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Marketing Management & Strategy Extra Reading Notes
Advertising: Strongly Persuasive or Nudging (Barnard & Ehrenberg, 1997).This paper specifically considers individual customer loyalty and the advertising implications this has.Consumers who are committed and hard core loyals are matched with brands that satisfy their needs, both tangible and intangible.Loyals are valuable in terms of sales as they protect the brand from competitive attack and support premium pricing.Switchers are variety seekers and are often deal sensitive and price sensitive. A switcher's contribution to brand value is generally considered to be much lower than a loyals.
Brand Loyalty and Advertising
1. Advertising to Committed Loyals and Switchers: Strongly Persuasive.Convincing consumers to switch from being a switcher to a loyal requires different persuasive tasks.
Converting Other Brands' Loyals into Your Loyals: Involves severing a variety of existing ties and establishing a new and different bond with your brand. The substance of the ties would differ for each brand, each having its particular brand identity and values.
Converting Switchers into Your Loyals: A markedly different task is to persuade consumers who had so far never committed themselves to just one brand to do so now. The attractions of price differences, short-term deals, functional differences, or sheer variety seeking would need to be overcome.
Converting Switchers to Buy Your Brand More: Yet a different advertising task---not full conversion/
commitment but just more attraction to your particular brand (our "nudging").Brand maintenance persuasive tasks are different:
Keeping Your Existing Customers: In the face of strongly persuasive competitive advertising or other threats
(e.g. Price, display, sheer availability, or product innovation) your advertising would either have to inoculate your Loyals well beforehand, or try to defend them just in the nick of time.
Keeping Your New Customers: Any converts must be prevented from slipping back into their old ways, e.g.,
commitment to their previous brand's values, or to switching for price.
Reinforcing Your Existing Customers: The task would once more be different in that there might seem to be little need for routine brand maintenance if your existing Loyals are already committed to your brand, and
Switchers apparently buy you for other reasons like variety-seeking.
2. The Alternative: Advertising to Split-Loyals.This approach sees brands customers as generally having idiosyncratic repertoires of one or more other habitual brand.This leads to a much more homogenous and less ambitious task for advertising than in the first approach.Each consumer would choose from their repertoire with mostly steady purchase propensities (i.e. only with occasional shifts and departures from habit).Brand's advertising to such multibrand buyers does not have to be strongly persuasive, not trying to convert them whole-heartedly to that single brand. In this scenario a brand has few near 100% loyals anyway.There is instead scope for advertising to:
Reinforce your brands customers' existing propensities to buy it as one of several.
Nudge them to buy it somewhat more often.
Get other consumers to add your brand as an extra or substitute brand to their existing brand repertoire. ?
The common task is to influence the purchasing propensities for your brand within consumers existing multibrand repertoire.The immediate effects will usually be small, advertising reinforcing and nudging mechanisms are mainly long term.Positive nudging can also occur for competitors and this needs to be countered.Hence there is an ongoing need for active brand maintenance in order to defend the customer's propensity to buy your brand.
Segmented or Unsegmented Loyalty: The Evidence
1. Are There Distinct Segments of Loyals?It is increasingly being recognized that for frequently bought goods, many or most consumers are multibrand buyers.In a week nearly everyone appears 100% loyal because they mostly buy the product category or subcategory only once.
And similarly there are many 100% loyals in a month. But not in longer analysis periods.Typically in a year only around one in ten of the buyers of the brand are 100% loyal.If most consumers are in fact polygamous, some will happen to still appear in any chosen analysis period simply by dint of being light buyers of the product category who, therefore, have little opportunity to be disloyal.Longer term loyals are not heavy buyers even of their own particular brand. They therefore do not account for any especially attractive amount of its sales.Even a brands heavy buyers still buy other brands almost half the time.Heavy buyers are not loyals to that brand who just occasionally fall out of line. Instead they still have serious steady split-loyalty relationships.Therefore, loyals do not make up a sizeable or especially attractive subset of customers for any brand, though that is not to say they should be ignored.However, they do not warrant heavy advertising or other heavy marketing activities geared specifically towards them.
