The Creation of Customer Loyalty in the Automotive Sector

8/6/2019 The Creation of Customer Loyalty in the Automotive Sector

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The creation of customer loyalty in the

automotive sector

Marketers push for brand loyalty, across all product ranges, from toothpaste to larger purchasessuch as a new car. Within the automobile industry there is little product differences in eachsegment, as partnerships, coalitions and takeovers bind manufacturers together.

Each manufacturer is striving to obtain brand loyalty, not only at thepoint of purchase, throughservicing the vehicle, supply parts andencouraging repurchases. This adds value to theorganisation, andincreases profits.

Loyalty schemes have been a success in supermarkets and otherretail outlets, can this form ofmarketing be transferred to theautomotive industry.This paper sets out to review the current literature of the subject,discuss what loyalty schemes

the automotive industry offers itscustomers, and to focus on one Manufacturer Volvo.

Volvo have in the last decade turned around flagging sales, this wasachieved through placing ahigher value on their customers, whoresponded by increased usage of their servicedepartments.

3.0 Introduction


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The ultimate obtainment for marketers would be for complete brandloyalty, across all productranges, from toothpaste to larger purchasessuch as a new car. Although without any brandloyalty, organisationscould not survive. So is it possible to increase brand loyaltythroughschemes that target the consumer?One of the hardest areas to increase brand loyalty is the automotiveindustry. Manufacturers are

constantly offering discounts, freeinsurance, sales and other packages to attract new customersand to resell to existing consumers. Consumers expect a good service and deal asit will be theirsecond largest purchase (a house being the first).

The result of partnerships, coalitions and takeovers in theautomobile industry has bondedmanufacturers together. This has leftvery little product differentiation, with more marketing onthe brandthan product. Manufacturers have to look for different methods toattract customers.Each manufacturer is motivated to obtain brand loyalty, not only at thepoint of purchase, throughservicing the vehicle, supply parts andencouraging repurchases. This adds value to theorganisation, andincreases profits. The added value can be the emotional tie thecustomer haswith the brand.

Customer loyalty is not a new notion, although it is now the focus ofmany practioners, retainingexisting customers is more important thanattracted new. If you lose your core customers a higherlevel ofresources is required to maintain the same level of sales. Therefore itis vital to maintainloyal customers to utilise economies of scales.Loyalty schemes have been a success in supermarkets and other retailoutlets. Some schemesinvolve several brands collaborating to give theconsumer a choice of where to spend. Thequestion is can this form ofmarketing be transferred to the automotive industry.This paper sets out to review the current literature of the subject,discuss in general what loyaltyschemes the automotive industry offersits customers, and to focus then on one ManufacturerVolvo.

Volvo was chosen for this research as an example of using customerloyalty as a change agent toturn the organisation around. Brandloyalty is very strong with Volvo, although this did notcorrelate withthe dealerships.

Volvo has introduced methods to increase loyalty with theirdealerships. They have taken loyaltya step further and strengthen allsupply chains

Volvo traditionally had a strong brand recognition, but went sales wentinto decline theorganisation had to re-focus on core values. Themethods that Volvo used to build the brand andto increase customerloyalty will be discussed, comparing them to the literature.We are loyal to brands; our degree differs as to how we value thecloseness of the product. Canthis be influence by strong marketingtactics? With such a large purchase as a vehicle can themanufacturerssway our opinion, or do we remain loyal to what we know and trust?

4.0 Methodology

This chapter discusses the research methods used for the project andthe justification for thechoice of methods. It discusses methods thatwere not used, with justification of why they werenot included. Included is a critique of methods selected, and with hindsightidentifies any changes


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that would have enhanced the research.

This paper evaluates brand loyalty within the automobile industry.Selection of the topic wasstimulated and formed out of allmanufacturers offering loyalty schemes; therefore could theyindividualschemes succeed. The nature of the research was discussed withcolleagues and fellow

students this not only added practical ideas andsuggestions, it opened new avenues of thought.This was the discussedwith lecturers sounding out ideas, gauging opinions and clarifyingthequestion. Focusing in on the question was obtained by employingrelevance trees, narrowingthe research area. This gave direction tothe research, although with reviewing the literature thischangedseveral times (Buzan, J. 1995).

Next, a research proposal was compiled, with the benefit of organisingideas and setting a time-scale for research. Theoretically, theproposal would highlight any difficulties with the researchquestionand access to data. Creating a time-scale would focus on targets andmeet deadlines inthe completion of the paper.

The literature review, discussing theories and ideas that exist on thetopic formed the foundationof the paper. The findings from theresearch are then tested on theories for validity (Saunders, M.et al1997). The literature review was challenging, there is very littleacademic researchspecifically on the topic area, although is a lot ofresearch in the wider markets for exampleSupermarket loyalty schemes.Journals and books were the back bone for the review, togetherwithinternet sites.

Tertiary data sources, such as library catalogues and indexes were usedto scan for secondarydata. This produced journals and newspaperarticles, books and Internet addresses. With theamount of literature,it took time to sort out relevant material to the research. Narrowingdown thesearch Bells (1993) six points parameters was applied. Applying key words that were identifiedin the first search producedrelevant and up-to-date material (Bell, J.1993). A limitation ontheliterature search was the amount of time to read all articles and bookson the subject. Whilstreviewing the literature references to otherpublications were followed and reviewed. Bellschecklist onidentifying the relevance of literature found was a practical method toreduce theamount of reading (Bell, J. 1993).

Ethical considerations in research fall into three categories, duringdesign, collection, andreporting of the data. These areas werecarefully considered at all stages of the research(Oppenheim,A.1996:84). The data sought throughout the research should remainwithin thescope of the project (Saunders, M. et al 1997).

Case studies of organisations that through varying factors have usecustomer loyalty schemes toimprove market share have been reviewed andcompared to the literature. The case studiesdiscuss the organisationsstrategy in the use of the data they have collected. This informationwasgathered from secondary data and their web sites.

To produce primary data on brand loyalty within the automobile industryproved to be a vast task,taking a lot of time to produce results.Internal and external operations of several organisationswould have tobe compared to reach any level of validity. Instead it was decide toreview


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previously published case studies, interviews and surveys. Thiswas then compared to theliterature review.

Other methods of data collection were considered and rejected. Focusgroups would have offeredfree flowing information. This could havebeen facilitated with discussion led by the researcher.

The idea wasrejected due to the limited resources.

The major limitation of the study lies in its relatively small samplesize and the limited coverage.This was mainly attributable to thelimited time and other resources available for the study.

5.0 Literature review

This chapter will review and discuss all the relevant publishedmaterial on brand loyalty. Thisstarts of wide to gain insight intobrands and the theory that has driven brand loyalty.

