Description
Marketing specialists widely accept that brand loyalty, as core component of brand equity, can leverage several positive effects on brand commercial performance and on other dimensions of brand equity, loyalty being both an input and an output from this perspective.
A COMPARATIVE STUDY OF THE RELATIONSHIP
BETWEEN BRAND LOYALTY AND MARKET SHARE
AMONG DURABLE AND NON-DURABLE PRODUCTS
Lecturer PhD Ovidiu I. MOISESCU
Babe?-Bolyai University of Cluj-Napoca, Romania
Associate Professor PhD Andrej BERTONCELJ
University of Primorska, Koper, Slovenia
Abstract:
Marketing specialists widely accept that brand loyalty, as core component of
brand equity, can leverage several positive effects on brand commercial
performance and on other dimensions of brand equity, loyalty being both an
input and an output from this perspective. Starting from the supposition that
higher brand loyalty can generate higher market share, the paper
investigates the relationship between the two, considering repurchase and
recommend intentions as main measurements of loyalty. Analyzing the data
collected through a questionnaire based survey among a representative
sample of Romanian urban consumers, the paper comparatively investigates
the potential positive correlations between loyalty and market share
considering two market types and product categories: durables and non-
durables. The results reveal that the relation is not sustained statistically in
the case of non-durable, but can be modeled through exponential functions in
the case of durables.
Keywords: brand loyalty, market share, durables and non-durables, Romania
Brief literature review
The concept of brand equity and
its constituencies
Although the concept of brand
equity has received much attention
during the last two decades, the 90s
“classics” (Aaker, Keller, Kapferer,
Farquahar and others) still dominate the
list of most quoted approaches.
For David A. Aaker (1991) brand
equity is a complex system including a
set of brand fundamental dimensions as
brand awareness, brand perceived
quality, brand loyalty and brand
associations. Moreover, he designs a
brand equity measuring system – the
“brand equity ten” – which considers ten
analytical dimensions to be taken into
consideration in order to describe brand
equity, dimensions among which brand
loyalty (satisfaction, repurchases, and
recommendations) and commercial
performance (especially market share
and customer base) are fundamental
(1996).
Kevin Lane Keller (2008) states
that brand equity should be viewed from
a customer based perspective in which
brand knowledge is essential in
generating differential effects on
consumers’ responses to marketing
actions related to the brand. Keller’s
brand equity model includes two
general dimensions – brand awareness
and brand image composed of brand
associations, but brand loyalty and
market share are seen as fundamental
outcomes of a strong brand.
Another “classic” (Farquhar, 1989)
modeled brand equity through three
core elements that build a strong brand
– a positive customer brand evaluation,
an accessible brand attitude, and a
consistent brand image in customers’
minds. His approach is more abstract,
but still relates, more or less directly, to
brand awareness, brand loyalty and
market performance (especially sales
level).
The concept of brand loyalty as
core dimension of brand equity
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, David A.
Aaker (1991) considers that brand
loyalty reflects the probability that a
customer will switch to another brand,
especially when that brand makes a
change in its marketing mix. In Aaker’s
view, brand loyalty represents the core
of a brand’s equity. Moreover, Daryl
Travis (2000) considers that brand
loyalty represents the meaning of brand
equity.
Brand loyalty can’t be analyzed
without considering its relationship to
other 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
independently. 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). Thus, 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.
Effects of brand loyalty on
marketing performance
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 of their
purchases or even both, thus
generating higher revenues for the
brand. They may also become
advocates of the brand, concerned by
playing a powerful role in the 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 customer 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 (1995), brand
loyalty implies a deep-seated
commitment to brands and there is a
sharp distinction between repeat
purchases and actual brand loyalty. In
their published research, they assert
that a repeat purchase behavior is the
actual re-buying of a brand whereas
loyalty includes antecedents or a reason
or fact occurring before the behavior.
Bloemer and Kasper (1995) further
delineate brand loyalty into “spurious”
and “true” loyalty. Spurious loyalty
represents biased behavioral response
138
expressed over time by some decision-
making unit, with respect to one or more
alternate brands, as a function of inertia.
True brand loyalty includes the 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
brands’ loyal customers.
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.
Loyalty also enhances the process
of attracting new customers, and thus,
generates increased market share.
Satisfied and loyal clients tend to
provide brand exposure and
reassurance to new customers, through
“mouth to mouth” communication. On
the other hand, a potential customer
has a better evaluation of a brand if that
brand is perceived as having a loyal
customer base.
