An executive summary for managers and executives can be found at the end of this article

The theory of reasoned action applied to brand loyalty

Choong Lyong Ha
Introduction In recent competitive business environments, consumers have been exposed to a proliferation of brand choice alternatives. Fisher (1985) states Marketers battling to keep competitors from grabbing off customers complain that there just doesnt seem to be as much brand loyalty around as there used to be. This complaint means that it is not easy to obtain and maintain consumers loyalty to a companys product, since there are many forces driving consumers to be unloyal (e.g., competitions, consumers thirst for variety, etc).

Measuring and predicting brand loyalty

In order for managers to cope with the forces of disloyalty among consumers, they need to have an accurate method to measure and predict brand loyalty. However, it has seemed impossible to obtain an objective and general measurement of brand loyalty, because brand loyalty has been differently defined and operationalized by a number of scholars. The diverse definition and operationalization of brand loyalty has been in part due to the various aspects of brand loyalty (e.g. behavioral and attitudinal brand loyalty). Jacoby and Chestnut (1978) state If brand loyalty is ever to be managed, not just measured, it will have to be elaborated in a much more detailed description of cognitive activities rather than focusing only on behavioral aspects of brand loyalty (e.g., repeat purchase). The statement made by Jacoby and Chestnut (1978) implies that previous studies of brand loyalty have mostly focussed on the measurement issue of brand loyalty by investigating repeat purchase of a brand. Cognitive aspects of brand loyalty make it possible to predict what purchase behavior would be followed by a certain cognitive response. For example, a bad attitude toward a certain brand would result in switching behavior of purchase.

Theory of reasoned action

Until now, there have been few studies of how several antecedents of behavioral brand loyalty are inter-related. If the antecedents are integrated to measure and predict brand loyalty, the measurement will be more stable over time and accurate. The purpose of this paper is to integrate three aspects of brand loyalty (cognitive response, subjective norm and purchase behavior), and to investigate the relationships among several antecedents of behavioral brand loyalty by introducing the theory of reasoned action by Fishbein (1980). What is brand loyalty? Customer loyalty has been a major focus of strategic marketing planning (Kotler, 1984) and offers an important basis for developing a sustainable competitive advantage an advantage that can be realized through marketing efforts (Dick and Basu, 1994). They report that academic research on loyalty has largely focussed on measurement issues (e.g., Kahn et al., 1986) and correlates of loyalty with consumer characteristics in a
The author would like to express true thanks to two anonymous reviewers for their keen and constructive comments.

