, or were indifferent (39,1%) as to whether
they liked to try new brands of mayonnaise. Furthermore, 7,2% strongly
disagreed with the fact that they liked to try new brands of mayonnaise, while
17,9% agreed that they liked to try new brands of mayonnaise. Only 2,1%
strongly agreed with the statement that they liked to try new brands of
mayonnaise.
Figure 5.5 Respondents’ agreement with the statement: “I like to try
new brands of regular packet soup.”
Figure 5.5 gives a clear indication that the majority of respondents (42,5%)
felt indifferent as to whether they liked to try new brands of regular packet
soup.
0%5%
10%15%20%25%30%35%40%45%
% D
istr
ibu
tio
n
Stronglydisagree
Disagree Neither agreenor disagree
Agree Stronglyagree
Agreement level
Figure 5.6 Respondents’ agreement with the statement: “I like to try
new brands of coffee.”
According to the analysis provided in Figure 5.6, a total number of 122
respondents (45,2%) of the 270 respondents, who bought coffee on a
regular basis, indicated that they disagreed with the statement that they liked
to try new brands of coffee. This is in sharp contrast with the opinions on
mayonnaise and packet soup.
“I prefer to buy a specific brand of . . . ” was the third and final statement the
interviewers asked the respondents.
Mayonnaise (37,4%) and coffee (44,1%) had a strong representation of
respondents who agreed with the statement that they preferred to buy a
specific brand of mayonnaise or coffee. Regular packet soup, on the other
hand, received a more indifferent response. Thirty-two percent (71)
respondents said that they neither agreed nor disagreed with the statement,
while 28,8% (62) respondents said that they agreed with the statement.
0%
10%
20%
30%
40%
50%%
Dis
trib
uti
on
Stronglydisagree
Disagree Neither agreenor disagree
Agree Stronglyagree
Agreement level
A discussion of the implication of the above findings is given in Chapter six.
The next few questions were more direct and related to mayonnaise, regular
packet soup and coffee, respectively.
With the first question that focused on mayonnaise, the researcher
attempted to determine what brand of mayonnaise the respondents
purchased most often. Appendix B shows the various brands of
mayonnaise that were mentioned by the 235 mayonnaise users. The three
most prominent brands were Crosse & Blackwell with 33,2% (78
respondents), Nola with 31,5% (74 respondents) and Epic with 6,8% (16
respondents).
The respondents were also given the opportunity to indicate their reasons for
using a particular brand of mayonnaise. See Table 5.3 for an analysis of the
responses received on this question.
Table 5.3 Reasons for mayonnaise preference
Reasons for preference % Users choosing this
reason
Taste 63,4%
Price 36,2%
Quality 34,0%
Value 22,1%
Loyalty 17,0%
Other 5,4%
From Table 5.3 it follows that taste was the most important factor influencing
the brand of mayonnaise preferred. Other reasons not listed included:
• “Because I use it in many other things.”
• “It lasts for a long time.”
• “It does not need to be refrigerated.”
• “Children love it and use it as a spread.”
• “Tastes good and is always available.”
• “It is not sour and it is affordable.”
The list below provides the options given to respondents to indicate what
they would do should their regular brand of mayonnaise be out of stock at
the outlet were they purchased their groceries on a regular basis:
• Will buy an alternative brand.
• Will wait until my brand is in stock again.
• Will buy my brand at another outlet.
Sixty-one percent claimed that they would purchase an alternative brand of
mayonnaise, 35,9% indicated that they would purchase their regular brand of
mayonnaise at another outlet, while 2,6% said that they would rather wait
until their regular brand of mayonnaise was in stock again.
Figure 5.7 indicates an analysis of how many times within the last twelve
months the respondents had bought a brand of mayonnaise other than their
regular brand.
Figure 5.7 Purchases of other mayonnaise brands
The same questions as discussed above, were posed to regular buyers of
packet soup.
15.5%
15.5%
23.6%
45.5%
0% 10% 20% 30% 40% 50%
1
2
3
4
No
. of
tim
es
% Distribution
1 = Not once, 2 = Once, 3 = Twice, 4 = Three times or more
There were 219 respondents who said that they purchased regular packet
soup on a regular basis. The most popular brand was Royco (41,1%),
followed by Maggi (15,5%), Knorr (6,8%) and Imana (6,4%). A list of the
other brands that were mentioned can be seen in Appendix C and represent
the balance of 30,2%.
Figure 5.8 illustrates the reasons for the regular packet soup brand
preference of the respondents. An analysis of Figure 5.5 shows that taste
(59,8%) and price (40,6%) were the most prominent reasons why the
respondents preferred a specific brand.
Figure 5.8 Reasons for soup purchases
Figure 5.9 shows what the respondents would do should their regular packet
soup be out of stock at the outlet where they usually purchase this product.
16.9%
40.6%
25.1%
59.8%
23.7%
2.4%
0%
10%
20%
30%
40%
50%
60%
70%
Loyalty Price Quality Taste Value formoney
Other
Reasons
% D
istr
ibu
tio
n
Figure 5.9 Actions of respondents should their preferred brand of
regular packet soup be out of stock
Figure 5.9 shows that 72,9% of the respondents would purchase another
brand and 23,4% would purchase their preferred brand of regular packet
soup at another outlet.
Table 5.4 reflects how many times, within the last 12 months, the
respondents had bought another brand of regular packet soup.
72.9%
1.8%
23.4%
1.9%
Will buy an alternative brand Will wait until my brand is in stock again
Will buy my brand at another outlet Other
Table 5.4 Purchases of other brands of regular packet soup
No. of times % Respondents
Not once 31,5%
Once 24,1%
Twice 16,2%
Three times or more 28,2%
Table 5.4 shows an almost even spread between those that have bought
other brands of soup at least three times over the past year and those that
did not do so at all.
The last section where the questions were focused on one specific brand
was based on coffee. In this case, 270 respondents indicated that they used
coffee on a regular basis.
Figure 5.10 is a visual picture of the seven most popular coffee brands that
were mentioned by the respondents. The top seven brands represent 88,3%
of all the coffee brands that were mentioned by the 270 respondents. The
balance of the coffee brands that were mentioned can be seen in Appendix
D.