5.1 Brands

Kotler (2000) described a brand as a name, term, symbol, or design (ora combination of them)which is intended to signify the goods orservices of the seller or groups of sellers and todifferentiate themfrom those of the competitors (Kotler (2000) cited in Groucutt, J etal2004:275). The brand is part of the products tangible features, itis the verbal and physical cluesthat help the consumer identify whatthey want and to influence choice (Groucutt, J et al 2004).The actual word brand is derived from a Norse word which means toburn. It is assumed thatthis means to imprint ideas or symbols on aproduct. This then gives the product identificationand leaves alasting mark on the consumer (Groucutt, J et al 2004).Because product features are easily imitated brands have beenconsidered a marketer's major tool

for creating productdifferentiation. Even when differentiation based on productcharacteristics ispossible, often consumers do not feel motivated orable to analyse them in adequate depth.Therefore the combination ofbrand name and brand significance has become a core competitiveassetin an ever-growing number of contexts. Brands incite beliefs, evokeemotions and promptbehaviours (Aaker, D. (1991) cited in Kotler, Pand Gertner, D. 2002:249).

The brand in the automobile industry is of great importance, purchasinga vehicle is a statusindicator for the consumer. Manufactures brandtheir vehicles to attract the target audience; thenext step isretaining the customer to the brand. This is not just for repurchase,there is great valuein retaining the customer to the brand through outthe life of their purchase (Kottler, P et al .2005).5.0 Global BrandsThere are very few car manufactures products that are not a globalbrand. Their appeal can spanin a multitude of markets. Eachmanufactures portfolio is designed to attract a wide audience.

The rapid development of telecommunication and strong consumingcapability of youth havecreated common demands, tastes and valuesglobally in last two or three decades, which thus hasdriveninternational marketers to increasingly focus on the importance ofglobal brands. In recentyears, global branding has not only takenroot, it's in full bloom. As Peter Doyle (1998:165) said:


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"Brands areat the heart of marketing and business strategy The purpose ofmarketing is to create apreference for the company's brand". The trendtowards global branding, moreover, isaccelerating rapidly. Successfulglobal brands are powerful to obtain a number of benefits.

Consumers are willing to pay a premium price for global brands; theyimply credibility, high

quality and up-to-date global trend. To theconsumers, brand choice somewhat reflects a certainlifestyle, taste,image or even social status beyond the product. If they feel the brandfits into thiscategory, they'll not only prefer it, but are alsowilling to a higher price for it. Consumers perceiveadded values, itis the "the subjective beliefs of the customers" (Doyle 1998:168).Global branding can benefit the organisation by considerably cut costs,not only because of"thesignificant scales of economy it achieved"(Aaker 2000:306) in terms of new brand development,packaging andmanufacturing, but also because with global reputations can enter newmarkets atlower cost than new national brands: if you move into a newmarket with a brand that is alreadyglobal in scope, it reduces thecost of introductory and follow-up marketing programs.Suppliers and distributors obtain a comparatively stable marketingenvironment and can obtainhigher profit, with less risk by trading asbusiness partners with global brands. Therefore

companies that marketglobal brands posses powerful trade leverage, in bargaining withforefficient service and lower costs, they have more options on choosingits suppliers andretailers.

Although there are many advantages to a global brand, each area has tobe considered as anindividual market. Firstly, culture and customdifference can lead to market difference, whichenhance the difficultyof growth of global brand. To meet the different preference ofconsumers indifferent countries, global brand may have to adjust itsmarketing strategy accordingly andcustomise products. Secondly,localisation and increase in nationalism to some extent may resistthemarketing development of global brands. Thirdly, the political factoris considered as anothermain barrier to global brand. Last but notleast, along with the technology improvement andproduct innovation,the rise of local competitors is becoming an inevitable threat toglobal brand.

5.3 Brand Building

Once a brand is established it requires nurturing, to bring out the full potential and add value tothe organisation.Kashani (1999) believes that powerful brands are built over timethrough a consciousmanagement effort. This is achieved throughstrategic decision making and appropriate actions.All brands need tobe based on values and attributes that are permanent and, purposefulandfundamental to its strategy (Kashani (1999) cited in Groucutt, Jet al 2004:285). Therefore bycreating such values in an organisationit will provide direction and a future for the brand.

A brand with strong brand equity is a valuable asset to anorganisation. This asset is difficult tomeasure; although it hasemerged as key strategic asset. A powerful brand enjoys a high levelofconsumer awareness and loyalty, with the organisation benefiting fromlower marketing costsrelative to revenues. Consumers expect moreoutlets to carry strong brands; therefore theorganisation has moreleverage when bargaining with retailers. This all adds to thebrandsequity, which needs to be managed by the organisation (Kotler, P. etal 2005).This brand asset management is a concept that is closely related topositioning, since certainbrands are central to a company's currentand future performance. They need to be managed,


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enhanced and protectedas assets. This allows brand names like Coca-Cola, Sony, IntelandDisney to extend into new product categories, and produce productvariants and services(Kotler, P. 2004).

Brand asset management is an area of increasing importance to marketerstoday, particularly as

organisations move toward attempts tocommunicate ever complex and intangible messages, aspart of brandmanagement strategies (Davis, 2000; Goodchild and Callow, 2001). Brandmanagersare concerned with how to develop a better understanding ofthe appropriate relationship betweenbrand equity and customer loyalty,particularly in relation to the multitude of known variablestocustomer loyalty (Davis, (2000) Goodchild and Callow (2001) cited inTaylor, S. et al2004:219).

It is vital that marketers position the brand correctly, and considerthe fit with its attributes,values, culture, benefits, andpersonality. For example Mercedes suggests that it attributes arewellengineered and well built, it is durable, high prestige, fast andexpensive. These attributestell the consumer the benefits and valuesthat are placed in the product. These attributes represent

the Germanphilosophy and culture, which reassures the consumer the high value ofthe product.The personality of the product is wealthy, well built andreliable (Kotler, P. 2005).

Within the Motor Industry it is difficult to extend products without anexpensive developmentand launch of a new vehicle, although continualresearch and development are vital tomaintaining market position. Manymanufacturers have extended their brands by introducing forexampleclothing, toys, consumables and sporting equipment. These are retailedmainly throughtheir network of dealerships, utilising economies ofscale. These items are inclusive to them,adding value to the products(Johnson, G & Scholes J 2004).

