Production is not complete until the product is in the hands of the target market. Distribution function adds time and place utilities since it is responsible for transferring products from the point of production to the point of use. This is done over time and most times across long distances. For instance, majority of the imported of the electronic products we use in Nigeria are produced abroad and improved into Nigeria through various means, some come by air, some over high seas and yet others come by road.
These features are majorly responsible for differences in the distribution channels and the types of middlemen employed for distribution of industrial products are against those employed for the final consumer products. All the same, no matter the type of product in question, the value of the product when manufactured is not necessarily the same as its value when placed in the hands of the consumer. Channel members add value to the product when they perform function such as sorting and grading, financing, storing, transporting and servicing.
Just as manufacturing adds value to raw materials, distribution adds value to finished products. Some advertisers who promise their potential customers that they will avoid the middlemen fail to tell them also that they will have to perform the function of the middlemen, and that he customer eventually pays for those services. The difference becomes a matter of who should perform the function and receive the pay and not whether the customer will avoid any cost. In extreme cases, when the user prefers to deal directly with the producer, he is made to travel long distances to collect such products or pay for same by buying the product at a rather exorbitant price compared to its cost of production. The consumer in this case is also expected to buy in larger quantities, take responsibility for product assembly, or finance the purchase. By the time all these steps are costed and their costs summed up, it may be discovered that the customer would have been better off buying if from an intermediary located near to him, who performs the above mentioned functions for him. It is however cautioned that for the customer to be satisfied and the middlemen to reap a modest profit, the margin added by the middlemen to his cost of product acquisition should be commensurate with the value he adds.
Nowadays, brands are companies’ most valuable assets, adding both economic and strategic value to its proprietors. During the last years, brand valuation has been an intensively analyzed subject among marketing specialists. The value of this asset is often referred to brand equity which is the marketing and financial value associated with a brand’s strength in the market or the added value a given brand name provides to a product beyond the functional benefits. Besides the actual proprietary brand assets, such as patents and trademarks, other major elements underlie brand equity: brand awareness, perceived quality, brand associations and others, but, above all, brand awareness, perceived quality, brand loyalty, which represents the core of a brand’s value. This paper will try to position brand loyalty among other descriptive dimensions of brand equity, analyze the effects of a high degree of loyalty among customers, identify several typologies of customers considering their level of loyalty and finally establish a framework for creating, maintaining, enhancing, and assessing brand loyalty.
The American Marketing Association defines brand loyalty as “the situation in which a consumer generally buys the same manufacturer- originated product or service repeatedly over time rather than buying from multiple suppliers within the category” or “the degree to which a consumer consistently purchases the same brand within a product class”. Trying to define the term, Aaker considers that brand loyalty reflects “how likely a customer will be to switch to another brand, especially when that brand makes a change in price, product features, communications, or distribution programs”.
Brand loyalty represents the core of a brand’s equity. Daryl Travis considers that brand loyalty is “the ultimate objective and meaning of brand equity”, adding that “brand loyalty is brand equity”. Still, brand loyalty can’t be analyzed without considering its relationship to other descriptive dimensions of brand equity like awareness, perceived quality, or associations.
Firstly, all the other descriptive dimensions of brand equity can enhance brand loyalty, as perceived quality, associations and awareness provide reasons to buy and affect satisfaction. Loyalty could arise from a brand’s perceived quality or associations, but could also occur independent of these dimensions (for example, a person can be loyal to a low perceived quality brand and dislike a brand with a high perceived quality due to subjective reasons). Yet, the nature of this relationship is unclear.
On the other hand, loyalty can induce a higher perceived quality (for example, a potential customer has a better evaluation of a brand if that brand is perceived as having a loyal customer base), stronger associations (the brand can be associated to elements characterizing its loyal customers), or increase awareness (loyal customers tend to provide brand exposure to new customers through “mouth to mouth” communication).
Concluding, brand loyalty is both an input and an output of brand equity and it is both influenced by and influences the other descriptive dimensions of brand equity.
Nevertheless, brand loyalty is qualitatively different from other major dimensions conditioned by prior purchase and use experience, while awareness, associations, or perceived quality may be present even in the case of a brand that hasn’t been used yet.