Figure 5.10 Most purchased brands of coffee
The respondents provided various reasons for preferring their specific brand
of coffee. The most popular response was taste at 63,9%, while the
respondents also listed price (32,0%), quality (31,2%), loyalty (24,5%), value
(17,1%) and various minor reasons (5%).
Table 5.5 provides a clear indication what the coffee users would do should
their regular brand of coffee be out of stock at the outlet where they normally
buy their coffee.
4.5%
9.0%
16.9%
9.8%
40.6%
3.0% 4.5%
0%
10%
20%
30%
40%
50%
% D
istr
ibu
tio
n
1Coffee brands
Ciro Frisco Koffiehuis Nescafe Ricoffy Shoprite brand Ace
Table 5.5 Actions during out of stock situations for coffee
Respondents’ actions % Respondents
Will buy an alternative brand 50,0%
Will wait until my brand is in stock again 4,8%
Will buy my brand at another outlet 42,2%
Will buy tea 2,2%
Will not buy anything 0,4%
Always been able to get my brand 0,4%
Fifty-three percent of the coffee users said that they had not purchased
another brand of coffee within the last 12 months, while 21,1% bought
another brand once, 12,2% twice, and 13,0% three times or more within the
last twelve months.
5.3.2 Survey of brand owners
The researcher also conducted personal interviews with five brand
managers and five account directors from advertising agencies representing
various prominent brands within the South African fast moving consumer
goods market. The questionnaire that was used during the interviews can
be seen in Appendix E. The findings of the survey with brand owners are
presented here, while the interpretations and conclusions are included in
chapter six. The questions and responses are discussed below.
• Do you believe that brand loyalty still exist among the consumers
within the FMCG market?
Only one respondent said that brand loyalty did not exist anymore,
because consumers were looking around for price promotions.
The remainder of the respondents felt that brand loyalty existed. The
reasons given by the respondents as to why they felt that brand loyalty
still existed, are presented below.
The brand manager for Ricoffy, Lethiwe Motloung, said “…brand loyalty
still existed to some extent, but it was not pure loyalty anymore, because
consumers were not saying that they would buy their specific brand
whatever happened. Consumers tended to identify themselves with a
brand, not only for what the brand delivered, but more for what the brand
stood for in the consumer’s mind.”
Monde Keebine, the Simba brand manager, believed that brand loyalty
still existed within specific product categories, where companies were
using advertising to build loyalty. Monde concurred with the group
product manager at Nestlé, Wayne Emslie, that loyalty was very alive in
the black market. They both believed that the disposable income of
consumers within the black market was low and this led to the fact that
they were not prepared to take risks with purchasing another brand.
Bridget Good, managing partner at Optimedia strongly believed that
brand loyalty existed because of the following reasons:
• Consumers know what they want and receive from their brands and
that is why they keep purchasing a specific brand.
• A brand can reflect a specific social status that the consumer can
relate to.
• The last brand that the consumer bought will always be in the
consumer’s subconscious mind.
• What bases do you think consumers use to differentiate between
homogeneous products?
Seven of the respondents said that price was one of the determining
factors, while three respondents believed that it was distribution; two
respondents mentioned packaging and brand association as factors that
consumers use to differentiate between homogeneous products.
Other factors that were mentioned by the respondents were:
• quality; and
• product benefits.
Ms Keebine believes that the selling point of the product that is being
marketed, for example taste, differentiates homogeneous products.
Examples of taste is Simba Chips versus Willards Chips and Dairymaid
ice cream versus Ola ice cream, to mention a few. These products are
the same, but consumers mostly purchase the brand that offers the taste
that will satisfy their needs.
Account director at J. Walter Thompson, Jenni Holmes, went on to say
that when consumers need to select a product from homogeneous
products, the consumer will purchase the product that he/she knows or is
aware of. However, the consumer may also purchase a product that has
been advertised and is on his or her mind.
• Was there a shift in brand loyalty in the last five years? If yes, what
do you think are the reasons for such a shift?
All the respondents said that there was a shift in brand loyalty in the last
five years. Some of the most prominent reasons were:
• Consumers in the informal market are more brand loyal due to the fact
that their disposable income is less and that it is risky to purchase
another brand.
• The upper LSM’s are less brand loyal because there are more brands
of one specific product than five years ago. This is mainly due to the
fact that the South African market is more open to the rest of the
globe, resulting in a bigger variety of brands.
• Consumers are more sophisticated and younger consumers are more
educated than older consumers.
• Consumers question a brand’s performance much easier and much
more often than in the past. Should a brand’s performance not be
consistent, consumers will not hesitate to switch to another brand.
• What do you think makes consumers brand loyal?
Most of the respondents believed that to satisfy consumers’ needs
constantly was enough to ensure that consumers would come back and
purchase the same brand over and over again. It is also very important
that the brand delivers what its marketing people communicate to the
market, not just on the message, but also the intrinsics of the brand. For
example, a coffee manufacturer cannot market a product as a
decaffeinated coffee when, in fact, it contains caffeine. The consumer
wants to know that with every purchase of the brand the quality will be
the same. Should the consumer have a few bad experiences with the
brand, it would be difficult to be brand loyal towards the brand.
Mr Emslie feels that brand loyalty does not happen overnight, but gets
built over years. He said that the best product at the most affordable
price, where the consumer pays for what he gets, makes the consumer
loyal towards a brand. Mr Emslie also believes that the packaging of the
brand contributes towards brand loyalty. The packaging should stay
constant and should only go through major changes when a new brand
product gets launched. An ideal opportunity for a packaging change is,
for example, when Crosse & Blackwell mayonnaise introduces a new
squeezy type bottle mayonnaise.
Natalia Marin, account director at Ogilvy & Mather, concurred with Ms
Good that special offers and consumer promotions make consumers
loyal towards and brand.
• How do you measure brand loyalty?
All the respondents agreed that brand loyalty could be measured by
making use of the following methods:
• Monitoring of the brand’s sales volumes.
• Constantly monitoring the brand’s market share (measured by AC
Nielsen on a bi-monthly basis).