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segmentation context (e.g., Frank, 1967). A few brand loyalty studies found price promotions as the antecedents of brand switching behavior (Bawa and Shoemaker, 1987; Rothschild and Gaidis, 1981; Winer, 1986). They agree that price promotions increase sales in the short term. Some researchers have proposed and found empirically that if consumers have been satisfied with the promoted brand, their satisfaction is reinforcing and leads to an increase in the probability of choosing the brand again after the promotion is withdrawn, particularly for previous non-users of the brand (Kahn and Louie, 1990; Rothschild and Gaidis, 1981). Other researchers found that lineage is an antecedent of brand loyalty (Miller, 1975; Moore-Shay and Lutz, 1988). For example, Moore-Shay and Lutz (1988) reported that mother and daughter had shown same brand preference and shopping strategy congruence. Behavioral aspect Many studies on the topic of brand loyalty have been measured by the behavioral aspect of brand loyalty (e.g., repeat purchases) without considering cognitive aspects of brand loyalty. For example, Fader and Schmittlein (1993) conducted a research investigating the advantage of high share brands in brand loyalty, suggesting that high share brands have significantly higher brand loyalty than low share brands. They measured brand loyalty only by the behavioral aspect of repeat purchase, not considering cognitive aspects of brand loyalty. Bayus (1992) also operationalized brand loyalty by a behavioral measurement of probability of purchasing the same appliance brand as the one previously owned in his study on brand switching analysis of home appliances. However, brand loyalty is not a simple uni-dimensional concept, but a very complex multi-dimensional concept. Wilkie (1994) defines brand loyalty as a favorable attitude toward, and consistent purchase of, a particular brand. However, such a definition is too simple to understand brand loyalty in the context of consumer behavior. The definition implies that consumers are brand loyal when both attitude and behavior are favorable. However, it does not clarify the intensity of brand loyalty, because it precludes the possibility that a consumers attitude is unfavorable, while he/she repeats the purchases. In such case, the consumers brand loyalty would be superficial and shallowrooted. Another definition of brand loyalty that compensates for the incompleteness of Wilkies definition (1994) was offered by Jacoby and Chestnut (1978). They provided a conceptual definition of brand loyalty that brand loyalty is (1) biased (i.e., non-random), (2) behavioral response (i.e., purchase), (3) expressed over time, (4) by some decision-making unit, (5) with respect to one or more brands out of a set of such brands, and is a function of psychological (decision-making, evaluative) processes. In their operational definition of brand loyalty they identified three kinds of categories which the various operational measures had been placed into (behavioral, attitudinal, and composite; both attitudinal and behavioral). Operational brand definition Based on the behavioral element of brand loyalty, Sheth (1968) provides an operational definition of brand loyalty that brand loyalty is a function of a brands relative frequency of purchase in both time-independent and time dependent situations. An operational definition of brand loyalty based on the attitudinal element was provided by Reynolds et al. (1974). They viewed brand loyalty as the tendency for a person to continue over time to exhibit similar attitude in situations similar to those he/she has previously encountered. Day (1969) suggests that loyalty should be evaluated with both
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attitudinal and behavioral criteria (composite brand loyalty). From the conceptual and operational definition of brand loyalty, we can derive the two most important elements of brand loyalty: attitude and behavior, which have been extensively studied in the area of consumer behavior. Advances in research of attitude Significant advances in the research of attitude were made by Fishbein and Ajzen (1975). In an extension of Fishbeins earlier learning theory, Fishbein (1980) developed a theory of the relationship between attitude and behavior (called theory of reasoned action: TRA). Any conceptualization of brand loyalty has not utilized the theory of reasoned action proposed by Fishbein. The concept of brand loyalty is expected to be more manageable and meaningful by the utilization of Fishbeins theory. The theory of reasoned action The theory of reasoned action was developed to explain how a consumer leads to a certain buying behavior (Fishbein, 1980). The theory of reasoned action asserts that attitude toward buying and subjective norm are the antecedents of performed behavior. The two antecedents (attitude and subjective norm) influence the purchase behavior additively, although a conceptual argument was developed earlier leading to an interaction as well as direct