Brand Loyalty

Case Example: Perrier

1989: over 50% market share in bottled

water

1990: product recall

Late 1990: under 20% market share

Key Factors

Product pullout disrupted purchasing

behavior

Recovery attempt: Pricing Promotion

Further reduced perceived value of product

Compromised the loyalty of consumers who stood for Perrier’s top-tier image as a bottled water

Case Example: Wordstar

Dominant word processing software in the

early 80’s

Distant competition: WordPerfect, and

Microsoft Word

Key Factors

Customer service support

Upgrade was poor in backward

compatibility

Legitimized competition by offering similar interface

Multiple simultaneous releases in-market

Measuring Brand Loyalty

Behavior Measures

Repurchase

Share of purchase

# of varying brands purchased

Switching costs

Customer Satisfaction

Brand “Liking”

Brand Commitment

Levels of Brand Loyalty

No Loyalty (Switchers, Indifferent)

Habitual Buyer

Satisfied Buyer

“Liker”

Committed Buyer

Key Lessons

Loyalty isn’t transferred or bought, it is

EARNED

Marketing Costs

Trade Leverage

Attracting New Customers

Brand Awareness

Reassurance

Buffer against Competitive Threats