• Distributing brand share across all sectors of the market.
• Monitoring sales volumes during a consumer promotion.
• Facilitating focus groups.
• Doing consumer research.
Ms Motlaung believes that there are two methods to measure brand
loyalty. The first method is called a usage and attitude study. This study
gets done every three years and its objectives are long term. The study
can research the following:
• How many consumers use the brand?
• How many times do consumers use the brand per day?
• How many times do consumers use and purchase the same specific
brand?
• What are the consumers’ attitudes towards the brand?
The second method is the consumer tracking method. This exercise is
performed every three months and is ongoing. Normally this method
tracks the same elements or consumer attributes by using the same
universe of consumers.
The senior brand manager at National Brands, Guilliette Morrison, feels
that a tracking study is the best way in which to measure brand loyalty,
although it is expensive. The study is based on quantitative research that
gets done every second or fourth month, measuring a twelve-month,
moving average of the brand. The study measures the brand’s attribute
awareness, advertising awareness and benefit awareness. When the
study is developed, it is important that it is done in contrast with the
competing brands.
• What strategies do you utilise to create, maintain and enhance
brand loyalty?
To complete the above questions, the respondents had to indicate if a
company should adopt a single strategy or a combination of strategies to
achieve each of the above.
Each respondent’s feedback to the above questions is discussed next.
Ms Keebine noted that the creation, maintenance and enhancement of
brand loyalty were handled separately in the past, but due to financial
limitations, organisations apply a single strategy nowadays.
An organisation should have a short- and a long-term strategy. The
short-term strategy should consist of the following:
• Promotions, like buy one product and get one free, on-pack
competitions and coupon promotions.
• The brand should act as a sponsor at special events to create some
excitement around the brand.
The long-term strategy should focus more on advertising campaigns by
using television to convey the brand message. It is also important that
there is synergy between above the line and below the line advertising.
Ms Morin said that an organisation should apply one strategy, depending
on the brand and the product life cycle to create, maintain and enhance
brand loyalty. Ms Morin recommended the following two strategies:
• Consumer relationship marketing (CRM). With this strategy the
organisation talks to the consumers on a one-on-one basis. The
organisation must be in contact with the consumers on a regular basis
and it should be a two-way communication process. The objective of
this approach is that loyalty is a core ingredient of the concept. The
organisation can make use of loyalty programmes or give the
consumers an add-on, free of charge with the purchase of a certain
product. An example of this is where an organisation offers a points
system whereby the consumers receive redeemable points for every
product purchased. An added advantage is that the organisation can
then build up a database of its consumers.
• Three hundred and sixty degree strategy. This strategy ensures that
the organisation covers all points of contact with the consumer, for
example the new home shopping concept that Pick & Pay is offering.
Consumers therefore now have more options available doing their
shopping. It is important that this approach is used in conjunction with
the organisation’s marketing mix.
To create, maintain and enhance brand loyalty: Ms Good felt that an
organisation should have a separate strategy for each of these
objectives. In order to create brand loyalty, Ms Good believed that there
should be very active interaction between the brand and the consumers.
The organisation should determine why and where consumers consume
the brand. Once the organisation has answers to these two questions it
can interact with the consumers to create brand loyalty. To succeed in
creating brand loyalty, the organisation must ensure that the interaction is
of such a nature that the consumer can taste, touch and see the brand.
An example of this is Nestlé Foods presenting cooking demonstrations
where chefs can cook with Nestlé products and the consumers can be
exposed to the various uses of Nestlé products and also taste the
products and dishes.
To maintain brand loyalty, Ms Good felt that the organisation should see
that the brand is supported through different points of contact between
the brand and the consumer. Contact options available to an
organisation are via cinema, radio and magazine advertising. Ms Good
also believed that an organisation could make use of line extensions and
new products to maintain brand loyalty. A consistent approach is
important to ensure success.
According to Ms Holmes, a brand should have a brand strategy and by
using the strategy the consumers could become brand loyal. The major
element of the brand strategy should be communication. Furthermore,
the core of the brand strategy should not change. Just a few things
should change here or there, depending on where the product is in its life
cycle.
An organisation should have separate strategies to create, maintain and
enhance brand loyalty, said Ms Van Eeden. To create brand loyalty an
organisation should apply an above the line advertising strategy, and to
maintain brand loyalty the organisation should combine below the line
activities with brand promotions. Loyalty programmes should be used to
enhance brand loyalty.
Mr Emslie concurred with Ms Van Eeden by saying that an organisation
needs separate strategies for the creation, maintenance and
enhancement of brand loyalty. Mr Emslie was of the opinion that the
following strategies can be used to create and maintain loyalty towards a
brand.
The creation of brand loyalty should have a strategy with a long-term
objective, normally over a period of five years. Over this period, the
organisation should not make major changes to the strategy. It is also
important that the organisation has short-term strategies that form part of
the long-term strategy and its objectives. The short-term strategies
should be measurable. One of the most important objectives of the
creation strategy is that the organisation should ensure that the brand is
available wherever it is consumed.
Secondly, when the consumers are looking for a specific product, the
organisation’s brand will be the preferred choice if it is the brand that is
most readily available.
The following are strategies that an organisation can use to achieve the
above objectives:
• Activities should be ‘in the face’ of the potential consumers all the
time; for example, television, radio and magazine advertising as well
as in-store promotions.
• On-street promotions, or presence like billboards and store paintings.
• Ensuring that the brand is priced in line with the opposition.
Mr Emslie also believed that the creation strategy could be a very specific
strategy like in the case of Crosse & Blackwell Mayonnaise. Currently,
the brand is losing market share to one of the major opposition brands in
the Western Cape. The organisation (Nestlé) developed a strategy for
the brand assuming that consumers were brand loyal. Nestlé has built
the strategy around the fact that Crosse & Blackwell Mayonnaise is
manufactured in the Western Cape and those consumers should support
their local brand of mayonnaise. All the media promotions and point-of-
sale activities are based on the Western Cape culture to ensure that the
consumers can relate to the brand.