2. Are There Switcher Segments?Deal Sensitive's: Consumers who buy quite a lot on deal are usually labelled the "Deal Sensitive" segment. But they do not in fact buy any deal that is available. A study done by Burnett found that consumers only took advantage of deals for their own regular brands.Price-Sensitive's: In practice few consumers fall into distinct price-sensitive or high-spending segments. Rather than there being a substantial number of consumers who always buy cheap, there are many who sometimes do so and only a few who quite often do (mostly for their familiar brands). Consumers have varied and predictable repertoires of prices which they pay.Private Labels: Similarly, almost all consumers who buy Private Labels also buy manufacturers' brands as well and do so extensively. They do not form distinct private label-prone segments.Consumers mostly follow a split-loyalty pattern. This leads, to closely predictable numbers of how many behave in different ways. There would therefore be little point in devoting advertising or other resources to try to persuade these elusive Switcher segments to drop their other brands. 3. Advertising with Split-LoyalitiesThe evidence, shows that split or shared loyalty is an ever-present part of the context in which advertising has to operate.
Targeting in General. Targeting a particular consumer group presupposes that that group is important. But the advertising will also reach many other consumers. Any effects will probably depend more on those actually reached, i.e., including the spill-over, than just on those successfully "targeted." Targeting considerations will in any case seldom differ much between competitive brands, since more or less similar brands tend to appeal to much the same types of consumer.
Reassuring Heavy Buyers and Reminding Light Ones? Heavy buyers in a brand's franchise are always few, yet account for much of its sales. This being predictably much the same for any brand (i.e., always about 80:20),
neither advertising nor any other marketing activity can markedly change it. The findings are that in a year they still buy and use other brands in total almost as much as they buy their "heavy brand"---they are therefore routinely exposed to other brands anyway. And they could also switch to be heavy buyers of another (similar)
brand. They are therefore not to be taken for granted. Advertising which reaches the heavy buyers of a brand can give reassurance that buying this brand (heavily) is OK. Most buyers of a brand are, however, light buyers of it.EXAMPLE: About 50% of the annual buyers of a U.S. instant coffee brand buy the brand only once in the year. Such light buyers of a brand are nonetheless generally "loyal" to that brand in that they buy the brand again, and predictably so, but just not very frequently. And they also buy competitive brands even more. They could, therefore, overlook a brand they buy so infrequently and are worth reminding.
DiscussionThis paper argues that it is not the task of advertising to persuade consumers to be highly committed or loyal to one particular brand.If consumers had been strongly persuaded in the past then there would be many near 100% loyal customers for each successful brand and they would be important to its sales.However, over the course of a year few customers of a brand remain exclusively loyal to that brand.Nudging. Given that a brand's customers mostly have split-loyalty repertoires of habitual brands, the conclusion is that advertising for an established brand can reinforce and occasionally positively nudge their propensities to buy the brand
---but only as one of a number of familiar and habitual brands for that consumer. This adapts and extends the modern consumer-centered view of advertising. Instead of advertising having to do something to the otherwise indifferent or unwilling consumer, the consumer would be doing something with the advertising. It seems that consumers' ongoing tendencies to be loyal to several brands result from the need to simplify decision-making, making frequent brand choices manageable. Advertising can then play a part in influencing the make-up of such brand portfolios or wider consideration sets. It helps consumers to do what they seem inclined to do anyway: choose from a limited range of habitual brands. Advertising can achieve this by what we have here called reinforcing and nudging: it can affect how many such split-loyal customers each brand has rather than how loyal they are to it. Brands that are not in the consideration set or portfolio are not necessarily always rejected but more often merely ignored. They may never have been tried. Such competitive brands could therefore be brought into consumers' consideration sets as possible choices.
This provides opportunities for nudging consumers toward your brand. But it also provides threats from your competitors which your brand has to guard against.
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