Research methodology
Objectives
This paper represents a partial
dissemination of the results of a larger
study conducted in order to investigate
and identify significant relationships
among specific brand dimensions like
brand awareness, brand associations
(perceived quality, brand personality
etc.), and brand loyalty, taking into
consideration cognitive, affective and
action based perspectives. The study as
a whole was also intended to
statistically quantify the influence of
several demographics (sex, age,
income, education, consumer
personality) on the brand dimensions
and components mentioned above. The
aim of the larger study was to finally
depict a general model explaining the
synergic impact of brand dimensions on
consumer behavior, comparatively
considering two market types (product
categories): durables and non-durables.
The specific objectives of this
paper were to analyze the potential link
and mutual influence between brand
loyalty, on one hand, depicted through
brand repurchase intention and brand
recommend intention, and brand
commercial performance, on the other
hand, which we considered as being
well represented through a classic
market indicator, namely the brand’s
market share. The analysis was
conducted in a comparative manner
considering the cases of two product
categories and, implicitly, two market
types – durables and non-durables –
within an investigated statistical
population consisting in urban
Romanian consumers.
Indicators
Considering the paper’s research
objectives, certain particular indicators
139
had to be established and used to
measure brand loyalty and market
share.
In order to establish operational
indicators for brand loyalty, we
conceptualized brand loyalty as the
probability that consumers who have
bought a certain brand within the last
buying decision would chose the same
brand within the following purchasing
decision in a similar context given by
the nature of the product, the market
type (durable or non-durable) and the
specific product category within the
decision is made. We also extended the
concept of brand loyalty towards the
active involvement of loyal consumers
in brand promotion through brand
recommendations to other potential
buyers.
Therefore, the necessary data that
had to be collected regarding brand
loyalty were the intention to repurchase
the brand („Will you repurchase the
same brand next time?”), and,
respectively, the intention to
recommend the brand („Would you
recommend the brand you bought last
time to others?”). The data regarding to
the two brand loyalty components
mentioned above were implicitly
collected in relation to the last
purchased brand within each of the two
market types, corresponding to a
chosen durable and, respectively, a
selected consumable product category.
The indicators’ values further used
in our analysis were computed as
further described. Firstly, respondents
were asked to mention the most recent
purchased brand, the market share of
each brand being reflected by the
percentage of respondents that
mentioned that brand as being the most
recent purchased one. Secondly,
respondents were asked to evaluate
their intention to repurchase the most
recently purchased brand, on a modified
Likert scale from 1 (“will definitely not
repurchase”) to 6 (“will definitely
repurchase”). The repurchase intention
of each brand was computed as mean
of repurchase intentions mentioned by
respondents who most recently bought
that brand. Finally, each respondent
evaluated his/her intention to
recommend the most recently
purchased brand, on a modified Likert
scale from 1 (“will definitely not
recommend”) to 6 (“will definitely
recommend”). The recommend intention
of each brand was quantified as mean
of repurchase intentions mentioned by
respondents who most recently bought
that brand. Thus, the indicators’ values
were depicted through computing
simple percentages or means for each
identified brand within each product
category.
Sampling and data collection
Data were collected through an ad-
hoc questionnaire based survey, the
instrument for data collection including
open questions in order to identify most
recent purchased brands, and,
respectively, closed questions with
modified Likert scales in order to assess
brand loyalty from the perspective of
repurchase and recommend intentions.
The alteration of the classic Likert scale,
specifically consisting in establishing six
instead of five answering options, was
intended to avoid neutral responses and
force either positive or negative
attitudes.
The resources and time allocated
to the research did not permit
conducting a panel survey in order to
investigate medium or long term
evolutions of the analyzed relations and
limited the investigated population to the
urban consumers of Cluj-Napoca, one
of the largest cities of Romania,
although the intention of the research
was to analyze the urban Romanian
consumers as a whole. Nevertheless,
the research could still be considered,
with certain limitations, as being
representative for the entire urban
Romanian population as Cluj-Napoca
the second largest city of Romania,
representing almost 3% of the
Romanian urban population in 2009.
140
The investigated population was
heterogeneous considering
demographical characteristics (age,
income, education, and sex),
vocabulary, intelligence level, technical
knowledge, different product categories
usage etc. In order for the data to be
collected in such a manner so that
investigated consumers could describe
their behavior and attitudes, what they
do and what they think about brands of
durable and non-durable products, the
particular product categories selected to
be investigated within the research were
chosen so as to be different in usage
duration, not too technical (in order for
most of the consumers to be able to
evaluate their own behavior and
express their attitudes towards those
product categories) and to have a large
rate of penetration into households
usage or consumption. Therefore, we
chose the product category of tooth-
paste, as being representative for the
nondurables, and television sets, for
durables.