To maintain brand loyalty, a brand needs a consistent approach. An
organisation can use a drip strategy, depending on the brand. A product
like coffee is ideal for a drip strategy, because it is a strategy that sells
throughout the year. The drip strategy ensures that the strategy is split
over a period of twelve months and not only during certain months of the
year. The most prominent strategies are consumer competitions, media
advertising and consistent pricing.
Ms Dow believed that the following two strategies can be used to create
and maintain brand loyalty.
Firstly, an organisation can make use of UNA studies that test the
consumers’ perceptions of the brand to determine if they think that the
brand is still the same and that nothing has changed. This study
monitors and ensures that the brand is still on the shelf, that the shelves
are well stocked with the brand and that the opposition has not “stolen”
any shelf space.
Secondly, it is important that the organisation stays on top of
developments of new brands and innovation to support and protect its
brand against the opposition and against foreign brands entering the
market. It is very important to monitor the situation on an ongoing basis.
To enhance brand loyalty, Ms Dow felt that the organisation should
introduce its brand to a segment of the market that has not been exposed
to the brand before. A good example is the black-market where there are
still many opportunities to introduce new flavours or brands. Ms Dow
also believed that product extension and new products contributed to
brand loyalty enhancement.
Ms Morrison said that personal and business experience had shown that
loyalty does not come through promotional advertising, pricing or
distribution strategies, but that these are simply marketing activities. To
create and maintain brand loyalty, an organisation needs to keep its
consumers 100% satisfied and also understand what the consumers
need, because if the consumers are satisfied with the brand they will not
change to another brand. In order to be successful with the creation and
maintenance of brand loyalty, the organisation needs to be innovative.
The organisation must deliver brands that will constantly satisfy the
needs of consumers.
According to Ms Motlaung, it depends on the brand’s objective whether
there should be different strategies to create, maintain and enhance
brand loyalty. A good example is Nescafé coffee that currently has a
global objective to grow the youth market; however, the brand still needs
to maintain the loyalty of current, older consumers.
To create brand loyalty, the following should be included in the strategy:
• The brand must deliver on what it promises. It is also important that
this delivery is consistent. If the product maintains delivering on the
brand’s promises and keeps on meeting the consumers’ needs
consistently, consumers will keep on buying the brand.
• The brand should always be available where and when consumers
are looking for it. This will help to prevent consumers trying another
brand. Once consumers have tried another brand, the possibility
exists that they will turn their backs on their regular brand.
• It is also very important that the price the consumer is paying for the
brand is in line with what the brand is offering the consumer. Equally
important is that the price is in line with that of the opposition’s
brands.
• The communication activities should be relevant to the brand and the
consumers who purchase it. For example, if it is an upmarket brand,
it should appear in activities that consumers feel are upmarket.
• It is also important that the organisation apply relationship marketing.
The objective of relationship marketing must be to inform consumers
that the brand is part of the community and the consumer’s life. The
organisation needs to convey the message that it is not only
interested in the consumer’s money, but also in the wellbeing of the
community. A good example of relationship marketing is branded
Coca-Cola containers that can be used by hawkers as stalls in their
communities.
Furthermore, Ms Motlaung said that organisations spend less money on
creating brand loyalty than on the maintenance and enhancement of
brand loyalty. The major objective in seeking to maintain and enhance
brand loyalty should be to remind consumers that they should purchase
the organisation’s brand. The reminder strategy should not be a
consistent ‘hammering’ through advertising, but should be a more
persistent, subtle approach. An example is to advertise a product like
coffee close to office blocks to remind consumers of your brand just
before they buy their first cup of coffee for the day.
Ms Motlaung also agreed that it is important to make use of innovation,
for example new products, product extensions and consumer rewards.
Consumer rewards could include add-ons and consumer competitions to
ensure brand loyalty is maintained and enhanced.
• What strategies do you implement to build a brand?
Most of the respondents said that an organisation could build a brand by
implementing an awareness strategy. The objective of this strategy
should be to make the consumers aware of the brand. It is not enough to
list the brand at all the grocery chain groups in order to get the brand
onto the shelves: if consumers are not aware of the brand, the
organisation is wasting its time and money.
The awareness strategy should be a long-term approach and most
importantly, the brand must deliver what it is promising the consumers. It
is important to make the brand part of consumers’ lives. To achieve this,
the consumer should have daily contact with the brand. A well-structured
distribution and communication strategy will ensure daily contact between
the brand and consumers.
Both the distribution and communication strategies form part of the
awareness strategy in building a brand. The distribution strategy should
ensure that the brand is always available wherever and whenever the
consumer wants to purchase it. With the communication strategy the
organisation wants to remind the consumer on a continuous basis of the
existence of the brand and also what the brand offers the consumer.
According to the respondents, organisations are moving away from
television advertising due to the fact that it is getting too expensive and
that other alternatives result in more frequent and closer contact between
the brand and consumers. Other alternatives that are often used are:
• outdoor advertising;
• event sponsorship;
• magazines;
• radio advertising;
• consumer tastings;
• road shows; and
• advertising on taxis and bus stop shelters.
Ms Van Eeden and Ms Keebine believed that a brand loyalty strategy is
another element of a brand building strategy, whereas Mr Emslie felt that
building a brand is the same as creating brand loyalty.
Ms Motloung said that building a brand should have three pillars:
• Brand availability. The brand should be available to consumers
wherever and whenever it is needed.
• Consumer communication. It should be communicated to the
consumer what the brand represents and offers.
• Renovation and innovation. Whatever the brand offers should be in
line with and keep up with the consumer’s changing needs.
• If your brand is not on the shelf, what do you think your customers
will do?
Most of the respondents said that the consumers would purchase an
opposition brand, especially if there was a good quality substitute
available. It also depended on the product type. Should the product be
one like baby food, the consumer would rather wait until the product was
in stock again or would buy their regular brand at another outlet where it
was available.
The risk factor will also influence the consumer’s action. Should the
product be a high value product, the consumer would not purchase an
alternative easily because of the high risk involved in doing so.
Should the consumer be brand loyal and there was a good relationship
between the brand and the consumer, the consumer would purchase the
brand at another store or wait until the brand was available or in stock
again.
