Brand Equity to Customer Loyalty

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Brand Equity to Customer Loyalty

An examination of brand equity leading to customer loyalty in the clothing industry using the Loyalty Ladder model.

Abstract
Purpose - The aim of this paper is to examine if there is a correlation between brand equity and brand loyalty. The author will research the sources of brand equity for three international clothing companies: Abercrombie & Fitch, Marks & Spencer, H&M and apply each company to the Loyalty Ladder.

Methodology – Secondary literature was used throughout this study, mainly including; Annual Reports, Academic Journals & Datamonitor reports.

Findings – All three companies have a strong brand image and they do have many customers’ who are loyal to their products. All companies experienced growth in revenue in 2010. The companies examined are now in the process of growing their businesses in emerging markets. The loyalty of customers does remain but it is mainly due to the companies innovative marketing strategies, which have resulted in increased revenues within the companies. Constant brand re-enforcement is extremely important to keep customers loyal to a brand.

1.0 Introduction

Keller (1993) recognised two reasons to study brand loyalty; for financially based reasons and to improve marketing productivity. Tolba & Hassan (2009) studied the correlation between brand equity and customer loyalty which has seen significant research over the years. The authors conducted an in-depth study of 17 brands within the automobile industry. The findings showed that loyalty and satisfaction were the strongest predictors of brand preference and intention to purchase. The research was broken down into three areas; those who had never tried the brand, those who had tried once and those who had purchased the product. (See Figures 1.0-1.2). For those who had never tried the brand, they would not have been satisfied or loyal to a brand as they had never tired it. Perceptions of the brands image and value towards the brand impacted the results, therefore branding is fundamental in creating a personality and image of the brand that the customer can relate to. Patwardhan & Balasubramanian (2011) have taken brand equity one step further and discuss consumer “attraction” to brands. The authors believe that attraction and romance with a brand will increase loyalty to a higher level; a deeper and more intense level. The customer will experience security and trust the brand.

“We define brand romance as a state of emotional attachment (evoked in response to the brand as a stimulus) that is characterized by strong positive affect toward the brand, high arousal caused by the brand, and a tendency of the brand to dominate the consumer’s cognition. Brand romance is subject-specific. Different consumers may enjoy different levels of romance with respect to the same brand”.

Pawardhan & Balasubramanian conducted a study on numerous undergraduate students and asked them specific questions in relation to brand loyalty. The outcome of the study found that brand romance did exist even though the feelings and emotions behind the romance were not explained. There were a certain brands which kept re-occurring as brands with which students felt romantic about. These were Nike, Ford, Coca Cola, Dr. Pepper, Cingular, Sprint and Abercrombie & Fitch. The author of this paper believes that if marketing managers could harness this idea and “connect” customers’ emotions and feelings to their brands, it may increase loyalty; especially in such a competitive market it could help to retain more customers. If a customer experiences “romance” they may have a longer lasting relationship with a brand. Marketers have created the concept of the “The Loyalty Ladder”. The rungs on the ladder represent; prospect, customer, client & advocate. (See Figure 2.0).The idea of the romance being that a customer would remain on the top rung of the ladder for longer if the...
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