The questionnaire based
interviews were conducted face to face,
at the household‘s residence of the
respondents, by a group of 119
students, each student completing a set
of five interviews.
The sampling method consisted in
a mixture of classical probabilistic and
non-probabilistic methods. Firstly, the
population was geographically clustered
considering the 474 postal areas of
Cluj-Napoca. Afterwards, 119 clusters
were extracted through systematic
random sampling. The 119 clusters
(postal areas) were assigned to the 119
interview operators (one cluster to each
operator), and each operator had to
complete five questionnaire based
interviews on the basis of an itinerary
sampling method (5 consumers from
different households, located into five
consecutive buildings from the assigned
cluster – postal area). The data
collected was validated by contacting
(via phone) a random sample of
respondents in order to confirm their
answers. The interview operators
identified as trying to mislead the
research through providing non-valid
questionnaires were fully verified. From
a total of 595 face to face interviews,
only 551 were validated, therefore, the
research having, an estimation error of
±4.2%, considering a statistical
confidence level of 95%.
Hypothesis
Considering the indicators detailed
above, in order to asses the relation
between brand market share and brand
loyalty among durable and non-durable
products, the following hypothesis were
investigated:
H
1
: Brand market share is
positively correlated with brand
repurchase intention in the case of non-
durables.
H
2
: Brand market share is
positively correlated with brand
repurchase intention in the case of
durables.
H
3
: Brand market share is
positively correlated with brand
recommend intention in the case of non-
durables.
H
4
: Brand market share is
positively correlated with brand
recommend intention in the case of
durables.
Results
In order to investigate the previous
hypothesis and to measure the
proportion of market share’s variation
explained by brand loyalty components,
three bivariate regression models were
tested: linear Y=a+b·X, logarithmic
Y=a+b·ln(X), and exponential Y=a·e
b·X
.
Brand repurchase intention and,
respectively, brand recommend
intention, were successively the
independent variable (predictor) of the
model, while the dependent (predicted)
variable was each time represented by
brand market share. The models were
tested both in case of the durable and,
respectively, non-durable product.
Selecting the most appropriate
model to explain the relation firstly
141
implied testing the existence of a
relation between variables. In order to
test the relation, the null hypothesis of
“no relation” was rejected depending on
the value of the statistical indicator p,
with a statistical confidence level of 95%
if p<0.05, or with a statistical confidence
level of 99% if p<0.01. The intensity of
the relation was afterwards evaluated,
according to the tested model,
considering the bivariate correlation
coefficient R and the determination
coefficient R
2
, indicating the proportion
of the dependent variable’s variation
explained by the predictor’s variation.
Finally, the regression coefficients were
determined according to each tested
model, along with appropriate
mathematical functions to reflect the
relations.
In the case of brand loyalty as
repurchase intention, only hypothesis
H
2
was confirmed, while hypothesis H
1
was invalidated (Table 1). None of the
three tested models was statistically
significant for a possible relation
between market share and brand loyalty
as repurchase intention in the case of
non-durables. Still, in the case of
durables, all of the three models were
statistically explanatory, the most
appropriate model being the exponential
one.
Table 1
Tested bivariate regression models for the relation between brand
repurchase intention and brand market share
Market share = f (Repurchase intention)
Relation – existence and
intensity
Regression
coefficients
Market
type
Model
R
2
F df1 df2 p a b
Linear ,089 ,784 1 8 ,402 -,149 ,053
Logarithmic ,083 ,722 1 8 ,420 -,195 ,194
Non-
durables
Exponential ,220 2,256 1 8 ,171 ,001 ,730
Linear ,457 6,741 1 8 ,032 -,151 ,061
Logarithmic ,415 5,667 1 8 ,045 -,175 ,196
Durables
Exponential ,534 9,158 1 8 ,016 ,0015 ,928
In the case of brand
recommendation as component of
brand loyalty, the same situation was
observed: only hypothesis H
4
was
confirmed, while hypothesis H
3
was
invalidated (Table 2). The tested models
weren’t statistically significant for a
possible relation between market share
and brand loyalty as recommend
intention in the case of non-durables,
but all of them explained, more or less,
the relation in the case of durables, with
the most appropriate model being the
exponential one.