5.4 SUMMARY
In order to perform a successful empirical study, it is imperative that certain
steps are followed and certain elements are present. The steps followed in
the empirical research process were discussed. These included defining the
research population, the sampling process, the research technique, the
questionnaire, the inspection and editing of data, coding, and, finally, the
transfer of data.
The target populations were defined for both questionnaires that were used
in the research process. The target population for the consumer survey was
identified as being people responsible for or involved in the buying of
groceries in their households. The target population for the survey of brand
owners was a list of brand managers or advertising agencies marketing
leading brands.
The questionnaires were completed through personal interviews. The
interviews for the consumer survey were performed by a number of field
workers employed by a research company, Research Surveys. Prior to
commencing the personal interviews, the researcher briefed these
interviewers. The researcher himself performed the interviews for the survey
of brand owners. Among other things, the advantages and disadvantages of
personal interviews were discussed.
The results and findings of both the consumer survey and the survey of
brand owners were discussed. This included statistical detail of the
responses to each of the questions posed to the 303 respondents
interviewed during the consumer survey. Graphs, pie charts and tables were
also used to illustrate the statistical results. The responses received from
the brand owners who were interviewed were given in narrative form.
This chapter described important information obtained during the research
process in order to solve the research problem and sub-problems. The
consumer survey provided valuable information regarding the consumers’
preferences with respect to mayonnaise, regular packet soup and coffee.
Other information obtained was the reasons for these preferences, how often
brands other than the preferred brand were bought during the preceding
twelve months and the consumers’ actions when their preferred brand is not
available at the outlet they normally buy it from.
The survey of brand owners provided useful insight into the perceptions of
the owners of leading brands regarding the existence (or not) of brand
loyalty, how to create, maintain and enhance brand loyalty and what they
thought consumers do when their preferred brand is not on the shelves.
Following on the research methodology and results discussed in this
chapter, the next chapter provides details of the synopsis of the chapters,
while the conclusions and recommendations culminating from the results of
the research are also discussed.
CHAPTER 6
SYNOPSIS, CONCLUSIONS AND RECOMMENDATIONS
6.1 INTRODUCTION
With competition within the FMCG market increasing rapidly, the traditional
sources of competitive advantage no longer provide long-term security for an
organisation. Companies are starting to recognise the true value of the
brands they own and that they can maximise their potential financial returns
by maximising the power of their brands.
In order to survive in such an environment, organisations need to proactively
formulate and adopt strategies that will enable them to establish a strong
base of customers that are loyal towards the organisation’s brand, while
concurrently countering threats placed upon them by competitor brands. A
constant vigilance is thus required in creating and maintaining loyalty
towards a brand and keeping the providers of surrogate products at bay.
Building brand loyalty is not a simple process and organisations should
realise that it is a long-term process with many facets.
Mindful of the factors mentioned above, the researcher embarked upon a
systematic process of gathering relevant and reliable information about
building brand loyalty within the FMCG market. The knowledge gained from
the research enabled the researcher to draw conclusions on what strategies
organisations operating within the highly competitive FMCG market could
implement to create and maintain loyalty towards its brands.
A brief overview of the content and scope of the preceding chapters are now
presented.
6.2 SYNOPSIS OF CHAPTERS
6.2.1 Chapter one
Chapter one focused on explaining the background to the study. The main
research problem and sub-problems were defined and the significance of the
research was comprehensively outlined.
The researcher discussed the factors for delimitation of the research and key
concepts were defined to provide a clear understanding thereof at the outset
of the study.
A review of literature was provided the research methodology used was
justified
6.2.2 Chapter two
Chapter two consisted mainly of an investigation into the meaning of the
concept of a brand.
A literature study was embarked upon to obtain the viewpoints of various
authors and these were documented. This enabled the researcher to
present a solid information base regarding the definition, characteristics,
functions and the importance and value of brands.
6.2.3 Chapter three
Chapter three focused on examining the concept of brand loyalty. The
researcher presented the findings of a study of the relevant literature
regarding the various definitions that exist for brand loyalty.
It was found that it is important to measure brand loyalty on a continuous
basis. The ways in which to measure brand loyalty were then discussed.
These include measuring purchasing behaviour over a period of time,
switching cost measurement, measuring satisfaction, determining if
consumers like the brand, establishing the number of committed consumers,
share of category requirement, and market share and distribution data.
The researcher found that there are various factors that drive brand loyalty,
the main ones being:
• satisfaction;
• value (price and quality);
• availability; and
• image (both the brand’s personality and its reputation).
Brand loyalty was also found to have a number of levels and phases. Two
approaches to the levels of brand loyalty were discussed. The first approach
consists of potential loyals, pseudo loyals and, active and committed loyals.
The second approach included switchers, habitual buyers, satisfied buyers,
buyers who like the brand and committed buyers. The phases of brand
loyalty included cognitive loyalty, affective loyalty, conative loyalty and action
loyalty. In closing, brand loyalty was described in relation to brand equity.
6.2.4 Chapter four
Chapter four addressed the strategies to build brands and brand loyalty.
The researcher started off by discussing the merits of brand planning as
stated in literature as well as some characteristics that can possibly hinder
the success of a brand. The opinions of various authors of literature
regarding the brand planning process were discussed.
The literature study revealed that there is no golden recipe for success when
it comes to building a brand, but the elements that are likely to appear in the
brand building strategies of most organisations are:
• brand positioning;
• distribution;
• advertising and promotions; and
• differentiation.
Another aspect investigated by means of a literature study was the concept
of building brand loyalty. It was found that organisations should have
various types of brand loyalty strategies, depending on the situation. The
strategies could include creating, maintaining and reinforcing brand loyalty.
A number of possible strategies were highlighted and discussed.
6.2.5 Chapter five
Chapter five dealt with the research methodology and results. The details
about the research process followed to obtain information on the research
problem and sub-problems were outlined. The discussion of the research
methodology included defining the research population, the steps followed in
the sampling process, the research design, the data collection procedure,
the inspection procedure and the editing, coding and transferring of data.
