Consumer and consumption

patterns
 What is Customer Loyalty?

• Customer loyalty indicates the extent to which customers are devoted

to a company’s products or services and how strong is their tendency
to select one brand over the competition.

• Customer loyalty is positively related to customer satisfaction as

happy customers consistently favor the brands that meet their needs.

• Loyal customers are purchasing a firm’s products or services

exclusively, and they are not willing to switch their preferences over a
competitive firm.
 Example
• A typical example of customer loyalty is Starbucks. The company has
managed not only to retain its customers but also to expand its customer
base through exemplary loyalty programs.
• Capitalizing on the fact that it has created a successful, recognizable brand
worldwide, Starbucks seeks to enhance the customer experience every
time, at the same rate of success. On top of that, the company offers the
My Starbucks Rewards customer loyalty program.
• Starbucks’ loyalty program features a mobile app that allows customers to
pay their coffee with built-in payments. In that way, customers can pay for
their coffee easily and swiftly while reducing the use of credit cards. In
turn, Starbucks compensates them with loyalty points and discounts.
• In fact, customer loyalty is built from the company to the customer. The
more satisfied the customer, the more like to do repeat business with a
firm.
 Importance of customer loyalty

• Customer Acquisition And Retention

• Repeat Business
• Cross/Up Selling Opportunities
• Reduce Marketing Cost
• Minimize Service Cost
• Forecast Accuracy
• Improve Brand Image
• Stand Tall Among Competitors
• Honest And Quality Feedback
 Meaning of Brand
• Initially, a brand is a unique name, logo, design, symbol, words, slogan
or a combination of all these, used to create an image in the
customer’s mind that identifies the product or service and
differentiates it from its competitors.
• Every brand has an association in the mind of the customer. That
association may be positive or negative. It is an emotional
association.
 Meaning of Branding
• Branding is a process of creating a unique name and image for a
product in the mind of consumer, mainly through advertising
campaigns. A brand is a name, term, symbol, design or combination
of these elements, used to identify a product, a family of products, or
all products of an organization.
• Branding is an important component of product planning process and
an important and powerful tool for marketing and selling products.
 Why Is Branding Important?