As outlined in Figure 1, the
bivariate regression coefficients proved,
with a confidence level of 95% (p<0.05),
that there was a positive exponential
relation between brand loyalty as
repurchase intention and brand market
share in the case of durables (53.4% of
the variation being explained by the
model), while in the case of non-
durables no relation between market
share and repurchase intention was
shown. The same figure also
emphasized a positive exponential
relation between brand market share
and brand loyalty in its recommendation
perspective, again only in the case of
durables, with a confidence level of 95%
(p<0.05), 49.5% of the variation being
explained by the model. Again, no such
relation could be depicted in the case of
non-durables.
142
Table 2
Tested bivariate regression models for the relation between brand
recommend intention and brand market share
Market share = f (Recommend intention)
Relation – existence and
intensity
Regression
coefficients
Market
type
Model
R
2
F df1 df2 p a b
Linear ,061 ,522 1 8 ,490 -,139 ,049
Logarithmic ,070 ,599 1 8 ,461 -,257 ,229
Non-
durables
Exponential ,256 2,751 1 8 ,136 ,000 ,881
Linear ,420 5,803 1 8 ,043 -,288 ,082
Logarithmic ,416 5,687 1 8 ,044 -,444 ,351
Durables
Exponential ,495 7,845 1 8 ,023 ,0002 1,248
Figure 1. The relation between brand loyalty and brand market share within
durables versus non-durables
143
Conclusions
Analyzing the results, one
conclusion that can be drawn up is that
in spite of our expectations brand loyalty
is not a driving factor in gaining market
share in the case of non-durable
products (at least in the case of the
product category analyzed in our study).
We might assume that in this case
brand loyalty is a fundamental factor in
maintaining the actual customer base
and market share, but in order to gain a
bigger share of the market (increase
purchasing frequency and quantity),
focusing more or less exclusively on
strengthening loyalty is not the best
strategy. A better strategic option is
rather a dual one in which loyalty
remains an obvious basis (so that
market share should not be lost), but in
order to increase market share sales
marketing techniques like promotions,
merchandising, sales force motivation
etc. should be emphasized.
On the other hand, the research
results make us conclude that in the
case of durable products (or at least in
the case of the investigated product
category) brand loyalty is a driving
factor in both maintaining and gaining
market share.
Moreover, the exponential relation
revealed within the analysis suggests
that in the case of durables the marginal
effect of loyalty level strengthening is
higher if the brand already has a large
customer base and market share, and,
respectively, lower in the case of
“young” brands without a significant
market share yet.
Therefore, in the case of durables,
the marketing effort in order to increase
market share through greater brand
loyalty of existing customers (which
determine new consumers, directly or
indirectly, to buy the product) is as
higher as the brand has a lower market
share. As the brand market share
grows, the strengthening of brand
loyalty will have a more a more powerful
marginal effect, theoretically creating
premises for developing dominant
brands.
Research limitations and
future directions
Analyzing the methodology and
the results, several research limitations
and future directions can be outlined.
The overall significance of the paper’s
results is limited to a certain local area
of the urban Romanian market. Even
though we could, with certain limitation,
extend the results to the overall
Romanian urban market level, a more
geographical extensive research should
be conducted in order to reveal certain
local consumer behavior specifics. The
research method would have been
more relevant if a panel were created
and analyzed over time, so as
consumer evolutions could be
emphasized, as the Romanian market is
a developing one. Last, but not least,
the research could be extended
considering not only durables and
consumables, but also services, as
significant differences could be
expected.
REFERENCES
Aaker, D.A. (1991) Managing Brand Equity: Capitalizing on the Value of a Brand
Name, The Free Press, New York.
Aaker, D.A. (1996) Building Strong Brands, The Free Press, New York.
Aaker, D.A. (1996) “Measuring Brand Equity Across Products and Markets”,
California Management Review, 38(3).
Bloemer J .M.M., Kasper J .D.P. (1995) “The Complex Relationship Between
144
Consumer Satisfaction and Brand Loyalty”, Journal of Economic Psychology, 16(2).
Farquhar, P.H. (1989) “Managing Brand Equity”, Journal of Marketing Research, 1.
Keller, K.L. (1993) “Conceptualizing, Measuring, and Managing Customer-Based
Brand Equity”, Journal of Marketing, Vol.57 (1).
Keller, K.L. (2008) Strategic Brand Management: Building, Measuring and
Managing Brand Equity, Prentice Hall, Upper Saddle River, New J ersey.