Thereafter the results and findings of the brand loyalty surveys conducted
with both the consumers and the brand owners were presented. Where
applicable use was made of graphs, pie charts and tables in depicting the
results of the consumer brand loyalty survey. The results of the brand
loyalty survey conducted with the brand owners were presented in narrative
form.
6.3 CONCLUSIONS
Due to increased competition in the FMCG market, both locally and globally,
the traditional sources of competitive advantage no longer exist. In other
words, leadership in price and quality is not enough to ensure the success of
a product anymore. Brands are among an organisation’s most valuable
assets and if organisations maximise the power of their brands, they could
maximise their potential financial returns. Organisations can experience
exponential growth if they recognise the true value of brands and capitalise
on that by creating good, trusted brands.
The fundamental objective of the research was to make a meaningful
contribution and to generate accurate information that would assist the
researcher in drawing conclusions on building brand loyalty in the FMCG
market.
The main objective of the research was to identify the strategies an
organisation could implement to achieve and sustain loyalty from current and
prospective consumers towards its brand in a highly competitive FMCG
market.
From the main research problem, the following sub-problems were derived
and the conclusions following from the study with respect to these sub-
problems are discussed below.
6.3.1 On what basis do consumers differentiate between homogenous
products?
The empirical research performed with brand owners showed that the main
determining factor was seen to be price, while distribution, packaging and
brand association were also prominent factors, but less prominent than
price. Quality and product benefits such as taste were also mentioned.
6.3.2 What variables motivate consumers to be brand loyal within the
FMCG market?
From the empirical research performed with consumers, it was clear that
taste was by far the most prominent variable that motivates consumers to
continue using the same brand. This was the case with all three types of
products that were used in the survey (mayonnaise, regular packet soup and
coffee). Price was next on the list of most prominent variables, while quality,
value and loyalty were ranked after price. Marketers and organisations in
the FMCG market could therefore focus on taste and price in their
promotional programmes.
The literature study revealed that there are a number of drivers of brand
loyalty, the main ones noted being satisfaction, value (price and quality),
availability and image (both the brand’s personality and its reputation).
6.3.3 What strategies can an organisation within the FMCG market
utilise to create and maintain brand loyalty towards its brand?
The findings of the empirical study conducted with brand owners showed
that the majority of the brand owners were of the opinion that one strategy
should be implemented in order to both create and maintain brand loyalty. It
thus follows that creating and maintaining loyalty is an integrated effort.
The following strategies have an influence on creating and maintaining brand
loyalty:
• Promotional strategies identified in the empirical study include activities
such as buy one product and get one product free, on-pack competitions
and coupon promotions. It is important that these promotional activities
are carried out in a manner that will ensure that consumers can relate to
the brand. Active interaction between the brand and the consumers were
believed to be critical and the interaction should be of such a nature that
the consumer can taste, touch and see the brand.
Staying close to the consumer through active interaction was also
identified by literature as being important in creating and maintaining
brand loyalty. Regular consumer contact by the organisation sends a
signal that the consumer is valuable to the organisation.
It can therefore be concluded that interaction and communication with
consumers is of utmost importance in building and maintaining brand
loyalty.
• Advertising and communication strategies through various forms of
media such as TV, radio and magazines, as well as on-street presence
for example billboards and store paintings are important. These
advertising activities should be in the face of the consumers, but it should
not be a consistent hammering approach, but rather be more persistent
and subtle. It is very important that the advertising conveys the brand
message to consumers.
Literature also identified that organisations should promote their values in
advertising through the use of a brand message. It hence follows that
advertising (as mentioned above) can enhance contact with the
consumer.
• Consumer relationship marketing strategies were felt to be effective in
creating and maintaining brand loyalty. These strategies may include
customer loyalty programmes, free of charge add-ons with the purchase
of certain products and involvement in the community and in the
consumers’ lives.
According to literature, providing a few unexpected extras to consumers
is sometimes all that is needed to make a good impression on the
consumer about the brand. This is also identified in literature as an
offensive strategy that has the objective of creating a personalised
relationship with the consumer. A loyal consumer wants to be rewarded
and therefore customer loyalty programmes and free of charge add-ons
are useful in achieving this objective. Another way in which to create and
maintain brand loyalty is to create switching costs. Customer loyalty
programmes were mentioned as one way of doing this.
Staying close to the consumer, communication and advertising will thus
contribute to the building of relationships between the consumer and the
brand.
• The pricing strategy was thought to be an important factor and more
importantly, that the price of a brand is consistent with what the brand
offers to consumers as well as with the prices of competitor brands.
• Organisations need to keep abreast of technology and innovation so as
to continue to satisfy the changing needs of consumers. This innovation
should be evident in the brands that organisations put on the market. To
do this an organisation would have to monitor developments on an on-
going basis. Line extensions, new products and improvements to
existing products are examples of innovation being implemented.
• Long term relationships are built on trust. The brand must deliver on
what it promises. It is important that this delivery is consistent and that
the brand keeps on meeting the consumers’ needs. Keeping consumers
satisfied is an essential factor for creating and maintaining brand loyalty.
Treating the consumer right is an all-important element as stated in
literature so as to create and maintain brand loyalty. Consumers should
be treated with respect and this can only be achieved if the consumers’
needs are met consistently.
The research thus showed that keeping promises and treating
consumers and their needs with respect would enhance brand loyalty.
• The brand should also be available when and where it is consumed. This
will entail that an organisation’s distribution of the brand is accurate and
timely.
The above conclusions showed that there is harmony between the literature
and the empirical findings of the research.
Additional factors derived from literature, but not evident from the empirical
study are discussed below.
• Organisations should perform regular marketing research to determine
whether consumers are satisfied or dissatisfied. Consumer satisfaction
should therefore be measured and managed.
• A defensive strategy is also outlined by literature as being a tool that
could be used to create and maintain brand loyalty. This strategy entails
identifying the causes of disloyalty, and dissatisfaction among
consumers. Research has proved that treating consumers well will result
in consumers becoming more brand loyal. Treating complaints with
diligence, care and respect is therefore of utmost importance.
• Another strategy that organisations can employ is to create brand loyalty
at a very young age. A popular method is to add new ingredients to
familiar brands and lend the organisation’s brand name to a wide variety
of merchandise.