effects (Ryan and Bonfield, 1975). They report that operational measures of the constructs have been shown to have separate effects on the purchase behavior. If the additivity of attitude and subjective norm assumption can be supported, beta weight analysis has implications for marketing strategies as a means of ascertaining whether brand or product purchase intentions are primarily under attitudinal or social influence control. Two important propositions Lutz (1991) offered two important propositions underlying the theory of reasoned action. First, to predict a purchase behavior, it is necessary to measure a persons attitude toward performing that behavior, not just the general attitude toward the object around which the purchasing behavior is. For example, although a persons attitude toward a jewelry is favorable, yet the person may never buy the jewelry. Second, in addition to the attitude toward the behavior, TRA includes a second determinant of overt behavior: the subjective norm (SN). SN is intended to measure the social influences on a persons behavior (i.e., family members expectations). We can recognize that there may be some situations where behavior is simply not under the attitudinal control of individuals; rather, the expectation of relevant others may be a major factor in ultimate behavioral performances. The theory of reasoned action is different from the traditional attitude theories in that it introduces normative influences into the overall model and a causal relationship between the two antecedents and intention. In addition, the incorporation of normative influences explains the inconsistency between attitude and intention, and behavior as explained in the jewelry example. A consumers response to each element of TRA (Ab: attitude toward the purchase behavior, SN: subjective norm, B: purchase behavior) will be considered as unit brand loyalty (UBL). According to the definition of brand loyalty by Jacoby and Chestnut (1978), unit brand loyalty is formed at the point of purchase. The concept of unit brand loyalty provided by them is based on time. However, the unit brand loyalty utilized in this paper is based on the consistency among the three elements of TRA. For instance, when all of the three elements are shown favorable, the unit brand loyalty will be regarded as maximum. TRA model explains that the antecedent variables of
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purchase behavior are attitude toward the behavior (Ab), subjective norm (SN), and intention to perform the behavior (I). Social psychology studies Three social psychology studies (Ajzen and Fishbein, 1970; Darroch, 1971; Fishbein et al., 1970) have provided evidence indicating the need to include intention as a moderator variable even though situational variables were controlled. The relationship between behavior and behavioral intentions have been found contingent on the time interval between intention and behavior (Wilson, 1975). When intention and behavior measures were contiguous or nearly contiguous, correlations between intention and behavior were high. In the studies where the timing of measures of behavior and intention were allowed to vary, the correlations were much lower (Bonfield, 1974). Thus, time lapse between intention and behavior measures may be a convenient surrogate for the situational variables which intervene between the two measures. Each of the antecedent variables, except for intention, will be evaluated to obtain a certain level of unit brand loyalty. The reason why intention is excluded is that TRA seldom distinguish between intention and behavior. For consumers to be evaluated for brand loyalty, each element of unit brand loyalty should be included in predicting brand loyalty. In the next section, the details of unit brand loyalty will be further examined. Unit brand loyalty Unit brand loyalty is formed at a certain point in time. Based on the TRA model, unit brand loyalty comprises three elements. Each of the three elements forces a consumer to be loyal or unloyal. For instance, although a consumer is unfavorable to the purchase of a certain brand, the consumer may purchase the brand. In such case, his/her attitude is unloyal but the behavior is loyal. The loyal behavior is very likely to be converted into a behavior of switching the brand into other when the situations enforcing him/her to keep purchasing the brand are removed. The combination of the three elements of UBL results in 2*2*2 cases (eight cases). In Table I eight combinations of UBL are presented. Highest unit brand loyalty From Table I, we can recognize that combination 1 has the highest unit brand loyalty, while combination 8 has the lowest unit brand loyalty. Among the three elements, attitude toward the purchase (Ab) and subjective norm (SN) are cognitive aspects of brand loyalty, while purchase behavior (B) is the behavioral aspect of brand loyalty. Comparison among UBLs Comparison among the eight combinations (1-8) provides a deep insight in the different levels of unit brand loyalty. Combination 1 shows the highest

