Increasing number of companies put the strategy of customer loyalty into focus. Marketers from different countries come to an agreement that combining customer development with customer retention can bring long-term impact on brand performance (Kotler, 2003). In specific, price premium, brand awareness and market share closely associated with brand profitability count on customer loyalty. For instance, loyal customers are inclined to pay more for a certain brand because of its inimitable value for them; there is no doubt that no alternative can instead. Similarly, as repeated purchase of loyal customers, market share will be optimistic for the specific brand, in spite of situational restrictions. On the other hand, serious threats customer loyalty brings to brand lies in perceived product parity and fail in innovation and product propagation. Otherwise, retain loyal customers constantly require extra cost for quality control and more budget for marketing campaign on a continuing basis. Unfortunately, small brands with insufficient abilities hardly to achieve the development and reinforcement of customer loyalty, big brands will increasingly prosper as a result. This essay will highlight whether customer loyalty make or break a brand and illustrate examples which can contribute to a brand to be successful through customer loyalty strategy.
Customer loyalty has already been, and carries on to be, defined as “repeat purchasing frequency or relative volume of same-brand purchasing” (Assael, 1998). While some of academics approve that customer loyalty is an exactly multifarious construct (Javalgi and Moberg, 1997) because it well-defined on both behavioral and attitudinal footings (Mellens et al., 1996). And making full use of the compound definition of customer loyalty initially recommended by Jacoby (1978), there is little consent on whether customer loyalty makes or breaks a brand. Numerous definitions in the literature are swayed by customer behavior rather than taps into psychological connotation of customer loyalty (Oliver, 1999:33). Nevertheless, according to Jacoby and Kyner (1973:9), Customer loyalty is the biased behavioral response, expressed over time, by some decision-making unit, either on the part of an individual, family or organization, with respect to one or more alternative brands out of a set of such brands. To be precise, it is essential to make a distinction between exclusive loyalty (i.e. repeat purchase) and the psychological activities which contains using specific benchmarks to evaluate diverse alternatives. Likewise, Jacoby and Chestnut (1978) have made an effort to do this distinction.
Therefore, customer loyalty is not only simply concerned repeat purchasing behavior, but it also has another dimension which is related to attitude, where commitment is the vital character (Berne, 1997:163). According to Jacoby and Chestnut (1978), Solomon (1992) and Dick and Basu (1994:99), combining the two dimensions enables us to divide customer loyalty into two types. One is inertia loyalty, where a brand is chosen due to habit merely, and these sorts of loyal customers will not vacillate to switch to other alternative brands unless certain convenient reason to do so. Accordingly, competitors who are likely to change this buying pattern are rather easily, because of little confrontation to brand. The other is true brand loyalty, which means purchase repetition behavior revealing conscious decisions to buy the certain brand continually, and “it must be accompanied by an underlying positive attitude and a high degree of commitment toward the brand”(Solomon, 1992).
Customer loyalty is a significant conception in strategic marketing, especially branding strategy. It delivers whys and wherefores for customers to undertake protracted search among alternative brands (Uncles and Ehrenberg, 1995:71). Similarly, Solomon...