Consumer Behavior

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Taylor’s University
Consumer Behavior
BUS2344

Assignment 1

Name: Tan Carmen
Student ID: 0300491
Lecturer: Dr. Jeannot Abdul Karim
Due Date: 15 October 2012

Question 1

Brand equity is the intangible value built by company overtime based on consumers’ perception, liking and loyalty of the brand name. (Aaker and David, 1991) As a customer-centric organization, F&N tends to build up a good relationship and consistently communicate with customer to ensure customer loyal to their brand. F&N brand vision of bringing enjoyment and enriching daily social life made the perception of the brand into customer’s mind.

In addition, F&N makes their customers to like and have good perception to the brand by giving free cups of Teh Tarik, lucky dip and activities to sustain consumer interest. Besides, F&N organized a national consumer promotion campaign to promote brand name loyalty and reward loyal customer with attractive prize to ensure loyal customer return and purchase more.

F&N eliciting considerable interest and delivering excitement for the brand products and get recognition widely, it had successfully notched a high brand equity score of 7.9.

(149 words)

Question 2

Customer loyalty refers to the behavior of repeat customer, as well as offering good review and favorable word of mouth to friends or family. (Wisegeek, 2012) It is a main challenge for a company to retain loyal customer, due to customer are given more choices, distinction between brands fade and development of new product from competitor. Loyalty of customer can be a form of measurement for the success rate of marketing strategy and lead to financial and brand benefits.

Some customers are especially loyal to certain brands because they feel their interests are the main concern and placed on the first priority of the brand. They believe they are rewarded from the brand by being loyal, by having incentives, discount and free gifts. In addition, the brand also satisfied their needs, in terms of the function of product or good services provided by the company.

According to The Gartner Group, 20% of existing customers generate 80% of business profits. Customer retention and life time value is important to an organization, because it is generally less expensive to retain present customer than to attract new ones especially the business market is so competitive nowadays. At the same time, existing customers are more likely to repurchase products or services. It is more expensive to advertise, provide discount and educate new customer about the brand of a business. As the world population is growing slower, there is less number of new customers to replace for a customer loss. (Blackwell, et al 2012)

Loyal customer is also the free marketing agent, when they are satisfied with the service or product. They will share the experience and provide recommendation to people around, and their friends or family are generally easier to get influence and have more confidence to try the product or service. Similarly, it is easier to upsell and cross sell to a loyal customer, as they are more familiar with their preferred brands and willing to explore recommendation.

Likewise, loyal customers are more insulated and less sensitive from business price competition. It is an additional advantage to retain customers and protect business bottom line during inflation and recession. Furthermore, a business has the opportunity to get information from customers and learn about their preferences and expectations, as well as getting honest and quality feedback from loyal customer. At the same time the company is able to track, and identify customers habits such as behavior, spending power and trends. It can help the business to improve or develop a new product or business to attract new customers, while retaining existing customers before losing them. (Guys, 2012)

In a nutshell, customer loyalty not only helps an organization to get...
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