Ab 1 2 3 4 5 6 7 8 Loyal Loyal Loyal Loyal Unloyal Unloyal Unloyal Unloyal

SN Loyal Loyal Unloyal Unloyal Loyal Loyal Unloyal Unloyal

B Loyal Unloyal Loyal Unloyal Loyal Unloyal Loyal Unloyal

Table I. Unit brand loyalty

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level of unit brand loyalty. Both cognitive and behavioral aspects of brand loyalty are shown loyal. Those consumers who have this level of unit brand loyalty will not switch their brands so easily as the other levels. Marlboro was identified as a high-loyalty product (Fisher, 1985). He reasoned that the more closely a brand is bound to a persons image of him/herself, the more likely he/she will be to resist any change in it. He described this as the use this, this is me principle. The principle applies to Marlboro, because their users associate particular ideas about status or even personality. In addition, Marlboro seems to be highly subject to social norm (social influence) due to the users strong emotional motivation to choose it. In addition, Marlboro has the biggest market share. These two characteristics of Marlboro have strengthened consumers loyalty in both attitude toward the purchase and subjective norms. Lowest level of unit brand loyalty On the other hand, combination 8 shows the lowest level of unit brand loyalty. Both attitude and subjective norm are shown unloyal. Those consumers who show this level of unit brand loyalty are not likely to be loyal to a certain brand at least in the near future. For example, toys made in China are not likely to attract parents loyalty to the Chinese brand easily. The US consumers generally perceive China-made products as inferior. When a China-made product is associated with particular ideas about status, brand loyalty may be even more devastated. The unloyal behavior in combination 2 is not likely to be consistent over time, because the two cognitive elements of unit brand loyalty will change the behavioral element of unit brand loyalty, when the driving forces of the inconsistency between the cognitive elements and the behavioral element are removed. For instance, when a brand is not available at the only store in an area, although the buyer shows brand loyal in attitude and subjective norm, he/she may not purchase the preferred brand, rather be forced to choose other brands. However, immediately after the brand is available the buyer will switch back to the brand that the two cognitive elements correspond to. The other driving forces of the inconsistency will be examined in the following section of situational factors of brand loyalty. Spurious loyalty For the combination 7, we can apply the same explanation in combination 2 for the inconsistency between the three elements of unit brand loyalty. The loyal behavior based only on the behavioral element of B does not seem to be long lasting. Immediately after the other brand is available, the unit brand loyalty will be terminated. Dick and Basu (1994) call these cases spurious loyalty. According to them, spurious loyalty occurs when consumers have low relative attitudes accompanied by high repeat patronage. They suggest that subjective influence may lead to spurious loyalty. For example, an industrial vendor may receive repeated orders despite low perceived differentiation from competitors as a result of interpersonal relationships between the buying and selling organization. Which of the combinations 2 and 7 has more unit brand loyalty? On the surface, combination 7 seems to have more UBL. However, in the context of the elements of unit brand loyalty, combination 2 will show more unit brand loyalty in the near future, because it is strongly based on the cognitive elements of unit brand loyalty and the situational factors are always subject to change, which enhances the removal of the driving forces of the inconsistency. Combinations 3 through 6 reflect conflict between Ab and SN, each conflict ending up with loyal or unloyal behavior. The conflicts between Ab and SN
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will significantly reduce buyers unit brand loyalty. The conflicts will be resolved by the offset between Ab and SN, but will affect B (behavior) less than the consistent combinations of Ab and SN: combinations 1, 2, 7, and 8. Combinations 3 and 4 have loyal attitude but disloyal subjective norms. The consumers who are faced with these combinations are strongly discouraged to be loyal to a certain brand by social influence. For example, social influence may be formed by the US labor union by saying buy America, keep America working. A BMW buyer who has been satisfied with its quality may consider the claim made by the labor union if he/she is ethnocentric in purchase decision. Combinations 5 and 6 are opposite to combinations 3 and 4. In combinations 5 and 6, a Ford buyer who has not been satisfied with its quality may be encouraged to be loyal to a Ford by social influence (e.g. labor union). In combinations 3, 4, 5, and 6, the consumers are faced with spurious brand loyalty, leading to highly volatile brand loyalty. Situational factors of unit brand loyalty Three elements of unit brand loyalty have been explored: cognitive (Ab and SN) and behavioral (B). In addition to the TRA elements of brand loyalty, the situational factors influencing unit brand loyalty need to be discussed to understand why the inconsistencies between cognitive and behavioral loyalty take place in unit brand loyalty. Situational factors Smith and Swinyard (1983) provided several situational factors of brand loyalty, including actual or perceived opportunity for engaging in attitudeconsistent behavior (e.g., in the case of stockouts of preferred brands), incentives for brand switching through reduced prices of competing brands, and effective in-store promotions that might increase the salience of a competing brand over one normally preferred by the consumer (i.e., by impacting on the evoked set in a decision environment). These situational factors are potentially extraneous events that may introduce inconsistency in an attitude-behavior relationship. A consumers strong acceptance of subjective norm may also cause the inconsistency. Although his/her attitude toward the purchase of a product is favorable, the society may strongly discourage him/her to purchase the product as illustrated in the combinations 3 and 4. If the consumers personality is relatively weak, the consumer is very likely to comply to the subjective norm, leading to inconsistency between Ab and B. Consumers attitudes toward the behavior may be different from subjective norms formed against the behavior. In this case, the consumers will be put under large amounts of social pressures, leading to a cognitive conflict. Most of such situations are likely to arise when the consumers are too liberal or too conservative compared to the society. As a result, consumers personality traits should be another situational factor influencing inconsistency between Ab and SN. Conclusion/implications A pictorial presentation of the conceptualization process using TRA is shown in Figure 1. Referring to Figure 1, the concept of unit brand loyalty is introduced by the concept of brand loyalty made by Jacoby and Chestnut (1978). Jacoby and Chestnut (1978) provided three kinds of observable property of brand loyalty. The first type of data is behavior, brand loyalty being the property of consistent repurchase of the same brand over time. However this property stresses only the superficial aspect of a purchase behavior and ignores the
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Attitude Toward the Behavior (Ab)

Situational Factors

Purchase Behavior (B)

Subjective Norm (SN)