The emerging literature suggests that customer brand loyalty isgenerally considered the ultimatedesirable marketing-based outcomefrom strategic marketing activities (Chaudhuri, (1999)Gwinner et al.,(1998); Kumar, (1999) Mittal and Lassar (1998) Reichfeld and Schefter,(2000)Strauss and Friege, (1999) Kotler (1999) have all publishedarticle that point to loyalty as theultimate attainment in marketing. This assertion is largely based on the growing influence oftherelationship marketing orientation on marketing theory and practice(Taylor, S. et al 2004:219)

5.4 Brand Loyalty

Brands have a personality and speak for the user. They enhance theperceived utility anddesirability of a product. Brands have theability to add to or subtract from the perceived value ofa product. Onone hand, consumers expect to pay lower prices for unbranded productsor for those

with low brand equities. On the other hand, they paypremiums for their treasured or sociallyvalued brands. Brands haveequity for both customers and investors. Brand equity translatesintocustomer preference, loyalty and financial gains. Brands are appraisedand traded in themarketplace. Brand equity has been pointed out toinclude many dimensions, such asperformance, social image, value,trustworthiness and identification (Kotler, P and Gertner, D.2002)

The four types of brand loyalty are characterised as (1) No loyalty: Nopurchase at all, and a


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complete lack of attachment to the brand, nosocial influences to be even cognitively loyal to abrand. (2) Covetousloyalty: No purchase but, unlike the case of 'no loyalty', theindividualexhibits a very high level of relative attachment to thebrand as well as a strong positivepredisposition towards the brand,which is developed from the social environment. (3) Inertialoyalty:An individual, although purchasing the brand, does so out of habit,convenience or for

some other reason, but not as a consequence ofemotional attachment to the brand or a real socialmotive. (4) Premiumloyalty: An individual exhibits a high degree of relative attachment tothebrand, a high instance of repeat purchases, and appears to behighly influenced by social pressure.Premium loyalty is characterisedby the greatest degree of consumer attachment to the brand, andin thiscase the consumer purposefully seeks to purchase the particular brand,while attempting toovercome obstacles (Gounaris, S. and Stathakopoulos, V. 2004).

Chaudhuri and Holbrook (2001) proposed a model of brand loyalty thatsuggests that purchaseloyalty tends to lead to greater market share,while attitudinal loyalty leads to higher relativebrand pricing.Morgan (2000) suggests that the term "loyal can be interpreted indifferent ways,ranging from affective loyalty ("what I feel") tobehavioural loyalty ("what I do"). Thus

separating loyalty intoemotional and actionable (Chaudhuri and Holbrook (2001) andMorgan(2000) cited in Taylor, S. et al 2004:221).

There are different levels of trust that affect brand loyalty, they are(1) calculus-based trust, theconsumer believes it is in the serviceprovider interest are not to suffer the loss of reputation andprofits(2) Knowledge-based trust, as the name suggests, is based on knowingthe service firmwell and being able to anticipate its actions.Effective two-way communication is important forknowledge-based trustto develop because it ensures that the parties exchange informationabouttheir preferences and approaches to problems. (3) Customers withidentification-based trust havefull confidence in the service companyand believe that it will act in their best interests. Theserviceprovider has in-depth knowledge of customers' needs and desires, andcustomers perceivethat their desires are fulfilled, and they sharedvalues (Liljander, V. and Roos, I. 2002)

In terms of brand purchase expectations, the implicit assumption isthat a satisfied customer willremain "loyal" to the brand (all otherfactors being equal). In the modern automotive marketingenvironment,this is indeed a fair assumption to make. The degree of pricecompetition at the retaillevel is so intense that, when factoring indiscounts, rebates and low interest finance rates, priceparityinevitably results. Furthermore, the growing oligopolisation of themanufacturing industry(e.g. Ford owning/controlling Jaguar, Mazda,Volvo and Aston Martin) and co-operation betweenmanufacturers (e.g.Ford/VW, Ford/Nissan, GM/Toyota) has resulted in few, if any,sustainableproduct differences (Liljander, V. and Roos, I. 2002)

Is brand loyalty resistance to change? The literature accepts thatcommitment is central torelationship marketing. There is a linkbetween commitment, trust and loyalty. Pritchard et al.(1999) definecommitment as the emotional or psychological attachment to a brand".They arguethat resistance to change is the root tendency of commitmentas well as the primary evidence ofcommitment, and that resistance tochange is a key antecedent to loyalty (Pritchard et al. (1999)cited inTaylor, S. et al 2004:221).

5.5 Relationship Marketing


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Organisations should build a stronger relationship with theirprofitable customers. There are fivedifferent levels of relationshipmarketing that can be practiced. The basic level does notreallyinvolve building a relationship, for example it is when a carsalesperson smiles and sellsyou a car and waves good-bye as you driveit off the lot. You never see him again; if you needservice you talkto someone in the service department. Very few auto dealership systemssucceed

in building such a strong bond between the dealership and theclient that the client keeps buyingfrom the same dealership (Kotler,P. 1992:52).

Reactive marketing is the next level of relating. At this level, as thesalesperson waves good-byeto the customer, he says, "By the way, ifthere's any problem, please call me. You don't have tocall the servicedepartment; I am responsible for your satisfaction" The employee hastaken onsome of the responsibility of managing the customers needs(Kotler, P. 1992:52).

A higher form of relationship is accountability. At this level, thesalesperson calls the new carowner within two weeks of the sale andasks how he likes the car, and if there is any way the carcould havebeen better. Those salespeople often get an earful. The customer mightsay, "I wish the

door had a pocket for maps. I wish there was a rearwindow wiper."

At that point, the dealershould ask, "How much would ithave been worth to you if the car did have a map pocket in thedoor anda rear window wiper?" That type of information will help the automobilemanufacturercontinuously improve its product (Kotler, P. 1992:52).

Still, a higher level is proactive, where the salesperson will call thecustomer from time to timeand say "The manufacturer has developed aproduct that will help you save fuel, it's somethingwe can add to yourengine and it will reduce your fuel costs." Customers get a sense thatthecompany still is interested in their needs. Partnerships are theultimate form of relationshipmarketing. They involve actually livingwith the customer and are mostly confined to business-to-businessrelationships (Kotler, P. 1992:52).

Each level requires more cost, so it is important for organisations todetermine when it is worthgoing to the next level. Two dimensions thatare particularly critical are the margin that the firmmakes on thebusiness and the number of customers making purchases. For example, alow-margin business with many customers, for example selling toothpastewould operate at the basiclevel. The organisation has so manycustomers for that product and makes so little per unit that itwouldnot be cost-effective to develop a high-level relationship (Kotler, P.1992:52).

There are five levels of response for each customer service andretention tool. Those levels varywithin companies; an organisationmight be reactive with respect to technical assistance,accountablewith respect to service and basic in terms of value-added. Theimportant thing is toknow where your competitors stand, what is theirprofile with respect to relationship investments,and what thingsshould you do to be superior to the target market.

5.6 Service Quality

The organisation has to decide and implement which level of valueadded service it will offer itscustomers. This experience of thecustomer will reflect in brand loyalty.


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Relationship marketing strategy will decide the level of service acustomer will receive. Forexample on the basic level technicalassistance might be a owners manual, yet on the reactivelevel perhapsa help line, at the level of accountability, perhaps an occasionalvisit to the customerto see if the customer is using the productcorrectly and efficiently(Kotler, P. 1992:52).

Training of employees would appropriate at the proactive level. Thiscan offer the customer ahigher level of service, making them feelvalued by the organisation. Many manufacturers offerin house trainingto the employees within the dealerships. This not only trains employeesto asimilar level of customer service skills, it reinforces the brand.The customers experience of thebrand is uniform across themanufacturers network (Kotler, P. 1992:52).