Moisescu, O.I. (2006) „A Conceptual Analysis of Brand Loyalty as Core Dimension
of Brand Equity”, Proceedings of the International Conference
„Competitiveness and Stability in the Knowledge-Based Economy”, Craiova,
2006.
Moisescu, O.I. (2009) „The Influence of Market Type and Demographics on Brand
Loyalty: A Study Among Urban Romanian Consumers”, Analele Universit??ii
din Oradea. ?tiin?e Economice, 18(4).
Moisescu, O.I. (2009) „The Importance of Brand Awareness in Consumers’ Buying
Decision and Perceived Risk Assessment”, Management&Marketing
(Craiova), 7(1).
Travis, D. (2000) “Emotional Branding: How Successful Brands Gain the Irrational
Edge”, Crown Publishing Group.
*** American Marketing Association, http://www.marketingpower.com at
15.02.2010.
145
doc_926287064.pdf
Marketing specialists widely accept that brand loyalty, as core component of brand equity, can leverage several positive effects on brand commercial performance and on other dimensions of brand equity, loyalty being both an input and an output from this perspective.
A COMPARATIVE STUDY OF THE RELATIONSHIP
BETWEEN BRAND LOYALTY AND MARKET SHARE
AMONG DURABLE AND NON-DURABLE PRODUCTS
Lecturer PhD Ovidiu I. MOISESCU
Babe?-Bolyai University of Cluj-Napoca, Romania
Associate Professor PhD Andrej BERTONCELJ
University of Primorska, Koper, Slovenia
Abstract:
Marketing specialists widely accept that brand loyalty, as core component of
brand equity, can leverage several positive effects on brand commercial
performance and on other dimensions of brand equity, loyalty being both an
input and an output from this perspective. Starting from the supposition that
higher brand loyalty can generate higher market share, the paper
investigates the relationship between the two, considering repurchase and
recommend intentions as main measurements of loyalty. Analyzing the data
collected through a questionnaire based survey among a representative
sample of Romanian urban consumers, the paper comparatively investigates
the potential positive correlations between loyalty and market share
considering two market types and product categories: durables and non-
durables. The results reveal that the relation is not sustained statistically in
the case of non-durable, but can be modeled through exponential functions in
the case of durables.
Keywords: brand loyalty, market share, durables and non-durables, Romania
Brief literature review
The concept of brand equity and
its constituencies
Although the concept of brand
equity has received much attention
during the last two decades, the 90s
“classics” (Aaker, Keller, Kapferer,
Farquahar and others) still dominate the
list of most quoted approaches.
For David A. Aaker (1991) brand
equity is a complex system including a
set of brand fundamental dimensions as
brand awareness, brand perceived
quality, brand loyalty and brand
associations. Moreover, he designs a
brand equity measuring system – the
“brand equity ten” – which considers ten
analytical dimensions to be taken into
consideration in order to describe brand
equity, dimensions among which brand
loyalty (satisfaction, repurchases, and
recommendations) and commercial
performance (especially market share
and customer base) are fundamental
(1996).
Kevin Lane Keller (2008) states
that brand equity should be viewed from
a customer based perspective in which
brand knowledge is essential in
generating differential effects on
consumers’ responses to marketing
actions related to the brand. Keller’s
brand equity model includes two
general dimensions – brand awareness
and brand image composed of brand
associations, but brand loyalty and
market share are seen as fundamental
outcomes of a strong brand.
Another “classic” (Farquhar, 1989)
modeled brand equity through three
core elements that build a strong brand
– a positive customer brand evaluation,
an accessible brand attitude, and a
consistent brand image in customers’
minds. His approach is more abstract,
but still relates, more or less directly, to
brand awareness, brand loyalty and
market performance (especially sales
level).
The concept of brand loyalty as
core dimension of brand equity
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, David A.
Aaker (1991) considers that brand
loyalty reflects the probability that a
customer will switch to another brand,
especially when that brand makes a
change in its marketing mix. In Aaker’s
view, brand loyalty represents the core
of a brand’s equity. Moreover, Daryl
Travis (2000) considers that brand
loyalty represents the meaning of brand
equity.
Brand loyalty can’t be analyzed
without considering its relationship to
other 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
independently. 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). Thus, 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.