Figure 1. Pictorial presentation of UBL

cognitive processes underlying such behavior. The second type of data stresses attitudes, brand loyalty being the property of psychological commitment (i.e., the beliefs, feelings, and intentions) that result in the consistent repurchase of the same brand over time. This measurement also ignores the behavioral outcome, which can be completely opposite to the attitudes as discussed in the section of situational factors of unit brand loyalty. The third type of data stresses both behavioral and attitudinal properties. Inconsistency The conceptualization of brand loyalty in this paper integrates the two elements (attitudinal and behavioral) of the brand loyalty concept made by Jacoby and Chestnut (1978). In addition, subjective norm is introduced to illuminate an inconsistency that may exist among the two elements of brand loyalty. The application of the theory of reasoned action provides an academic insight that has not been associated with the previous studies. The concept of unit brand loyalty integrates all underlying elements (attitude and subjective norm) of a consumers purchasing behavior, suggesting that future research may be directed to the development of brand loyalty measures combining the three elements of unit brand loyalty (Ab, SN, and B). The inclusion of subjective norm in the measures of brand loyalty should lead to a more accurate and dependable estimate of consumers brand loyalty. Managerial implications can be drawn from the combinations 1 through 8. Based on the integration of the three elements of unit brand loyalty, consumers who are spuriously brand loyal can be identified (combinations 3 through 7). Also, unit brand loyalty becomes stabilized in the combination 1 and 8. Combination 1 is the maximum condition of unit brand loyalty and combination 8 is the minimum condition of unit brand loyalty. In either the combination 1 or 8, the degree of brand loyalty is not likely to change soon. In these combinations, strategic alternatives to increase brand loyalty may not be readily available to the marketing managers.
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Combinations 2 through 7 are the conditions where marketing managers need to be aware of setting up their marketing strategy to increase the consumers brand loyalty. Combinations 2, 4, and 6 represent the conditions that the consumers are unloyal temporarily, implying that the marketing manager should not be discouraged by a temporary disloyalty and needs to strive for grabbing brand loyalty. However, combinations 3, 5, and 7 are the conditions that the marketing managers need to rediagnose their customers brand loyalty. The main focus should be pointed at either enhancing the consumers attitude toward their brand or adjusting their brand to the social norms.
References and further reading Ajzen, I. and Fishbein, M. (1970), The prediction of behavior from attitudinal and normative variables, Journal of Experimental Psychology, Vol. 6, October, pp. 466-87. Bawa, K. and Shoemaker, R.W. (1987), The effects of a direct mail coupon on brand choice behavior, Journal of Marketing Research, Vol. 24, November, pp. 370-76. Bayus, B.L.(1992), Brand loyalty and marketing strategy: an application to home appliances, Marketing Science, Vol. 11 No. 1, p. 22. Bonfield, E.H. (1974), Attitude, social influence, personal norms, and intention interactions as related to brand purchase behavior, Journal of Marketing Research, Vol. 11, November, pp. 379-89. Darroch, R.K. (1971), The prediction of intention and behavior: a comparison of theoretical models of the attitude-behavior relationship using a photographic release singing situation, unpublished doctoral dissertation, University of Illinois. Day, G.S.(1969), A two dimensional concept of brand loyalty, Journal of Advertising Research, Vol. 21, p. 30. Dick, A.S. and Basu, K. (1994), Customer loyalty: toward an integrated conceptual framework, Journal of Academy of Marketing Science, Vol. 22 No. 2, pp. 99-113. DuWors, R.E. Jr. and Haines, G.H. Jr (1990), Event history analysis of measures of brand loyalty, Journal of Marketing Research, Vol. 27, pp. 485-93. Fader, P.S. and Schmittlein, D.C. (1993), Excess behavioral loyalty for high-share brands: deviations from the Dirichlet model for repeat purchasing, Journal of Marketing Research, Vol. 30, pp. 478-99. Fishbein, M. (1980), A theory of reasoned action: some application and implications, Nebraska Symposium on Motivation, University of Nebraska Press, Lincoln, NE, Vol. 27, pp. 65-116. Fishbein, M. and Ajzen, I. (1975), Belief, Attitude, Intention and Behavior: An Introduction to Theory and Research, Addison-Wesley, Reading, MA. Fishbein, M., Ajzen, I., Landy, E.S. and Anderson, L.R. (1970), Attitudinal Variables and Behavior: Three Empirical Studies and a Theoretical Reanalysis, (Department of the Navy, Advanced Research Projects Agency, Tech. Rep.), Department of Psychology, University of Washington, Seattle, pp. 70-79. Fisher, A.B.(1985), Cokes brand-loyalty lesson, Fortune, August 5, pp. 44-6. Frank, R.E. (1967), Correlates of buying behavior for grocery products, Journal of Marketing, Vol. 31, October, pp. 48-53. Jacoby, J. and Chestnut, R.W. (1978), Brand Loyalty: Measurement and Management, John Wiley & Sons, New York, NY. Kahn, B.E. and Louie, T.E. (1990), Effects of retraction of price promotions on brand choice behavior for variety-seeking and last-purchase-loyal consumers, Journal of Marketing Research, Vol. 27, pp. 279-89. Kahn, B.E., Kalwani, M.U. and Morrison, D.G. (1986), Measuring variety seeking and reinforcement behaviors using panel data, Journal of Marketing Research, Vol. 23, May, pp. 89-100. Kotler, P. (1984), Marketing Management: Analysis, Planning, and Control, 5th ed., PrenticeHall, Englewood Cliffs, NJ. Lutz, R.J. (1991), The role of attitude theory in marketing, in Kassarjian, H.H. and Robertson, T.S. (Eds), Perspectives in Consumer Behavior, Prentice-Hall, Englewood Cliffs, NJ, pp. 317-39.