Frequently organisations move from one strategic initiative to anotherwith little consideration oftheir natural progression. This has beenthe case for many companies that have moved from anemphasis on qualityin the 1980s, to customer satisfaction in the early 1990s, to customerloyaltyand retention today. Managers proclaim that they have movedbeyond quality and customersatisfaction to focus on what reallymatters, namely loyalty and profitability. Although it is

argued thatthere is no such thing as moving beyond quality and satisfaction. Theyare essentialbuilding blocks toward building loyalty and a valuablebusiness organisation. (Gustafsson, A.and Johnson, M. 2002:249).

The service quality perceived by the customer varies across thespectrum. Relationship benefitsare perceived advantages that theregular customer receives over and above the core service.These arerewards; the individual has gained over time by being a regularcustomer. The benefitstie him or her to the company by making itunattractive to switch providers. They may take theform of loyaltyprogrammes, which are offered to all customers, or benefits that canbecustomised to individual consumers (Liljander, V. and Roos, I. 2002).This then becomes a relationship benefit, but only when it is notoffered to any customer whoenters the dealership, regardless ofrelationship length. However, companies may believe thatthey areoffering benefits, but only customers can tell if they are experiencingany. Therefore thelevel of service received is subjective (Liljander,V. and Roos, I. 2002)

5.7 Customer Value

Customer value management (CVM) has become a major focus in currentmarketing, as valuemarketing has become a slogan among marketingpractitioners. Sinha, I and DeSarbo, W. (1998)defined this as in themarketplace, value often is defined as quality at the right price" andis seenas more important to consumers than quality, because value isquality that the consumers can

afford (Sinha, I and DeSarbo, W.1998:236).

Zeithaml (1988) reports considerable heterogeneity among consumers inthe integration of theunderlying dimensions of perceived value. Theydefine the perceived value as a trade off of"higher orderabstractions," such as perceived benefits and sacrifice, which areformed from bothintrinsic and extrinsic product attributes, includingtexture, quality, price, performance, service,and brand name (Zeithaml(1988) cited in Sinha, I and DeSarbo, W. 1998:236). Zeithaml1988:236)


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There is a strong link between relationship marketing and customervalue, the higher value placedon the customer will reflect in theirpurchasing choices. True and spurious relationships are theextremepoints on a continuum. At the lower end, customers may be behaviourallycommitted tothe service but satisfaction is only latent. At the higherend, customers are more manifestly

satisfied and more affectivelycommitted to the service (Liljander, V. and Roos, I. 2002)

Berry (2000) proposed three relationship levels of customer perceivedvalue. These are based onfinancial, social and structural bonds.Financial bonds, such as loyalty programmes, areconsidered the weakestform and may only lead to spurious relationships Social andstructuralbonds are more closely related to true customer relationships.According to Berry(2000), structural bonds offer value-adding problemsolutions that are not dependent onindividual service representatives,and which are difficult for competitors to copy (Berry (2000)cited inLiljander, V. and Roos, I. 2002:598)

5.8 Customer Loyalty

Customer satisfaction can be considered the central determinant inall phases of the contact chain.Multi-dimensional recording ofcustomer loyalty reveals clear differences in the interactionsfirstwith brand loyalty and, second, with dealer loyalty. In contrast to theopinion widely held inpractice, customers in the automotive sectordefinitely do not perceive the brand and the dealer asone unit. Theresults obtained are so fundamental that they can be translated intoimplicationseven by internationally operating companies (Huber, F andHerrmann, A 2001)

The relationship between the purchase intention and customersatisfaction has been widelyinvestigated (for example, Oliver 1980;Bearden and Teel 1983). The evidence suggests that thereis a strongpositive relationship between the two. Several of these studiesindicate that higher

levels of satisfaction lead to greater customerloyalty (Yi (1991); Anderson and Sullivan (1993)Boulding, Staelin,Kalra, and Zeithaml (1993) all cited in Dervaraj, S. et al 2001:425)

Consumers who purchase higher quality vehicles expect to receive ahigher quality service,therefore the assumption is made that poorservice will lead to greater dissatisfaction among thosethat purchasethe higher quality vehicles. Conlon, et al (1997) observed thatcustomers whopurchase higher quality rated vehicles are more likelyto use dealer facilities to maintain theirvehicles (Conlon, et al(1997) cited in Dervaraj, S. et al 2001:425)

An explanation for such behaviour is that there is a correlationbetween the perception of vehiclequality and the perception of thequality of service at dealer facilities. Therefore, high

customerexpectations of service quality can lead to better service performancewhich, in turn, thispositively influences customer satisfaction withservice. Therefore in the higher end of theindustry there is greaterloyalty (Dervaraj, S. et al 2001:425)

Oliver (1999) suggests that ultimate customer loyalty is a function ofperceived productsuperiority, personal fortitude, social bonding, andtheir synergistic effects. His argumentsgenerally support theassertion that measures of loyalty that are constrained only torepurchaseconsiderations fail to capture the richness of the loyaltyconstruct (Oliver (1999)cited in Taylor,


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S. et al 2004:219).

If loyalty is essentially an irrational and emotional attachment to aproduct, service or business,then marketers need to focus on elementsthat create this emotional attachment. In developing astrategy thatdraws on the irrational attitudes of consumers, brand equity plays animportant role.

All the elements that contribute to the development ofbrand equity are difficult to measure, oftenbased on consumer emotionsrather than on rational behaviour, and the objective of brandmarketingis, in part, to create a generally favourable impression of the productor service withoutthe use of objective or tangible factors. It is thisintangible element that gives brands their valuesince, without suchintangibles, brands become worthless (Kotler et al 2005).

The dilemma with subjective measures is that they take marketers backinto the territory whichthey though they had left behind. Back to theworld where we know half our marketing works butnot which half. Fivedecades of scientific marketing has resulted in a situation when acrucialconcept such as customer loyalty gets defined in terms ofelusive consumer emotions and on a(not unreasonable) assumption thatconsumers will continue to act irrationally from time to time

(Tayloret al 2004).

5.9 Types of Loyalty

Loyalty to one brand within the automotive industry does not make aconsumer loyal to onedealership. The only way of ascertaining the typeof loyalty would be from a wider perspective.

The movement from purchase loyalty (repurchase intentions) toward moreholisticconceptualisations of the loyalty was highlighted by Keller(1998) who acknowledged that brandloyalty has historically often beensimplistically measured behaviourally simply via repeatpurchasebehaviours Loyalty extends far beyond repurchase intentions; a goodpurchase will be

discussed with colleagues and friend adding value tothe brand (Keller (1998) cited in Taylor, S.et al 2004:219).

New findings from a database of more than 600,000 consumer interviewsaround the worldindicate that if marketers are truly committed tobuilding brand loyalty, they must use theirprogrammes to buildconsumers' emotional attachment to the brand, not just be contentwithrepeat buying. In doing so, they will maximise and better sustain thefinancial success oftheir programmes and may even help the brandbecome a category leader (Hallberg, G.2004)(Appendix One).

