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Welcome to the home page for the NTC project I98A06:

"Building Global Textile and Apparel Brand Image Strategies: A Cross-National Model"

Introduction

Brand loyalty has a direct and obvious impact on corporate profitability and marketing efficiency. Strong brand loyalty leads to improvements in the acquisition and retention of profitable customers, improves margins and market share, and usually improves the hit rate on new product development via product and line extensions.

The purpose of this study is to provide a rational and functional framework for understanding brand loyalty and testing a model which is predictive of loyalty. Customers may be loyal to a particular branded product because of the brand image, the (desired) product attributes, or the price. Identification of these loyalty motivations allows us to segment customers into different loyalty groups, each requiring a different marketing strategy. This segmentation scheme, based on the different motivations for loyalty, permits the development of more effective strategic marketing programs.
 

Conceptual Framework for Research

Brand loyalty may be viewed as a lack of switching behavior, given a set of available competing products. People, and institutions, may be loyal to a branded product for different reasons. For example, a customer may be loyal to the Levi brand for jeans for the fit, for the image associated with the brand, or for consistent performance. Also, loyalty behavior for a particular person can vary from category to category. A customer may be loyal to the Levi brand for jeans, but disloyal for other items of casual wear, purchasing those brands that seem like the better bargain.

Brand loyalty may be defined as the proportion of times a purchaser chooses the same brand in a specific product category compared to the total number of purchases made in that category under the condition that other brands are equally available at the same time and place. The concept of brand loyalty may be viewed as a behavior resulting from positive attitudes and perceived value.

Perceived value drives brand loyalty. Customers considering a purchase scan their product options and develop a consideration set. Within the consideration set, they develop a hierarchy of branded products based on their assessment of value. They then choose the branded product at the top of their value hierarchy, if available. If we can accurately measure a purchaser’s relative value structure for a product category, then we can accurately predict that purchaser’s choice among a set of competing branded products in that category. Perceived value can be viewed as the total utility a person places on each product available to them in a category. Rational people will purchase the product that they perceive to give them the highest value (utility).

The total value of a branded product can be thought of as having three general components - tangible (brand/product performance) benefits, intangible (brand image) benefits, and price. Each brand in a product category delivers a bundle of tangible benefits to the purchaser. These tangible benefits are the physical deliverables or performance attributes of the product which are used by the purchaser to satisfy their perceived needs. Thus, individually and as a group, these tangible benefits delivered by a brand represent value (or utility) to the purchaser.

Each brand also delivers a bundle of intangible benefits to the purchaser. These intangible benefits are the image drivers associated with the brand name and are used to satisfy other perceived needs of the purchaser (e.g. trust, reinforcement of self-image, consistent performance, social responsibility.) As a bundle, these intangible benefits may be thought of as the brand’s image. These intangible benefits also represent value to the purchaser.

Purchasers normally trade-off the value of the tangible benefits and intangible benefits, against price (which has a negative utility - the lower the price, the higher the utility), to arrive at a total value or utility for each branded product in their competitive set. Rational purchasers then can be expected to choose the brand they perceive to provide the best value, or greatest utility. Thus, a branded product’s relative value drives customer choice, and therefore their loyalty behavior.

If a particular brand maintains a significantly higher perception of value to a purchaser than any other brand in the category, that purchaser will buy that brand proportionately more than other brands in the category. The brand’s value is the sum of the customer’s evaluation of the tangible benefits, intangible benefits and price as illustrated in Figure 1 below.

Figure 1. The Brand Loyalty Model



Figure 1 shows that price, brand performance and brand image all contribute to a purchaser’s perception of value. In turn, the consumers’ evaluation of the branded products’ overall value drives choice, at least among rational purchasers. In Figure 1, brand/product performance is the aggregate bundle of tangible product attributes (descriptive features that characterize a branded product). Brand image is comprised of the intangible benefits/attributes delivered by a branded product.

The intangible part of a product’s value, its brand image, may be positive or negative, meaning that a brand name can increase (or decrease) perceived overall value. Hence, positive brand image allows a marketer to charge a premium in the market place over the value of the bundle of tangible features alone, or over the value of an unbranded product. To better understand consumers’ choices and what drives loyalty, we must first understand and measure the relative utilities (importance weights) customers place on brand image, performance, and price.
Objectives

The specific objectives of this study are as follows:

1. Develop and test a Brand Loyalty Model to identify and measure (performance, brand image and price) loyalty motivations at the individual consumer level.

2. Identify the key intangible (brand image) attributes for two selected product categories and determine the effect of each attribute on brand image, and thus on brand loyalty.

3. Identify key tangible (performance) attributes for two selected product categories and determine the effect of each attribute on brand performance evaluations, and thus on brand loyalty.

4. Segment customers into different loyalty groups according to their (performance, brand image, and price) loyalty motivations.

5. Identify the most effective marketing strategies for each loyalty segment in a selected product category.

6. Compare the relative impact of brand image, performance and price on consumers’ evaluation of total brand value by age and sex.

7. Compare the relative impact of brand image, performance and price on consumers’ evaluation of total brand value for selected product categories.

8. Predict the impact of changes in performance attributes, brand image and price on consumer choice/switching behavior.

Method

Measurement of Perceived Value and Brand Loyalty

Ideally choice behavior, and thus brand loyalty, should utilize experimental designs, whereby the purchase alternatives are manipulated in a controlled fashion, to uncover the drivers of choice. To accomplish this, we will simulate the online marketplace in a computer mediated market environment. Participants will view experimental web sites (where brand and other variables under study will be controlled/ manipulated) and complete an online questionnaire designed to elicit their perceptions of the each experimental product. These experiments will closely replicate the actual information processing activities a person goes through to arrive at a value-based preference hierarchy, and ultimately a choice when purchasing on the Internet. The design and derivation of these models allows us to decompose perceived brand/product value into its component parts so that we can examine the impact of brand/product performance, brand image and cost on the purchaser’s choice.

Determining Choice Behavior from the Brand Loyalty Model
Because the Brand Loyalty Model is derived at the individual level, we can determine who would purchase what, given competing product performance descriptions. That is, if we specify the brand name, the performance attributes, and price for each of a set of competing products in the category, then we can calculate the total utility, or value, each respondent places on each offering, and therefore determine their most likely choice. This allows us to determine who would stay loyal and who would switch under alternative market scenarios. More importantly, we can determine why they would switch, whether it is due to specific tangible product attributes, price, or brand image.

Using Loyalty Type as a Segmentation Tool
A projectable sample of purchasers can be classified into distinct market segments based on the type of loyalty determined from their preference structure. This type of segmentation scheme would allow the marketer of, say, Brand A to determine how much of their share falls within each loyalty segment and their vulnerability to switching from each segment. Other information in each cell would allow the marketer to develop offensive strategies for converting attribute loyal consumers and convenience oriented shoppers from competing brands.

Participants

We had a convenience sample for this research of college students with internet access and some experience shopping online. We used a stratified random sampling procedure to obtain sample of online shoppers. Participants were selected to obtain representativeness by age and all respondents were between 18 and 25 years old.

Summary

We are in the  data analysis stage and will present our Findings on this web site shortly.

 
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Last updated: September 07, 2001.