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Mackenzie, S.B., and Spreng, R.A. (1992), How does motivation moderate the impact of central and peripheral processing on brand attitudes and intentions?, Journal of Consumer Research, Vol. 18, pp. 519-29. Miller, B. (1975), Intergenerational patterns of consumer behavior, Proceedings, Associations for Consumer Research, pp. 93-101. Miniard, P.W., Bhalta, S. and Rose, R.L. (1990), On the formation and relationship of ad and brand attitudes: an experimental and causal analysis, Journal of Marketing Research, Vol. 27, pp. 290-303. Miniard, P.W., Sirdeshmukh, D.S. and Innis, D.E. (1992), Peripheral persuasion and brand choice, Journal of Marketing Research, Vol. 19, pp. 226-39. Mittal, B. (1990), The relative roles of brand beliefs and attitude toward the ad as mediators of brand attitude: a second look, Journal of Marketing Research, Vol. 27, pp. 209-19. Moore-Shay, E.S. and Lutz, R.J. (1989), Intergenerational influences in the formation of consumer attitudes and beliefs about the marketplace: mothers and daughters, Advances in Consumer Research, Vol. 15, pp. 461-7. Onkvisit, S. and Shaw, J.J. (1994), Consumer Behavior, Macmillan College Publishing Company, New York, NY. Pan, Y. and Lehmann, D.R. (1993), The influence of new brand entry on subjective brand judgement, Journal of Consumer Research, Vol. 20, pp. 76-86. Reynolds, F.D., Darden, W.R. and Martin, W.S. (1975), Developing an image of the storeloyal customer: a life style analysis to probe a neglected market, Journal of Retailing, Vol. 50 No. 4, pp. 73-84. Rice, C. (1993), Consumer Behavior, Butterworth and Heinemann, Oxford. Rothschild, M.L. and Gaidis, W.C. (1981), Behavioral learning theory: its relevance to marketing and promotions, Journal of Marketing, Vol. 45, Spring, pp. 70-78. Ryan, M.J. and Bonfield, E.H. (1975), The Fishbein extended model and consumer behavior, Journal of Consumer Research, Vol. 2, September, pp. 118-36. Sheth, J.N. (1968), A factor analytic model of brand loyalty, Journal of Marketing Research, Vol 5, pp. 398. Smith, R.E. and Swinyard, W.R. (1983), Attitude behavior consistency: the impact of product trial versus advertising, Journal of Marketing Research, Vol. 20, August, pp. 257-67. Wilkie, W.L. (1994), Consumer Behavior, John Wiley & Sons, New York, NY. Wilson, D.T. (1975), Attitudes, referents, and perceived risk, AMA Combined Conference Proceedings, AMA, Chicago, IL, pp. 75-9. Winer, R.S. (1986), A reference price model of brand choice for frequently purchased products, Journal of Consumer Research, Vol. 13, Spring, pp. 250-56. (Choong Lyong Ha is a Doctoral Candidate at the University of Texas at Arlington, Texas, USA.)