Sheaves and Barnes (1996) discussed that relationship benefits act asbonds that tie customers to

the service provider, there appear to befew conceptual differences between relationship benefitsand positiverelationship bonds. However, unlike relationship benefits, bonds couldalso beperceived as negative when they tie customers to a company in anegative sense (Sheaves andBarnes, (1996).cited in Liljander, V. andRoos, I. 2002:597)

Customers with low affective commitment may continue purchasing aservice because of being"locked in" by bonds. For example, customerswho take out additional warranty insurance fortheir car are forced tofollow specific maintenance schedules at an authorised repair shop


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andcannot switch to any other shop (Sheaves and Barnes, (1996).cited inLiljander, V. and Roos,I. 2002:597)

Therefore, to take full advantage of the loyalty benefits of anyloyalty programme, success mustbe evaluated not only in terms of afinancially acceptable level of repeat buying, but also by

anincreasing emotional attachment of programme participants to the brand.Failure to developthis emotional response risks an enormousopportunity cost. Deficient programmes are likely tofall far short oftheir potential to increase customer retention and are then highlyvulnerable tocompetitive attack (Hallberg, G.2004).

The analysis of over 600,000 consumers confirms the force of emotionalloyalty to a particularbrand on sales of that brand. The findings showthat the greater the emotional loyalty to a brand,the more a consumerbuys. It also reveals a correlation that is exponential, not linear. Inthe earlystages of emotional loyalty development, sales growth isusually regular but relatively modest.But at the highest level ofemotional loyalty to a brand, consumers will buy at least twice asmuchas consumers just slightly less attached to the brand, and often threeto four times more.

Moving a consumer to the top level usually producesan increase in sales considerably greaterthan the sum of all previousincreases (appendix one).

The analysis reveals that customer retention in the brand franchise isdirectly proportional to thelevel of emotional loyalty. The moreattached to the brand, the more repurchase intentions.Although this isseparate from dealer loyalty. After a bad purchase experience, theymaybe loyalto the brand but switch dealers (Appendix one)

Taylor et al. (1997) suggests that marketers should look beyondcustomer satisfaction andtowards integrated marketing strategies thatfoster brand equity and trust in the customer base insupport ofcustomer loyalty programmes" These programmes can trigger a deeperattachment tothe brand when managed correctly (Taylor et al. (1997)cited in Taylor, S. et al 2004:221).

5.10 Loyalty Programmes

The epitome of loyalty programme are the airline frequent flyerprogrammes, first introduced inthe early 1980s, which offer free tripsand upgrades on the airline. Since then, many othermarketers, rangingfrom the travel industry to financial services to the grocery business,havefollowed suit. Judging by their popularity, the general consensusof the marketing communityseems to be that these kinds of programmesare an effective tool for building customer loyaltyand sales(Hallberg, G.2004).

The central determining factor of customer loyalty for dealers andmanufacturers is customersatisfaction (Oliver 1997). Active complaintmanagement anchored in the strategic target systemmust also berecommended. Barriers to dissuade a customer from making a complaintmust belowered, solutions found quickly and appropriately within theprocess and the information gainedused for a permanent improvement.This will certainly entail a change towards an in-house dealerculturewhere a complaint is highly valued as a loyalty indicator.

The study again confers the central importance of product satisfactionfor brand loyalty. The path


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adopted by the manufacturers towardsgreater technical and functional quality should therefore bepursuedmeticulously. Target group strategies to promote loyalty shouldspecially promote anintensive communications process with highlyinvolved customers and the potential to secure thebonds of loyaltywith older customers by taking into account their needs for vehicledevelopmentand marketing (Huber, F and Herrmann, A 2001)

These programmes should not just be an exercise in sales pushing.Taylor et al (1997) discussedthis as programmes developed on the backof discounting, sales promotions and tacticalcommunications do notcreate loyal customers. This does not mean that such programmesarewithout value since they do contribute to sustaining market share andto keeping the businessfrom the majority of customer who typically actpromiscuously in their consumption of ourproduct (Taylor et al. (1997)cited in Taylor, S. et al 2004:221).

Automotive loyalty schemes will be discussed in depth in the

next chapter

6.0 Manufactures loyalty StrategiesThis is a brief description of what different car manufacturers areoffering their customers toforge brand loyalty. These were taken fromthe manufacturers web sites. Although not all brandshave beenincluded, the majority offer similar rewards.

6.1 Driving ProgrammesSaab is the latest European automaker to launch a consumer drivingprogram as automotiveloyalty programs. Professional race car driverswill instruct drivers, with a ratio of one instructorfor every fourowners, on how to handle a performance car.

Saab's program joins established efforts by BMW and Volvo. BMW has twoongoing programsand a third in development. The Ultimate DrivingExperience, in seven cities introduces currentand potential owners tothe 3-series line up. The more general Ultimate Drive, in 200cities,features all BMW products while raising more than $2 million to datefor a Breast CancerFoundation. BMW also is developing aperformance-training program for those who buy its M5performancecoupe.

Volvo, looking to broaden its image beyond safety to includeperformance and style, offered adriving program for its flashy S80models during their fall debut and may reprise the program.Theseprograms are an excellent way to help drive home the brand positionoutside of advertising.

6.2 Bonus PointsBMW will soon join fellow German carmakers Mercedes and Porsche inissuing an affinity creditcard. After a wave of co-branding in the'90s offered rebates from brand names like GM, manyhave been scrapped,sold or completely revamped. Under those kinds of pressure, BMW willuseits planned card launch as more of a device to promote customerloyalty and tap into theirtypically upscale affinities. Accessoriesfor their vehicles and BMW events will be discountedwhen using thecard.


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To maintain momentum, the GM card has to address three local factors.First, in contrast to theU.S., the majority of new cars in the U.K.are sold to companies and then handed out toexecutives; second,cardholder inertia is much higher than in the U.S.--most Brits can'tbebothered to sign up for loyalty benefits; and third, the vast majorityof cardholders have a creditcard issued by the bank with which theyhave their primary checking-account relationship.

Responding to the first of these considerations, GM decided thatcompany-car drivers should beable to use their rebate points otherthan on vehicle purchase, by obtaining vouchers redeemablewith avariety of suppliers. GM brought Trusthouse Forte Hotels, the Next,Currys, and Dixons'High Street chains, and the Burton department-storegroup into the scheme as merchant partners.

6.3 Owners MagazinesFord Magazine, published by the BLA Group, is one of the newestcustomer magazines and waslaunched earlier this year. The magazine isdistributed to 800,000 owner-drivers and companyfleet "user choosers",and plays a major role in the company's customer loyalty programme.Untilthe launch, Ford was virtually the only major motor companywithout a retail customer magazine.

Tremendous changes can be expected in the car market during the nextfive years, and themagazine is going to help Ford maintain itsleadership over this period and make an importantcontribution toFord's customer loyalty strategy.

According to Nissan (GB), for every reduction of four years in theentry age to the market there isone additional sales opportunity. IfNissan achieves its objective of reducing the average entryage by 20years, from 45 down to 25, then on this theory a loyal customer couldpotentially buyfive additional Nissan cars in his or her lifetime.