• Forming an emotional link with consumers is another way in which to
create and maintain brand loyalty. Consumers’ experiences of the brand
is an important factor and consumers care more about a brand when they
can define the brand for themselves.
6.3.4 How can on organisation go about building a brand?
The findings of the empirical study showed that the key factor in building a
brand is to have an awareness strategy. Consumers should be made aware
and be continuously reminded of the brand. This should be a long-term
approach and it requires daily contact with the consumers of the brand. The
awareness strategy consists of the distribution and communication strategies
of a brand. A well-structured distribution and communication strategy will
ensure daily contact between the brand and consumers.
The brand owners interviewed during the empirical study were of the opinion
that the distribution strategy should ensure that the brand is always available
wherever and whenever the consumer wants to purchase the brand. The
findings of the literature study confirmed that distribution is a key element
that is necessary in order to build a brand and that consumers cannot
purchase a brand if they cannot find the brand.
According to the findings of the empirical study, the communication strategy
would enable the organisation to remind the consumer on a continuous basis
of the existence of the brand and also what the brand offers the consumer.
The communication strategy would include mainly advertising and
promotions. Popular methods of advertising and promotions used by
organisations are:
• outdoor advertising;
• event sponsorship;
• magazines;
• radio advertising;
• consumer tastings;
• road shows; and
• advertising on taxis and bus stop shelters.
The literature study also revealed that it is essential that an organisation
communicate with consumers about the brand. Effective communication can
be achieved by making use of an advertising and promotion strategy.
It is therefore clear that there is a correlation between the findings of the
empirical and literature studies regarding the importance of an awareness
strategy through distribution and communication.
Renovation and innovation as a brand-building factor was highlighted during
the empirical study, but was not noted during the literature study. The
benefits that the brand offers should keep up with the changing needs of the
consumer.
The literature study emphasised an element that the researcher did not
come across during the empirical study and this is that an organisation
should get to understand the consumer through the use of market research
in order to position its brand. Positioning the brand would entail defining a
target market for the brand, defining the type of business or industry the
organisation operates in and stating the brand’s key points of differentiation
and benefits to the consumer. Differentiation of the organisation’s brand
requires distinguishing a brand from that of competitors on an attribute that is
meaningful, relevant and valuable to consumers.
6.4 RECOMMENDATIONS
Based on the findings of the study, the researcher would like to put forward
some recommendations that could be useful for organisations within the
FMCG market. The researcher also provides a number of recommendations
for further possible research.
Organisations within the FMCG market are advised to:
• Use market research techniques to continuously determine the levels of
loyalty towards their brands and investigate which factors influence those
loyalty levels. The information obtained from the market research could
be used to determine the effectiveness of the existing marketing and
brand loyalty strategies of each brand.
• Proactively develop and implement brand loyalty strategies to gain a
competitive advantage.
• Become more focused on increasing brand loyalty towards their brands
rather than focusing on short-term financial returns alone, as high levels
of brand loyalty would bring about both short and long-term financial
returns.
• Embark upon consumer loyalty programmes in an attempt to establish a
large base of loyal consumers. This has proven to be successful for
organisations such as SAA with their Voyager programme and Clicks
Stores with its Clubcard system.
Various areas for further research have been identified:
• Further investigation is required of loyalty levels within different cultural
groups, gender groups, age groups and income groups to determine the
impact this could have on an organisation’s marketing strategy.
• The research was conducted using only three products. The total FMCG
market consists of a very broad array of products and it is therefore not
certain that the findings of the study would be applicable to all product
types within the FMCG market.
• Further research could be performed with regards to the impact that a
brand building strategy would have on brand loyalty.
• The importance of brand loyalty within the brand equity framework and
the way in which these two concepts could ensure the success of a brand
could be investigated.
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APPENDIX A
CONSUMER QUESTIONNAIRE
Interviewer number
Respondent
number 3
BRAND LOYALTY SURVEY
Hello my name is . . . . . . . . . . . I work for an independent research company. We are conducting a
survey on brand preference on grocery items that will take about 10 minutes. Are you willing to take part?
Are you responsible or involved in the buying process of groceries in your household?
yes 1 if yes, continue with interview.
no 2 if no, close interview.
1) Do you buy any of the following products on a regular basis?
Yes No
1.1) mayonnaise 1 2 4
1.2) regular packet soup 1 2 5
1.3) coffee 1 2 6
If none of the above apply, close interview.
Please indicate your level of agreement/disagreement with each of the following statements.
Show respondent show card number 1.
Mayonnaise Regular packet
soup Coffee
2) All . . . . . . . . . . . . . . . brands give me the same benefits. 9
3) I like to try new brands of . . . . . . . . . . . . . . . 12
4) I prefer to buy a specific brand of . . . . . . . . . . . . . . . 15
In your own words, please answer the following questions:
5) What brand of mayonnaise do you buy most often?
17
6) What are the reasons for your preference for the above mentioned brand of mayonnaise?
Loyalty 1 18
Price 2 19
Quality 3 20
Taste 4 21
Value for money 5 22
Other : 24
26
7) Can you please rate the above mentioned factors according to importance.
Show respondent show card number 2. 27
28
8) Should your regular brand of mayonnaise be out of stock, at your regular outlet, what would you do?
Will buy an alternative brand 1 29
Will wait until my brand is in stock again 2
Will buy my brand at another outlet 3
Other :
9) How many times, within the last 12 months, have you bought another brand of mayonnaise other than your
regular brand of mayonnaise?
Not once 1 30
Once 2
Twice 3
3 times or more 4
10) What brand of regular packet soup do you buy most often?
32
11) What are the reasons for your preference for the above mentioned brand of regular packet soup?
Loyalty 1 33
Price 2 34
Quality 3 35
Taste 4 36
Value for money 5 37
Other : 39
41
12) Can you please rate the above mentioned factors according to importance.
Show respondent show card number 2. 43
44
13) Should your regular brand of regular packet soup be out of stock, at your regular outlet, what would you do?
Will buy an alternative brand 1 45
Will wait until my brand is in stock again 2
Will buy my brand at another outlet 3
Other :
14) How many times, during the last 12 months, have you bought another brand of regular packet soup other
than your regular brand of regular packet soup?