• Branding Gets Recognition

• Branding Increases Business Value
• Branding Generates New Customers
• Improves Employee Pride And Satisfaction
• Creates Trust Within The Marketplace
• Branding Supports Advertising
 Elements of Branding
• Brand includes various elements like –
• Brand Name - It is also called Product Brand. It can be a word, a group of
words, letters, or numbers to represent a product or service. For example -
Pepsi, iPhone etc.
• Trade Name - It is also called Corporate Brand. It identifies and promotes a
company or a division of a particular corporation. For example - Dell, Nike,
Google, and etc.
• Brand Mark - It is a unique symbol, coloring, lettering, or other design
element. It is visually recognizable, not necessary to be pronounced. For
example - Apple's apple, or Coca-cola's cursive typeface.
• Trade Mark - It is a word, name, symbol, or combination of these elements.
Trade mark is legally protected by government. For example - NBC colorful
peacock, or McDonald's golden arches. No other organization can use
these symbols.
• Trade Characters - Animal, people, animated characters, objects, and the
like that are used to advertise a product or service, that come to be
associated with that product or service. For example - Keebler Elves for
Keebler cookies.
 Branding Strategies
• Brand Extension - According to this strategy, an existing brand name
is used to promote a new or an improved product in an organisation's
product line. Marketing organisations uses this strategy to minimise
the cost of launching a new product and the risk of failure of new
product. There is risk of brand diluting if a product line is over
extended. Apple: from personal computers into MP3 players
• Brand Licensing - According to this strategy, some organisations allow
other organisations to use their brand name, trade name, or trade
character. Such authorisation is a legal licensing agreement for which
the licensing organisation receives royalty in return for the
authorisation. Organisations follow this strategy to increase revenue
sources, enhance organisation image, and sell more of their core
products.
 Branding Strategies
• Mixed Branding - This strategy is used by some manufacturers and retailers
to sell products. A manufacturer of a national brand can make a product for
sale under another company's brand. It can increase its profits by selling
private brands without affecting the reputation and sales of its national
brand.
• For instance, Toyota makes all types of vehicles under its own name and
markets them as reliable, inexpensive cars and trucks. However, the
company also markets the cars produced under its Lexus brand as luxury
vehicles.
• Co-Branding - According to this strategy one or more brands are combined
in the manufacture of a product or in the delivery of a service to capitalise
on other companies' products and services to reach new customers and
increase sales for both companies' brands.
• A typical example of an International co branding exercise is when Dell
computers or HP computers advertise with Intel. Intel as a processor is
known for its computing power and hence is assumed to be far above the
rest.
 Brand Fundamentals
• Brand Promise:
• At the very basic level, a brand is a promise to the customer. The
customer buys a brand in the hope that he/she will get something out
of it. This promise is not limited to the material or tangible benefits
she will derive. It also includes the emotions that the customer
experiences while buying, owning or using the product or service.
• E.g. A boy buying a fairness cream is not buying only the cream. He
dreams of becoming more beautiful, more confident after using that
cream. Beauty, attractiveness and self-confidence are some of the
promises most of such personal care brands make.
• Sometimes, our customers can help us understand our own brand’s
promise. For this, we must find out why our customers buy our
products. Observing them can give us an insight into our real brand
promise.
 Brand Perception
• Brands are built or broken by customers, not companies. The key to a
brand’s fate is its perception in the customers’ minds. We may believe that
our brand promises something. Our brand promise doesn’t matter if the
customer doesn’t perceive our brand as a tool to fulfill that promise.
• E.g. almost every new residential real estate project promises a lot of
facilities, amenities, convenience, lifestyle advantages, payment flexibility
etc. They project their houses as “Dream Homes” for the prospective
buyers.
• But in spite of all these, if the past record of that developer presenting the
project is bad, if their reputation is tarnished due to unpleasant
experiences of the customers, the new project will not get desired
response.
• The customers won’t believe the glossy promise of a “Dream Home”.
• The perception can’t be created by advertisements or brand ambassadors.
Only actual performance can do it.
 Brand Expectations
• Based on our brand promise, consumers develop expectations from our
brand. They buy our product in a hope that the brand will really fulfill the
promise. If the brand fails to live up to the expectation, the customer gets
confused and goes in search of another brand that may meet her
expectations.
• E.g. when a superstar’s new film is going to be released, it creates a lot of
hype. The viewers, who have enjoyed being entertained by his earlier
movies, go to the new film with a hope of having another similarly
enjoyable experience. But, if the new film disappoints, the customer get
confused. He may not go to watch his next film till positive popular reviews
and box-office responses are not received by the newer film.
• Similarly, if the girl buying a fairness cream realizes that her skin did not
change much even after three-four months of regular application, she will
lose trust in that brand. She will stop buying the brand and will tell others
not to be fooled by the tall claims of the brand.
• Our brand must promise only what it can deliver. Raising the customers’
expectations and then failing to fulfill them kills the brand, may be slowly,
but surely.
 Brand Personality
• A brand can be compared to a human being in more than one ways.
Just like a person has a lifespan and life stages, a brand also passes
through similar phases. Every brand also has its own personality, just
like humans. A brand’s personality is a set of human characteristics
that can be attributed to the brand. The characteristics make the
brand unique; they give the brand a distinct personality.
• To build that personality, the brand must perform consistently to
embody these characteristics. A brand personality is something which
the target customers can relate to. Customers are more likely to
purchase a brand if its personality is similar to their own. If the brand
matches with the personality traits of the target customers, it
succeeds in building strong bonds with them.
 Brand Personality
• There are five main types of brand personalities:
• Excitement:
• Cold drinks connect with those who are youthful and carefree.
• A soda brand makes you ‘spirited’.
• Sincerity:
• Hand wash brands reflect the caring, family-oriented mindset of a
mother.
• A bottled water brand sells purity to appeal to a sincere person’s
personality traits.
• Ruggedness: SUV brands stand for the rough and tough.
• Competence: A laptop brand portrays its user as successful.
• Sophistication: A formal shirt brand projects elegance.
 Brand Equity
• Brand equity refers to the total value of the brand as a separate asset. It is the
aggregate of assets and liabilities attached to the brand name and symbol which
results in the relationship customers have with the brand.
• Brand equity is often reflected in the way customers see, feel, and act towards
the brand. The effect of this intangible asset is also visible in the financial books
as the market share, prices, demand, and profitability.
• Brand equity refers to the value of a brand. That value is determined by
consumer perception of and experiences with the brand. If people think highly of
a brand, it has positive brand equity.
• When a brand consistently under-delivers and disappoints to the point where
people recommend others to avoid it, it has negative brand equity.
• A general example of a situation where brand equity is important is when a
company wants to expand its product line. If the brand's equity is positive, the
company can increase the likelihood that customers might buy its new product by
associating the new product with an existing, successful brand.
• For example, if Campbell's releases a new soup, the company is likely to keep it
under the same brand name rather than inventing a new brand. The positive
associations that customers already have with Campbell's make the new product
more tempting than if the soup has an unfamiliar brand name.
 Components of Brand Equity

1. Brand Awareness
The first step of the equity building process is
building the awareness of the brand. Brand
awareness means that the customers are aware of
the brand and can associate it with the specific
product/category. Awareness triggers the rest of the
components of the brand equity building process.
2. Brand Associations
Just like with other people, we tend to associate
things with brands too. Brand association is anything
which the customers think of or relate to the brand.
Interactions with the brand give rise to the
associations. These could be employees, color,
advertisements, voice, language, experience, etc.
For example, we tend to associate the color red with
McDonalds and happiness with coca-cola.
 Components of Brand Equity
• 3. Perceived Quality : One of the major prerequisites of building a
strong brand equity is the fulfillment of the brand promise. Customers
assess the brand by comparing its offering to the offerings of the
competitors on the basis of certain qualitative and quantitative
parameters. The product quality being a qualitative measure is a
relative subject and depends totally on customer’s perception.
Nevertheless, it influences the pricing decision and positioning
strategy of the brand which eventually affects its equity.
• 4. Brand Experience : Brand experience is the aggregate of
experiences of the customer with the product offered and the brand
overall. It includes pre-sale, sale, and post-sale experiences with the
brand along with the experiences with the product offered.
Customers with good brand experiences will certainly consider the
brand superior over others and will prefer it over other brands.
 Components of Brand Equity