The magazine the have launched was developed with video/audio andliterature-based, split intotwo areas which covered the range ofNissans on offer. The two programmes are the MakingTracks and FastTrack audio loyalty magazines. Making Tracks is aimed at the Nissanfamily cardriver, while Fast Track is for the Nissan sports car orrecreation vehicle owner.

For subsequent editions, recipients can choose what type of music theywant to hear by tickingthe appropriate box on their customer replycard. Drivers have to respond each time in order tostay in the loyaltyprogramme.

6.4 Owners ClubsMany manufacturers have owners clubs, which attract benefits as well associal events; theseinclude Volvo, Porsche, BMW and Aston Martin.These clubs show to the owner how they arevalued as a customer by theorganisation.

6.5 Employee SchemesFord amongst other manufacturers offers its employees and relativesheavily discounted new cars,this ensures loyalty from employees. Thisthen increases servicing and parts revenue atdealerships.


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6.6 Product RecallWhen a problem is met by all manufacturers they will then recall thevehicle for a modification.This viewed by the consumers as a value,the manufacturer cares about them and their vehicle.This has apositive affect on the relationship.

5.7 Customer Satisfaction SurveysThis scheme is run by many manufacturers, with different umbrellanames. Renault and Volvowill contact all new vehicle purchasecustomers and ask them about the level of service theyreceived,product information, experience and recommendations. This makes theconsumer feelvalued, their opinions matter to the manufacturer.

Some manufacturer extends this survey to used vehicles and servicedepartments. They argue thatcustomer loyalty is just as important inthese areas.

7.0 Market Conditions

Current passenger car manufacturers world wide have to face up to deepstructural changes intheir volume markets. In Western Europe, the USAand Japan, for instance, demand is falling forthe first time aftermany years of steady growth. Another factor which impacts on thesesalesterritories, which are so important for motor vehicle sales, isthat an increasing number ofmanufacturers are competing to supply amarket of the same size (Simonian 1996).

South-East Asian automobile manufacturer and Western Europe, inparticular, attractive forexpanding their markets because of thecomparatively low entry barriers. In addition, the trendinduced bychanging values, where material factors are becoming less important, isjeopardizingthe intangible additional utility which can be achievedthrough the prestige of a vehicle, thus

raising the price sensitivityof consumers, particularly in the higher-price segments of themarket(Huber, F and Herrmann, A 2001).For some time now, many motor vehicle manufacturers and dealers haveseen the development ofa closer relationship to the customer as asolution to the problems outlined above. Manufacturersand dealers hopethat the economic consequence of this will be greater customer loyaltyin thelong term, e.g. through cross-selling, higher sales, success inachieving the desired price levelsand lower costs. A result of ahigher percentage of loyal customers in the purchaser portfolio isthatit reduces the threat that customers will buy elsewhere, thusjeopardizing expected sales, andaggregated will safeguard substantialsales over the customer lifetime (Peppers and Rogers 1996).

Loyal customers are also likely to bring in higher profits in the laterphases because, as theyclimb up the social ladder, they often buy moreluxurious vehicles and thus vehicles which aremore profitable for themotor industry. This secure share of sales increases in line with theextentto which new customers can be locked in throughloyalty-promoting measures during the post-purchase phase (McDougall1992)

When a customer become loyal they tend to make more additionalpurchases, an important salesfactor in the automotive business, whichis heavily dependent on vehicle servicing and


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accessories. It is alsovery likely that the price sensitivity of demand falls with increasingloyaltyand thus competition on the basis of financial conditions isreduced in the loyal customersegment. Additional potential forboosting profits derives from the lower cost of marketingactivities,which essentially results from the possibility of producingcommunications appropriateto the target group and maintaining contactwith loyal customers (McDougall 1992).

Case Study

In 1991 Volvo was struggling for survival, they implementedextensive total quality management(TQM) programmes. This increasedcommitment from the employees, making them worktogether to achievecommon goals The cars that are produced today are becoming better andbetterand thus more equal in terms of reliability, durability andsuch. The key to gaining competitiveadvantage is to determine whatimprovements will affect the customers' perception of thecar(Gustafsson, A. and Johnson, M. 2002)

Volvo has three different satisfaction studies regarding customers inSweden that are carried out

on a regular basis. These surveys measurecustomer satisfaction with the dealer, with the vehicleafter twomonths of ownership, and with the workshop or service process. Thedatabase that theauthors had access to included information onapproximately 25,000 individual customers whohad bought a Volvo in1993 and a new car again in 1997. The database is unique in that itcontainsinformation for some customers on, for instance, whether thesecond vehicle purchased wasanother Volvo, whether they used Volvofinancing, had Volvo insurance, possessed a Volvocharge card, and howmuch money they charged to their card (Gustafsson, A. and Johnson,M.2002) (Appendix Two)..This information illustrates a network of relationships in whichvarious quality drivers affectsatisfaction with the sales, workshopand vehicle experience. These three sources of satisfaction

or benefitsthen drive the customers' overall satisfaction and subsequent loyaltyintentions (orstated loyalty). The customers' actual behaviour,however, is a function of both stated loyalty andoverall satisfaction.The aim was to perform the analysis in one step (Gustafsson, A. and Johnson,M. 2002) (Appendix Two).

The level of stated loyalty for the group of respondents who haveactually been loyal compared tothe ones who have switched. For the carit actually seems to work; respondents who clearly statedthat theywould buy another Volvo have done that, to a large extent. But it isalso found that ahigh level of stated loyalty for the car dealer doesnot automatically mean that the respondentsactually do go back to thesame dealer again. The relationship is not that simple (Gustafsson,A.and Johnson, M. 2002) (Appendix Two).

.Performance of the vehicle (very early in the consumption experience)has the highest impact onsatisfaction followed by the performance ofthe personnel and vehicle delivery respectively. Theimpact ofsatisfaction on stated loyalty at the time of the survey is 0.410.Typically, stated loyaltyshould affect subsequent customer behavioursand profit. The loyalty measures in this case aresimply collected tooearly in the purchase consumption repurchase cycle (shortly afterdelivery). Itis difficult for customers to reflect on their futurebuying plans and state whether they will buyanother Volvo. What isinteresting, however, is that overall satisfaction even early in


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theconsumption experience has a very significant and positive impact onprofit per customer onthe next vehicle purchased (Gustafsson, A. and Johnson, M. 2002) (Appendix Two).

It was found that if the Volvo dealers improve their quality one-scalepoint on each of the fourareas in the table (based on one to ten-pointperformance scales), they gain roughly 4 per cent

more profitdownstream at the next purchase. They gain most by improving personnel(almost 3per cent). Although not shown here, it is possible to breakthis effect down into improvements onspecific attributes of thecustomer-salesperson interaction.

The analysis provides a flavour of the types of impacts that can bedetermined when survey dataand profit per customer data are combined.It must, however, be acknowledged that the results area snapshot intime of a particular company's customer base. And the customers thatthe model isvalid for are the most loyal customers at a certain cardealer. Nevertheless, among the moreinteresting points in the case isthat the customer data, which are collected up to three yearsbeforethe sale of the next vehicle, predict significant, positive effects onfuture profit (Gustafsson,A. and Johnson, M. 2002) (Appendix Two).

