Brand royalty is a term that explains a consumer’s act of choosing/buying a product produced by the same manufacturer repeatedly rather than one from a competitor. The concept is based on perception simply because the consumer believes they are buying the superior product.
It is important to note brand royalty is related to products not a company. For instance, while one might be loyal to their Honda Accord, they might believe a Harley is the best motorcycle. Therefore, brand royalty consists of the consumers’ commitment that they will repurchase or continue use of the same brand. This is demonstrated by their repeated choice of a service or products or other behaviors like word of mouth advocacy.
There is more to brand royalty than simple repurchasing. Customers might purchase a brand as a result of situational constraints, out of convenience or lack of viable alternatives. Therefore, true royalty exists when customers have relative high attitude towards the brand which is exhibited through repurchase behavior.
This kind of royalty is a great asset to the firm because customers are often willing to pay high prices, they can bring new customers to the company and it costs less to serve them. From a marketer’s point of view, brand royalty in regard to consumer usage is the key aspect.
More importantly though, the rate of usage is also important and this is where the Pareto 80-20 Rule applies. A second dimension is whether the consumer is com mitted to the brand and Phillip Kotler defines 4 behavior patterns which include the following:
- Switchers-These are consumers with no loyalty (they are most likely ‘deal prone’ constantly keeping an eye for ‘vanity prone’ or bargains)
- Shifting loyal- These are consumers who shift from one brand to the next one
- Hard –core loyal-These consumers always buy the same brand every time
- Split loyal-This consumer is likely to have two or three favorite brands
It is suggested that brand loyalty included a certain degree of pre-dispositional commitment towards a brand. Loyalty is therefore viewed as a multidimensional construct. There are several distinct psychological processes that influence loyalty and also entail multivariate measurements. The customers perceived brand trust, repeat purchase behavior, commitment, customer satisfaction and value are the key factors that influence brand loyalty factors.
The most influential writer on brand royalty, Fred Reichheld claimed the enhancement of brand royalty has dramatic effects on profitability. The greatest benefit associated with brand loyalty is said to be customers’ low sensitivity to price. Recent research has proven that long term customers who are loyal to a brand are less likely to be sensitive to price increases.
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