Effects of brand loyalty on
marketing performance
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 of their
purchases or even both, thus
generating higher revenues for the
brand. They may also become
advocates of the brand, concerned by
playing a powerful role in the 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 customer 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 (1995), brand
loyalty implies a deep-seated
commitment to brands and there is a
sharp distinction between repeat
purchases and actual brand loyalty. In
their published research, they assert
that a repeat purchase behavior is the
actual re-buying of a brand whereas
loyalty includes antecedents or a reason
or fact occurring before the behavior.
Bloemer and Kasper (1995) further
delineate brand loyalty into “spurious”
and “true” loyalty. Spurious loyalty
represents biased behavioral response
138
expressed over time by some decision-
making unit, with respect to one or more
alternate brands, as a function of inertia.
True brand loyalty includes the 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
brands’ loyal customers.
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.
Loyalty also enhances the process
of attracting new customers, and thus,
generates increased market share.
Satisfied and loyal clients tend to
provide brand exposure and
reassurance to new customers, through
“mouth to mouth” communication. On
the other hand, a potential customer
has a better evaluation of a brand if that
brand is perceived as having a loyal
customer base.
Research methodology
Objectives
This paper represents a partial
dissemination of the results of a larger
study conducted in order to investigate
and identify significant relationships
among specific brand dimensions like
brand awareness, brand associations
(perceived quality, brand personality
etc.), and brand loyalty, taking into
consideration cognitive, affective and
action based perspectives. The study as
a whole was also intended to
statistically quantify the influence of
several demographics (sex, age,
income, education, consumer
personality) on the brand dimensions
and components mentioned above. The
aim of the larger study was to finally
depict a general model explaining the
synergic impact of brand dimensions on
consumer behavior, comparatively
considering two market types (product
categories): durables and non-durables.
The specific objectives of this
paper were to analyze the potential link
and mutual influence between brand
loyalty, on one hand, depicted through
brand repurchase intention and brand
recommend intention, and brand
commercial performance, on the other
hand, which we considered as being
well represented through a classic
market indicator, namely the brand’s
market share. The analysis was
conducted in a comparative manner
considering the cases of two product
categories and, implicitly, two market
types – durables and non-durables –
within an investigated statistical
population consisting in urban
Romanian consumers.
Indicators
Considering the paper’s research
objectives, certain particular indicators
139
had to be established and used to
measure brand loyalty and market
share.
In order to establish operational
indicators for brand loyalty, we
conceptualized brand loyalty as the
probability that consumers who have
bought a certain brand within the last
buying decision would chose the same
brand within the following purchasing
decision in a similar context given by
the nature of the product, the market
type (durable or non-durable) and the
specific product category within the
decision is made. We also extended the
concept of brand loyalty towards the
active involvement of loyal consumers
in brand promotion through brand
recommendations to other potential
buyers.
Therefore, the necessary data that
had to be collected regarding brand
loyalty were the intention to repurchase
the brand („Will you repurchase the
same brand next time?”), and,
respectively, the intention to
recommend the brand („Would you
recommend the brand you bought last
time to others?”). The data regarding to
the two brand loyalty components
mentioned above were implicitly
collected in relation to the last
purchased brand within each of the two
market types, corresponding to a
chosen durable and, respectively, a
selected consumable product category.
The indicators’ values further used
in our analysis were computed as
further described. Firstly, respondents
were asked to mention the most recent
purchased brand, the market share of
each brand being reflected by the
percentage of respondents that
mentioned that brand as being the most
recent purchased one. Secondly,
respondents were asked to evaluate
their intention to repurchase the most
recently purchased brand, on a modified
Likert scale from 1 (“will definitely not
repurchase”) to 6 (“will definitely
repurchase”). The repurchase intention
of each brand was computed as mean
of repurchase intentions mentioned by
respondents who most recently bought
that brand. Finally, each respondent
evaluated his/her intention to
recommend the most recently
purchased brand, on a modified Likert
scale from 1 (“will definitely not
recommend”) to 6 (“will definitely
recommend”). The recommend intention
of each brand was quantified as mean
of repurchase intentions mentioned by
respondents who most recently bought
that brand. Thus, the indicators’ values
were depicted through computing
simple percentages or means for each
identified brand within each product
category.
Sampling and data collection
Data were collected through an ad-
hoc questionnaire based survey, the
instrument for data collection including
open questions in order to identify most
recent purchased brands, and,
respectively, closed questions with
modified Likert scales in order to assess
brand loyalty from the perspective of
repurchase and recommend intentions.
The alteration of the classic Likert scale,
specifically consisting in establishing six
instead of five answering options, was
intended to avoid neutral responses and
force either positive or negative
attitudes.