Volvos brand image is built on safety an automobile is made by andfor people, the basicprinciple for all manufacturing is and mustremain: safety. This excerpt from the sales manualcan be seen as bothan early expression of Volvo's mission, and as the embryo of a centralcorevalue. This historical foundation of an organisation's efforts inthe area of safety has among otherthings contributed to the legitimacyof the concept within the organisation. In the formulation ofVolvo'smission, the concept of safety reappears, this time together with thecore values qualityand concern for the environment: "Volvo createsvalue by providing transportation relatedproducts and services withsuperior quality, safety and environmental care to demandingcustomersin selected segments" (AB Volvo, 1998, p. 6).

Based on consumer-perceived quality and achievements, Volvo willdistinctly, decisively andconsistently sustain and develop its brandposition as a recognized leader in safety and be rankedas a leader interms of environmental care among the world's top producers ofautomotive andtransport products, equipment and systems (AB Volvo,1997, p. 12).

The Volvo brand is based on and summarised largely by the core value ofsafety. This core valuecan, as stated earlier, be attributed to thefounders and their view of the principles of automobilemanufacturingand the role of the car in society.

The core value can also be traced to the company's physical products,i.e. the product programme,product development, and product design.Examples of Volvo's track record (Volvo safetyfeatures, 1927-1996)are: reinforced passenger compartment (1944), padded dashboard(1956),seat belts for the front seats (1957), forward and rear collision zones(1966), collapsiblesteering column (1966), seat belts for the backseats (1967), side collision protection (1973),energy-absorbingbumpers (1974), side air bags (1994), and air bags for side windows(1998).Instead of product development steering brand development,brand development generally steersproduct development(www.volvo.com/group/global)

Volvo now call all customers after a purchase from their dealerships,this includes new and used


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vehicles and service customers. After thesurvey they contact their customers through newsletters,personalisedletters, offers, websites, announcements of product news, recognitionas a valuablecustomer.The majority of these customers fall into the completely satisfiedcategory. Although theywelcome complaints from customers and treatthem with respect, this feedback is valued opinion

from customers.

9.0 Findings and Analysis

Volvo identified that they were losing their market share and madestrategic decisions to reviewand implemented policies that would stemtheir decline. Once the decline had been stopped, thenew policieswould increase the brand value; therefore increase the market share(5.3).

The introduction of total quality management not only increasedcommitment from employees itplaced a higher value on the customer. Thecustomer is the vital component in any marketingstrategy; thereforethe information to implement this change would come from the customer.This

was an important step in brand building (5.3, 5.5 & 5.7).

Although the brand Volvo was easily identifiable, the strength was indecline. It was important torebuild the brand and position it withinthe market. All areas were reviewed to obtain this; themost importantwas brand loyalty (5.3 & 5.4)

Volvo utilised information it already had in their data base to accesscustomer loyalty. Thisinformation proved vital in the turnaround. Itaccessed the customer value in its current loyaltyschemes and allowedthe expansion to fit the customers needs (5.5, 5.3, 5.7, 6.2, &6.7).

From the information they identified the quality drivers across allsections of the organisation, in

relation to customer satisfaction.This not only gave them the information loyalty intentions itassessedactual behaviour (5.8)

From the survey, there was a high level of brand loyalty, they hadpurchased a new Volvo, but theloyalty to the dealership was lower. Thecustomer is loyal to Volvo, but not to the supplier Thiscould reduceservice and parts revenue for Volvo, with customers going to nonfranchiseddealerships for the work on their vehicles (5.4, 5.8 &5.9).

The next stage was to review the performance of the dealerships and theemployees. Volvo settargets for their dealers to perform at the higherlevel of relationship, being accountable. Thisgave the consumer anemotionally binding experience when purchasing a vehicle. This

isimplemented across all departments Key indicators are used to accessthe level of service that isgiven to the customer (5.3, 5.5).

Training was offered to all dealership in employees that required it,to increase the relationshipbetween them and the customers. Volvooffered incentives to dealerships when they hit thetargets on customersatisfaction (5.6, 5.7 & 5.8).

Volvo attack on brand loyalty was multi dimensional; it reviewed andimplemented strategies in


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every part of the supply chain. This addeddepth to the scheme, the organisation was commited tochange (5.5 &5.8).

The product has a high rating with the consumers, which places it as ahigh value brand to thecustomer. The product has a status value and anemotional tie for the consumer. This then

reflects on future purchasesof vehicles and associated products. Volvos level of re purchaseisamongst the highest in the industry (5.7).

Volvo has strengthened the brand name by reinforcing the core values,the brand trades on safety.This is not only for the vehicle, itextends to the environment. The product is of superior quality(5.3).

Through reinforcing the core values, Volvo has stemmed the decline, andhas now increased itsmarket share. Volvo place a high value oncustomer loyalty, this is reinforced through theirloyalty schemes andthe customer satisfaction surveys and continual contact with theconsumer(6.1, 6.2, 6.3, 6.4, & 6.7).

Feedback from customers is vital in maintaining brand loyalty, evenwhen there are complaining.It is normally only when a customer isattached to a product that they care enough to complain(5.10).

10.0 Conclusion

As marketers have long suspected, emotional loyalty does drivebehavioural loyalty. The greatestgains in purchasing and retention areonly achieved when a consumer's attachment to the brandreaches thehighest level. So powerful is the effect on sales, the leader in marketshare is usuallythe brand with the greatest number of emotionallyloyal customers.

Therefore, in order to maximise effectiveness, the objective of loyaltyprogrammes must be todevelop high levels of emotional loyalty amongprogramme participants, not just repeat buying.High levels ofemotional loyalty increase customer retention by helping insulate theprogrammeagainst competitive offerings.

Volvo as a brand has created emotional loyalty amongst its consumers.Without this commitmentfrom loyal customers the turn round in theorganisation would not have been possible. Brandloyalty has a directeffect on customers repurchase intentions; this is a strength at Volvo.

It is difficult to build the high levels of emotional loyalty throughconventional marketing

communications; a programme that achieves thisobjective may be the most cost-effectivemethod of helping a brand moveup the hierarchy of brand leadership. These approaches thathave provedeffective have included newsletters, personalised letters, ownersclubs, websites, andannouncements of product news.

Brand loyalty is taking customer service values to a new dimension, andthis is key to brandloyalty. The skill of individual employee can havea positive or negative affect on the buyingexperience of the consumer.This is demonstrated by less dealership loyalty and a higher


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brandloyalty. Volvo addressed this problem by training employees andtargeting standards.

Most automobile manufacturers have loyalty schemes that target brandloyalty. Volvo hasdemonstrated that by reviewing all functions withcustomer loyalty in mind it is possible toincrease customer loyaltyand market share. Therefore not all loyalty schemes are equal;

eachmust match the targeted consumer market.