• 5. Brand Preference
• Brand preference is one of the major indicators of strong brand equity
in the market. A preferred brand can charge more for the same
product. However, giving rise to brand preference isn’t as easy as it
seems. The company needs to make sure that the customers have
good associations and experiences with their brand.
• 6. Brand Loyalty
• A brand loyal person repeatedly chooses one brand over others
offering the same product. Loyal customers not only result in
repetitive sales, but they also are the best source for word of mouth
marketing.
 Examples
• Apple : Apple is one of the best examples to explain brand equity.
Even though the product offered by this brand have similar features
to products of other brands, the demand, loyalty and the price
premium to higher than any other mobile brand. The brand is
counted among the top three most valuable brands since the past 7
years.
• Maggi : Even after months of the ban on its flagship noodles in India,
the product saw a great demand when it was relaunched in the
market. Maggi is one of the best examples to show how a strong
brand equity can help a company cope up with anything in the
market.
• Facebook : Other social networking websites may come and go but
Facebook remains the only constant. Facebook has made its users so
brand loyal that most of them don’t even look up to any other social
media platforms.
 Positive and Negative Brand Equity
• A brand can have either positive or negative brand equity.
• While positive brand equity helps the company to maintain
superiority over its competitors and expand its product lines, a
negative brand equity as in the case of Volkswagen, which was held
guilty for emission scandal, could even hurt the current product lines
under the brand and have a long-lasting negative effect on the brand
positioning.
 Types of Branding
• Personal Branding:
• Personal branding is different from the product branding. In this type
of branding, we try to establish our personality, character or our work
as a brand. Personal branding is very common among politicians,
athletes, and celebrities. Personal branding makes it possible for
famous people to reflect a good image of themselves to the public.
 Product Branding
• This is the most common type of branding. In this branding, we work
on our product to make it different from others. Product branding is a
symbol or design that helps to identify a product easily. Product
branding is easily noticeable when you go shopping in a supermarket
filled with multiple products. Because most products branded with a
unique color, design, and logo.
 Corporate Branding
• A business carried out various activities and different function,
organization have to manage all these functions along with other
aspects like products, services, employees, corporate culture as well
as corporate social responsibility. Every activity has its positive or
negative effect on the organization’s reputation. Corporate branding
used by businesses to create and maintain brand image.
 What is Corporate Branding?
• A corporate branding strategy uses your organization’s name and
reputation to draw consumers, as opposed to using the selling points
of a specific product. Corporate branding emphasizes your
organization as the best provider of your product or service.
• Celebrity endorsers such as Tiger Woods and Michael Jordan using
Nike products in competition are examples of corporate branding.
Endorsement and event sponsorships can make positive connections
in consumers’ minds. Small businesses can effectively use
sponsorships to create these positive associations in their
communities by partnering with youth groups and local events.
 Retail Branding
• Retail branding is commonly used by retail giants to arouse
customer’s interest in its brand. In retail branding, companies spend
the huge amount to set a distinctive image from competitors. This
type of branding requires a lot of planning efforts and efficient
execution. Any wrong decision or strategy can put the negative
impact on reputation.
 Geographical Branding
• Branding used for specific products and services that are unique to a
particular region known as geographical branding. It is commonly
used in the tourism industry. Many countries and regions try to brand
things that make them different from other areas. Landscape, cuisine,
tourist centers within a popular region are usually advertised and
eventually become associated with the region.
 Co-Branding
• In this type of branding two or more companies associates their
brands with a specific product or service. Co-branding can describe as
a marketing partnership between two or more brands. So that the
success of one brand can put a positive impact on other. Such
branding is effective in building the business, to spread awareness
and breaking into new markets.
 What is Consumer Branding?
• A consumer branding strategy works to create recognition and positive
reputation for a specific product. Distinctive packaging and emphasizing a
particular product’s selling points are common practices in consumer
branding.
• Consumer branding aims to convince your prospective customers of the
value, quality or exclusive nature of your product or service.
• Where corporate branding presents your organization as the top provider
of your product or service, consumer branding presents your product or
service as the top solution to your consumers’ needs and desires.
• Your neighborhood grocery store is filled with examples of consumer
branding on product packaging. Sports drink labels list key ingredients that
imply superior performance benefits to competing products. Soft drinks
and snack foods strive for eye-catching use of color and design in their
packaging.