The resources and time allocated
to the research did not permit
conducting a panel survey in order to
investigate medium or long term
evolutions of the analyzed relations and
limited the investigated population to the
urban consumers of Cluj-Napoca, one
of the largest cities of Romania,
although the intention of the research
was to analyze the urban Romanian
consumers as a whole. Nevertheless,
the research could still be considered,
with certain limitations, as being
representative for the entire urban
Romanian population as Cluj-Napoca
the second largest city of Romania,
representing almost 3% of the
Romanian urban population in 2009.
140
The investigated population was
heterogeneous considering
demographical characteristics (age,
income, education, and sex),
vocabulary, intelligence level, technical
knowledge, different product categories
usage etc. In order for the data to be
collected in such a manner so that
investigated consumers could describe
their behavior and attitudes, what they
do and what they think about brands of
durable and non-durable products, the
particular product categories selected to
be investigated within the research were
chosen so as to be different in usage
duration, not too technical (in order for
most of the consumers to be able to
evaluate their own behavior and
express their attitudes towards those
product categories) and to have a large
rate of penetration into households
usage or consumption. Therefore, we
chose the product category of tooth-
paste, as being representative for the
nondurables, and television sets, for
durables.
The questionnaire based
interviews were conducted face to face,
at the household‘s residence of the
respondents, by a group of 119
students, each student completing a set
of five interviews.
The sampling method consisted in
a mixture of classical probabilistic and
non-probabilistic methods. Firstly, the
population was geographically clustered
considering the 474 postal areas of
Cluj-Napoca. Afterwards, 119 clusters
were extracted through systematic
random sampling. The 119 clusters
(postal areas) were assigned to the 119
interview operators (one cluster to each
operator), and each operator had to
complete five questionnaire based
interviews on the basis of an itinerary
sampling method (5 consumers from
different households, located into five
consecutive buildings from the assigned
cluster – postal area). The data
collected was validated by contacting
(via phone) a random sample of
respondents in order to confirm their
answers. The interview operators
identified as trying to mislead the
research through providing non-valid
questionnaires were fully verified. From
a total of 595 face to face interviews,
only 551 were validated, therefore, the
research having, an estimation error of
±4.2%, considering a statistical
confidence level of 95%.
Hypothesis
Considering the indicators detailed
above, in order to asses the relation
between brand market share and brand
loyalty among durable and non-durable
products, the following hypothesis were
investigated:
H
1
: Brand market share is
positively correlated with brand
repurchase intention in the case of non-
durables.
H
2
: Brand market share is
positively correlated with brand
repurchase intention in the case of
durables.
H
3
: Brand market share is
positively correlated with brand
recommend intention in the case of non-
durables.
H
4
: Brand market share is
positively correlated with brand
recommend intention in the case of
durables.
Results
In order to investigate the previous
hypothesis and to measure the
proportion of market share’s variation
explained by brand loyalty components,
three bivariate regression models were
tested: linear Y=a+b·X, logarithmic
Y=a+b·ln(X), and exponential Y=a·e
b·X
.
Brand repurchase intention and,
respectively, brand recommend
intention, were successively the
independent variable (predictor) of the
model, while the dependent (predicted)
variable was each time represented by
brand market share. The models were
tested both in case of the durable and,
respectively, non-durable product.
Selecting the most appropriate
model to explain the relation firstly
141
implied testing the existence of a
relation between variables. In order to
test the relation, the null hypothesis of
“no relation” was rejected depending on
the value of the statistical indicator p,
with a statistical confidence level of 95%
if p<0.05, or with a statistical confidence
level of 99% if p<0.01. The intensity of
the relation was afterwards evaluated,
according to the tested model,
considering the bivariate correlation
coefficient R and the determination
coefficient R
2
, indicating the proportion
of the dependent variable’s variation
explained by the predictor’s variation.
Finally, the regression coefficients were
determined according to each tested
model, along with appropriate
mathematical functions to reflect the
relations.
In the case of brand loyalty as
repurchase intention, only hypothesis
H
2
was confirmed, while hypothesis H
1
was invalidated (Table 1). None of the
three tested models was statistically
significant for a possible relation
between market share and brand loyalty
as repurchase intention in the case of
non-durables. Still, in the case of
durables, all of the three models were
statistically explanatory, the most
appropriate model being the exponential
one.