Similarly, the effectiveness of a programme in building emotionalloyalty must be a measurementpriority. Absolute precision andreplication of the emotional loyalty pyramid classification islessimportant than a reliable gauge of whether consumer attachment to thebrand is beingpositively affected by the programme relative tonon-programme participants. By building thismeasure into theevaluation process, marketers can better assess the long-term impact oftheprogramme as well as the likelihood of sustaining or even improvingrepeat buying patterns.

Volvo has succeeded it maintaining and increasing brand loyalty byreview all aspects of thesupply chain and listening and reacting uponthe opinions of its customer. This multi dimensional

approach has beenvital to the success of the organisation. They not only re built thebrand, butrebuilt it with added value.

Bibliography

Books

Aaker, D. (2000)Brand leadershipNew York: Free Press, New York

Bell, J (1993) (2nd Edition) Doing Your Research Project

Open University Press, Buckingham

Buzan, T. (1995) (Rev ed) Use Your Head.BBC Books, London

Doyle, P. (1998) Innovation in marketingButterworth-Heinemann Oxford

Groucutt, J. et al (2004) Marketing Essential Principals and New realitiesKogan & Page, Great Britain

Johnson, G & Scholes J (2004) (6th Edition) Exploring Corporate StrategyPrentice Hall, Hemmel Hempstead.

Keller, K. (2003) (2nd ed ) Strategic Brand Management Building, Measuring, and ManagingBrand Equity Prentice Hall, NJ


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Kotler, P. et al (2005) (4th European edition) Principles of marketing.Pearson, Prentice-Hall, London

Kotler, P (2003) (11th ed.) Marketing Management

Prentice Hall/Pearson Education, NJ

Linton, I (1993) Building customer loyalty.Pitman Publishing, London

Oliver, R.L. (1997) Satisfaction: A Behavioural Perspective on the ConsumerPrentice Hall. New York

Oppenheim, A. (1996) Questionnaire Design And Attitude Measurement

Pinter publishing Ltd, London,

Saunders, M. Et al (1997) Research Methods For Business StudentsPitman Publishing. London.

Wass, VJ and Wells P. (1994) Principles And Practice In Business And Management ResearchPitman Publishing. London.

Journals

AB Volvo (1997), Volvo Brand Management Policy internal document, AB Volvo, Gothenburg

Dervaraj, S. et al (2001) Product and service quality: The antecedentsof customer loyalty in theautomotive industry Production andOperations Management, Winter 2001Vol.10, Iss. 4;

Gounaris, S. and Stathakopoulos, V. (2004) Antecedents andconsequences of brand loyalty: Anempirical study Journal of BrandManagement. London: Apr 2004Vol.11, Iss. 4

Gustafsson, A. and Johnson, M (2002) Measuring and managing thesatisfaction-loyalty-performance links at Volvo Journal of Targeting,Measurement and Analysis for MarketingLondon: Mar 2002Vol.10, Iss. 3;

Huber, F and Herrmann, A (2001) Achieving brand and dealer loyalty: thecase of the automotiveindustry Int. Rev. of Retail, Distribution andConsumer Research 11:2 April 2001 97122

Hallberg, G. (2004) Is your loyalty programme really building loyalty?Why increasing emotionalattachment, not just repeat buying, is key tomaximising programme success Journal of Targeting,Measurement andAnalysis for Marketing. London: Mar 2004.Vol.12, Iss. 3

Kotler, P. (1992) Marketing's New Paradigm: What's Really Happening OutThere?. Planning


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Review Dayton: Sep/Oct 1992.Vol.20, Iss. 5;

Kotler, P and Gertner, D. (2002) Country as brand, product, andbeyond: A place marketing andbrand management perspective Journal ofBrand Management. London: Apr 2002.Vol.9, Iss. 4/5

Kotler, P. (2004) A three-part plan for upgrading your marketingdepartment for new challengesStrategy & Leadership. Chicago:2004Vol.32, Iss. 5

Liljander, V. and Roos, I. (2002) Customer-Relationship Levels, FromSpurious to TrueRelationshipsThe Journal of Services Marketing. SantaBarbara: 2002Vol.16, Iss. 7;

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Internet Siteswww.bmw.orgwww.ford.org.ukwww.gm.orgwww.mercedes.comwww.volvoclub.org.ukwww.volvo.com/group/global

These findings are based on a new analysis of more than 600,000interviews from 31 countriesaround the world that make up Brandz(TM),the ongoing research study first fielded in 1998 byWPP and updatedannually. The study, designed and conducted by Millward-Drown, aleadingconsumer research supplier and, like Ogilvy, a WPP company,covers more than 100 product andservice categories and more than20,000 local and global brands.

Accessed through www.wpp.com and searching 'Brandz'.

The brand emotional loyalty pyramid

This is taken from the organisations web site, and demonstrates theircommitment to branding


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their products with safety as the core value.

The values of the Volvo Group summarize what we stand for and what we focus on.Corporate values

Quality, Safety and Environmental Care are the corporate values of theVolvo Group, eachreflected in how we develop our products, how we actin society, and how we approach ourcustomers and employees.

Social responsibilityOpen exchange of information and active participation in society arekey components of theVolvo Group culture, manifested in both ourexternal and our internal activities.

Company cultureThe Volvo Way is our company philosophy, describing Volvos values,our corporate cultureand the way Volvo works. It includes the historyof the Volvo brand and our vision for the future.

DiversityThe Volvo Group recognizes the importance of valuing diversity as part of our current and futurebusiness success.

QualityQuality is built into the design and engineering of our products -providing reliability andmaximum utilization for the customer. Qualityis also created by a consistent focus on customerneeds, including howwe perform services, how we provide access to information, andsimplyhow we treat people.

Consistently providing high quality products and services requires atremendous commitmentfrom the organization - and therefore it isassigned very high priority by our management

An automobile is driven by people. Safety is and must be the basicprinciple in all design workThis is a quote from the Volvo founders.

Safety innovations

A series of pioneering safety innovationshas made Volvo a world leader in automotive safetyover the years. TheVolvo safety concept has evolved to encompass safety in a broadercontext -safety in the interaction with others on roads and in worksituations, as well as improving comfort

and working conditions fordrivers and operators. A high standard of safety represents amajorcontribution to efficient transport.

Environmental care is together with quality and safety a corporatevalue for the Volvo Group.Already in the mission statement, we statethat we use our expertise to create transport-relatedhard and softproducts of superior quality, safety and environmental care. We alldepend ontransports


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Smoothly functioning transportation is one of the cornerstones ofmodern society. Thedistribution of daily supplies to people in cities,the trade between companies and the personalmobility are all examplesof how dependent we are on transports.

Volvo has a responsibility

As one of the worlds biggest manufacturers of heavy commercialvehicles, Volvo bears a clearresponsibility for reducing theenvironmental impact of its products. However, a long historyofproactive environmental programmes has also provided us with anopportunity of strengtheningboth our own and our customerscompetitiveness, while contributing to positive societaldevelopment

Documents

The Creation of Customer Loyalty in the Automotive Sector