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This summary has been provided to allow managers and executives a rapid appreciation of the content of this article. Those with a particular interest in the topic covered may then read the article in toto to take advantage of the more comprehensive description of the research undertaken and its results to get the full benefit of the material present

Executive summary and implications for managers and executives

Buyings a symptom of loyalty not loyalty itself A marketing manager of my acquaintance takes the view that (in his words) a customer isnt a customer until theyve bought twice. The first purchase represents trial not commitment but if they come back for more that indicates satisfaction and possibly loyalty. As ever such rules of thumb contain a grain of truth but are overstated in their application. Ha presents us with a more considered version of my friends bon mot. And Has concept suggests we look at loyalty from a broader perspective than purchase behaviour alone. Simply put, purchase behaviour is a symptom of several possible motives: total loyalty, doing what everyone else does and not having any choice are all alternative reasons. Without looking at attitudes underlying the purchase decision we cannot know whether or not we are dealing with a loyal customer. Take the example of telephone services. For much of the developed worlds population, choice in telecoms is, at best, limited and very often non-existent. Until the recent development of cellular and digital technologies, customers in Germany and France have had to buy their phone service from a state-owned monopoly. Customers are not loyal, they have no choice. And when phone markets are opened up what will be the response of customers? Here are some possible responses: Staying loyal in attitude and behaviour. Switching to another supplier. Staying loyal out of inertia. Staying loyal for reasons of peer pressure from family, friends or colleagues. Switching for reasons of peer pressure.

Assuming that these groups are evenly spread, we can imagine that the former telecoms monopoly retains the bulk of the business. Indeed the evidence from Britain shows just that British Telecom continues to dominate the market 15 years after privatization and the introduction of a duopoly in telephone services. The company has, however, reduced its prices and improved its service during that period. This suggests that many who stopped out of inertia eventually stopped from genuine loyalty. Over the next few years we will see the same situation played out in the UK markets for domestic gas and electricity supply. Where there was just one supplier there are now many indeed I recently received a mailing from a national newspaper offering me a deal on gas and electricity supply. In such circumstances the main (former monopoly) supplier needs to consider customer loyalty as the key to retaining high market shares. So what should such an organization do, apart from improve its service and reduce its pricing? Has proposals provide some indication for marketers: (1) Establish the nature of customer loyalty using the eight variations proposed by Ha. (2) Quantify each segment of loyalty giving a base from which to act. (3) Target communications according to the segment into which the customer falls.
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Lets look at these three actions. Establishing customer loyalty In our example we have the advantage of knowing all our customers by name. A questionnaire to those customers would provide the basis for segmentation at relatively low cost. The questionnaire needs to establish individual attitudes to competition, perceptions of societys attitude to competition and current purchase intentions. Even with a decent incentive we would not get 100 percent response so we need a model to allocate non-respondents to one or other of the eight segments. This gives us a total of 16 segments consisting of respondents and non-respondents in each of our eight loyalty types. Quantifying the loyalty types A simple count provides the basis for future targeting but, if our model derives from demographic characteristics, we could see significant differences between the 16 groups. This suggests that the measurement process needs continuing over time rather than being a one-off exercise. The resulting groups enable us to allocate marketing budgets, develop media campaigns and improve the effectiveness of direct marketing activity. Targeting communications Weve noted how a loyalty measure could assist in segmentation and targeting. However, such a measure does not exist in isolation and, as we have also suggested, attitudes and behaviour may shift over time. Someone who is loyal now may become disloyal for some reason and vice versa. However, by targeting our communications to a ranking of loyalty we should improve retention of customers. In the context of our example this must be the main objective since the main supplier cannot expect to retain 100 percent of their current customer base. My example is, I admit, a peculiar situation since the retention of current customers is the sole objective of marketing by the former monopolist. However, it illustrates how to bring Has measurement approach into practical marketing planning and communications targeting. For businesses without extensive databases of customers more traditional market research methods will suffice for identifying targets through careful modelling. Again, if customer loyalty represents a key element of behaviour for your business, you cannot ignore the principles set out in Has article. Reliance on repeat purchase information leaves you exposed to new and aggressive competition unless you have real loyalty and dont know it. Finally, the importance of general attitudes towards a product or service in determining loyalty means that broad brand promotions retain significance. Where the attitudes of friends, neighbours and families affect purchasing behaviour (and this must be the case for most purchases, surely), you need to influence this wider market as well as the actual buyer. Direct marketing and sales promotions may play a larger role in promoting mass-market consumer goods but they cannot perform the brand and image building work of advertising and public relations. (A prcis of the article The theory of reasoned action applied to brand loyalty. Supplied by Marketing Consultants for MCB University Press)

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