Table 1
Tested bivariate regression models for the relation between brand
repurchase intention and brand market share
Market share = f (Repurchase intention)
Relation – existence and
intensity
Regression
coefficients
Market
type
Model
R
2
F df1 df2 p a b
Linear ,089 ,784 1 8 ,402 -,149 ,053
Logarithmic ,083 ,722 1 8 ,420 -,195 ,194
Non-
durables
Exponential ,220 2,256 1 8 ,171 ,001 ,730
Linear ,457 6,741 1 8 ,032 -,151 ,061
Logarithmic ,415 5,667 1 8 ,045 -,175 ,196
Durables
Exponential ,534 9,158 1 8 ,016 ,0015 ,928
In the case of brand
recommendation as component of
brand loyalty, the same situation was
observed: only hypothesis H
4
was
confirmed, while hypothesis H
3
was
invalidated (Table 2). The tested models
weren’t statistically significant for a
possible relation between market share
and brand loyalty as recommend
intention in the case of non-durables,
but all of them explained, more or less,
the relation in the case of durables, with
the most appropriate model being the
exponential one.
As outlined in Figure 1, the
bivariate regression coefficients proved,
with a confidence level of 95% (p<0.05),
that there was a positive exponential
relation between brand loyalty as
repurchase intention and brand market
share in the case of durables (53.4% of
the variation being explained by the
model), while in the case of non-
durables no relation between market
share and repurchase intention was
shown. The same figure also
emphasized a positive exponential
relation between brand market share
and brand loyalty in its recommendation
perspective, again only in the case of
durables, with a confidence level of 95%
(p<0.05), 49.5% of the variation being
explained by the model. Again, no such
relation could be depicted in the case of
non-durables.
142
Table 2
Tested bivariate regression models for the relation between brand
recommend intention and brand market share
Market share = f (Recommend intention)
Relation – existence and
intensity
Regression
coefficients
Market
type
Model
R
2
F df1 df2 p a b
Linear ,061 ,522 1 8 ,490 -,139 ,049
Logarithmic ,070 ,599 1 8 ,461 -,257 ,229
Non-
durables
Exponential ,256 2,751 1 8 ,136 ,000 ,881
Linear ,420 5,803 1 8 ,043 -,288 ,082
Logarithmic ,416 5,687 1 8 ,044 -,444 ,351
Durables
Exponential ,495 7,845 1 8 ,023 ,0002 1,248
Figure 1. The relation between brand loyalty and brand market share within
durables versus non-durables
143
Conclusions
Analyzing the results, one
conclusion that can be drawn up is that
in spite of our expectations brand loyalty
is not a driving factor in gaining market
share in the case of non-durable
products (at least in the case of the
product category analyzed in our study).
We might assume that in this case
brand loyalty is a fundamental factor in
maintaining the actual customer base
and market share, but in order to gain a
bigger share of the market (increase
purchasing frequency and quantity),
focusing more or less exclusively on
strengthening loyalty is not the best
strategy. A better strategic option is
rather a dual one in which loyalty
remains an obvious basis (so that
market share should not be lost), but in
order to increase market share sales
marketing techniques like promotions,
merchandising, sales force motivation
etc. should be emphasized.
On the other hand, the research
results make us conclude that in the
case of durable products (or at least in
the case of the investigated product
category) brand loyalty is a driving
factor in both maintaining and gaining
market share.
Moreover, the exponential relation
revealed within the analysis suggests
that in the case of durables the marginal
effect of loyalty level strengthening is
higher if the brand already has a large
customer base and market share, and,
respectively, lower in the case of
“young” brands without a significant
market share yet.
Therefore, in the case of durables,
the marketing effort in order to increase
market share through greater brand
loyalty of existing customers (which
determine new consumers, directly or
indirectly, to buy the product) is as
higher as the brand has a lower market
share. As the brand market share
grows, the strengthening of brand
loyalty will have a more a more powerful
marginal effect, theoretically creating
premises for developing dominant
brands.
Research limitations and
future directions
Analyzing the methodology and
the results, several research limitations
and future directions can be outlined.
The overall significance of the paper’s
results is limited to a certain local area
of the urban Romanian market. Even
though we could, with certain limitation,
extend the results to the overall
Romanian urban market level, a more
geographical extensive research should
be conducted in order to reveal certain
local consumer behavior specifics. The
research method would have been
more relevant if a panel were created
and analyzed over time, so as
consumer evolutions could be
emphasized, as the Romanian market is
a developing one. Last, but not least,
the research could be extended
considering not only durables and
consumables, but also services, as
significant differences could be
expected.
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