POSITIVE EFFECTS OF HIGH DEGREE OF BRAND LOYALTY
A high degree of loyalty among customers provides the firm with a series of specific competitive advantages, loyalty having a strong positive effect in two main directions, reducing marketing cost and increasing the brand’s revenue.
Customers can manifest their loyalty to a brand in several ways: they may choose to stay with a provider, and they may increase the number of purchases or the frequency f their purchases or even both, thus generating higher revenues for the brand. They decision making of others, thus reducing the brand’s marketing communication costs.
It is well known that it is much more expensive to gain new customers than to keep existing ones, especially when the existing customers base is satisfied and loyal. Even if there are very low switching costs and low customer brand commitment, there is a substantial inertia among customers. Still, brand loyalty must not be confounded to brand inertia. According to Bloemer and Kasper, brand loyalty implies a deep-seated actual brand loyalty. In their published research, they assert that a repeat purchase behaviour is the actual re-buying of a brand whereas loyalty includes antecedents or a brand loyalty into “spurious” and “true” loyalty. Spurious loyalty represents biased behaviour response expressed over time by some decision-making unit, with respect to above, but replaces inertia with a psychological process resulting in brand commitment.
The loyalty of the customer base reduces the vulnerability to competitive attacks. Loyal customers perceive very little incentive to try other brands and even if they do, there is a substantial time gap between they receive the information about the new alternative and their decision to try it. Thus, the firm has a significant time to respond to competitive threats and knowing this, competitors are discouraged from spending resources to attract other brand’s loyal cusotemrs.
Loyalty also generates trade leverage, as loyal customers expect the brand to be always available generating incentives for distribution channels to reference the brand.
Research has shown that loyal customers are less price sensitive and the expense of pursuing new customers is reduced, while organizational profitability is positively affected by the level of brand loyalty. Brand loyalty can enhance marginal cash flow and profitability, as loyal customers often accept to pay a price premium for their favorite brands, are easily stimulated to new usage situations and tend to increase intensively and extensively their spending on the brand.
The marketing communication spending is also reduced as loyal customers are already confident in the purchase decision and process information rapidly, instruments like sales promotions or advertising being less intensive needed in this case in comparison to brands with low loyalty degree.
THE INFLUENCE OF EFFECTIVE INDUSTRIAL PRODUCT DISTRIBUTION ON CUSTOMERS BRAND LOYALTY
1. To represents the single most important activity in the creation of place-values and time-values, this means moving goods from the end of production line to customers in the market place.
2. Creates place values and time values by making goods available in the market place when needed.
3. Ensures that the right mix of products is available at the right place and at the right time, in sufficient quantity to meet demands; balance the risks of stock outs and lost sales against the risks of overstocks or obsolescence; and facilitate production planning.
4. Ensures good condition of products when they arrive in the market place and maximizes use of warehouse spare and transport equipments.
5. Maximizes speed and minimizes cost of order picking, moving to and from storage loading, and unloading at destination, relates to production.
6. Assists in creation of place values by communicating requirements to appropriate locations. Relates to inventory management by reflecting demands on current stocks and changes in inventory position.
7. Ensures realization of place and time values by making goods available for inventory permits planning of warehouse facility utilization, and transportation requirements.
8. Relate place-time values as seen by the company to place-time values as seen by its customers. Establish levels of customer services consistent with marketing objectives as well as with cost limitations.
9. Maximizes place-time values by relating plant and warehouse location to transportation services and cost in terms of markets to be served. Facilities planning ensure that capacity, configuration, and throughput of warehouse and shipping facilities are compatible with product flow.
A successful brand strategy must be based on creating brand loyalty. For achieving this goal, loyalty’s relationship to other descriptive dimensions of brand equity must be clearly set out, while target consumers must be classified on a loyalty basis. The marketing mix must be than shaped according to this classification.
Furthermore, certain rules generally apply when managing brand loyalty, along with specific tactics and strategies established after a detailed analysis of the particular situation a brand or its actual and potential clients has.
Finally, managing brand loyalty implies a periodical assessment of the results obtained through specific strategies and of the levels of brand loyalty among customers, considering both functional and emotional perceived aspects related to the brand.
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