Not once 1 46
Once 2
Twice 3
3 times or more 4
15) What brand of coffee do you buy most often?
48
16) What are the reasons for your preference for the above mentioned brand of coffee?
Loyalty 1 49
Price 2 50
Quality 3 51
Taste 4 52
Value for money 5 53
Other : 55
57
17) Can you please rate the above mentioned factors according to importance.
Show respondent show card number 2. 59
60
18) Should your regular brand of coffee be out of stock, at your regular outlet, what would you do?
Will buy an alternative brand 1 61
Will wait until my brand is in stock again 2
Will buy my brand at another outlet 3
Other :
19) How many times, within the last 12 months, have you bought another brand of coffee other than your
regular brand of coffee?
Not once 1 62
Once 2
Twice 3
3 times or more 4
20) Please tell me into which group does the total monthly income of your household fall?
Show respondent show card number 3, if respondent is unclear.
Below R3,999 per month 1 63
From R4,000 - R7,999 per month 2
From R8,000 - 11,999 per month 3
R12,000 and more per month 4
21) Please tell me into which age group do you fall? 18 - 25 years 1 64
Show respondent show card number 4, if respondent is unclear. 26 - 35 years 2
36 - 45 years 3
46 - 55 years 4
56 - 65 years 5
66 years and older 6
22) Is respondent male or female? Male 1 65
Female 2
23) Population group of respondent? Asian 1 66
Black 2
Coloured 3
White 4
Undecided 5
SHOW CARD 1
AGREEMENT SCALE
� � � � �
STRONGLY DISAGREE NEITHER AGREE STRONGLY
�� �� � � � � � � � �
NOR
DISAGREE
SHOW CARD 2
IMPORTANCE SCALE
� � �
NOT IMPORTANT SOMEWHAT IMPORTANT VERY IMPORTANT
SHOW CARD 3
INCOME CARD
�� �� � � �� �� � � �� � � �� � �
� �� � � � �� � � � !� � � �� � � � � � �
� �� � � � " � � � � � �� � � � � � � �� � �4.
� � � � � � # � $ � �� � � � � � �� � �
SHOW CARD 4
AGE SCALE
�� �� � �� � � � " �% &� #� '
� �� � �� � � �( � % &� #� '
� �� � �� � � � ( �% &� #� '
� �� � �� � � �( % % &� #� '
% �� � �� � � % ( ( % &� #� '
( ( ( &� #� ' # � $ � � $ � �
APPENDIX B
MAYONNAISE OPTIONS
MAYONNAISE OPTIONS
1. ALL JOY
2. CROSSE & BLACKWELL
3. EPIC
4. FAMILY FAVOURITE
5. HEINZ
6. HELLMANS
7. KOO
8. KRAFT
9. NOLA
10. PICK & PAY NO NAME BRAND
11. SHOPRITE CHECKERS/RITE BRAND
12. SPAR BRAND
13. NOLA SLIMANNAISE
14. EPIC LITE
15. CROSSE & BLACKWELL TRIM
16. NOLA TRIM
17. HELLMANS LOW
18. EPIC SALAD CREAM
19. GOLD BAND
20. COOLWIP
21. NO NAME/HOUSE BRAND
22. HOUSE BRAND
23. SALAD CREAM
24. TRIM
25. NOLA SALANNAISE
26. THE CHEAPEST
27. ANY CHEAP MAYONNAISSE
28. CROSSE & BLACKWELL SALANNAISE
29. NOLA LITE
30. FARMGIRL
APPENDIX C
REGULAR PACKET SOUP OPTIONS
REGULAR PACKET SOUP OPTIONS
1. FLOYD’S
2. IMANA
3. KNORR
4. MAGGI
5. PICK & PAY NO NAME BRAND
6. ROYCO
7. SHOPRITE CHECKERS/RITE BRAND
8. ROYCO OR MAGGI
9. ROYCO LITE
10. IMANA & JIKELELE
11. ROYCO & KNORROX
12. JIKELELE
13. ROYCO & IMANA
14. KNORROX
15. NO NAME/HOUSE BRAND
16. THE CHEAPEST
17. ANY CHEAP SOUP
18. I ALWAYS MIX MY FLAVOURS
19. DON’T HAVE
20. NOODLES
21. MUTTON
22. OXTAIL
23. DO NOT HAVE
24. ANYONE
APPENDIX D
COFFEE OPTIONS
COFFEE OPTIONS
1. BOSTON
2. CIRO
3. ENCORE
4. FAMILY FAVOURITE
5. FRISCO
6. HOUSE OF COFFEE
7. JACOBS
8. KOFFIEHUIS
9. NESCAFÉ
10. PICK & PAY NO NAME BRAND
11. RICOFFY
12. SHOPRITE CHECKERS/RITE BRAND
13. SPAR BRAND
14. KENNA COFFELETS
15. KOFFIEHUIS PRONTO BAGS
16. RICOFFY DECAF
17. ACE FILTER COFFEE
18. THE CHEAPEST
19. ANY CHEAP COFFEE
20. COFFEE
21. MILO
22. NO NAME BRAND
23. CHECKERS KOFFIEHUIS
24. NESTLÉ
25. NESCAFÉ DECAF
26. CIRO FILTER
APPENDIX E
BRAND LOYALTY SURVEY
BRAND LOYALTY SURVEY
1. Do you believe that brand loyalty still exists among the consumers
within the FMCG market?
2. Was there a shift in brand loyalty in the last 5 years? If yes, what do
you think are the reasons?
3. What bases do you think consumers use to differentiate between
homogeneous products?
4. What do you think make consumers brand loyal?
5. How do you measure brand loyalty?
6. What strategies do you utilise to create brand loyalty?
7. What strategies do you utilise to maintain brand loyalty?
8. What strategies do you utilise to increase brand loyalty?
9. Do you think that a single strategy is required to achieve brand loyalty
or do you think that each one of 6, 7 and 8 requires a separate strategy?
10. What strategies do you implement to build a brand?
11. If your brand is not on the shelf, what do you think your consumers will
do?
