INTRODUCTION
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.
CONCLUSION
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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