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S. Ramesh Kumar
Aalap Sharma

BRAND loyalty in fast moving consumer goods categories is a topical issue, with several brands resorting to price cuts across categories. More importantly, price cuts or sales promotion by themselves do not seem to have done much for brands in terms of sustaining brand loyalty. They may attract consumers in the short run: consumers may stock the brands and consumers new to the brand may try it. But over a period of time, a brand's value may get diluted in consumers' psyche, and will eventually lose a strong base of consumers. The following are some aspects of marketing mix elements and consumer behaviour which could contribute to brand loyalty.

Product differentiation

If the products are differentiated in their characteristics and this difference is perceivable, there are chances of brand loyalty being formed based on satisfaction with greater performance or fit of product with needs. In this case, loyalty is driven by functional or symbolic benefits. Functional benefits would be specific tangible features of the product whereas symbolic benefits would be intangibles such as brand personality and `hedonistic' value of purchase.

Price differentiation

If the price differentiation in the market is perceivable, price-led loyalty might exist in the market. Price-led loyalty is practised by supermarkets, airline companies and FMCG brands, which come out with frequent sales promotions based on freebies. Alternatively, price might be taken as an indicator of brand quality, and the customer might go in for higher priced options. Price-led loyalty has to be carefully considered with other marketing mix elements and the consumer should never perceive dilution, especially in low-priced bands. Hence, lower prices should create a sense of value through the product offerings as well as through communication.

Branding activity

If the category is organised and there is branding activity, there will be greater loyalty than there would have been if the category were unorganised. Branding activities can differentiate between brands on name, symbol, images and associations. Branding activity in this context refers to creating strong associations which will influence the consumers not only with regard to functional attributes but also with symbolism. Hamam soap's portrayal of its pure ingredients with the child and mother imagery is a good example of one of these dimensions. Ruf and Tuf's campaign using a personality-oriented concept to create a belief in products made in one's own country is another new approach to branding activity (especially in a category with Western origins). Creating an association through sponsorship too is a branding activity. Branding activities in a broad sense could range from advertising to sales promotion and public relations involving several aspects.

Level of risk

The perceived risks that typically occur are functional, social and psychological risks.

These kinds of risks are perceived in several products ranging from personal care products to electric cars. A pioneering brand in a category which offers a good product and addresses the perceived risks associated with the product is likely to get a loyal base of consumers. Amazon.com, one of the global pioneers in the business of online marketing which initially involved traditional categories, books and music, addressed and successfully overcame "the perceived risk" barrier to have a large group of loyal consumers. Smaller brands which compete with mega brands in the area of personal care (for example) can approach loyalty with this dimension. How does a good but lower-priced fairness cream ensure that consumers do not perceive health or usage risks?

Involvement of consumer

A high brand involvement would mean a greater search intention, and satisfaction of the customer could lead to repeat purchase and then loyalty. Low involvement could lead to brand habit. Researching the involvement levels of consumers helps to decide which of the marketing mix elements will be useful to create a trial, and hence loyalty. Dettol floor cleaner advertises that children will fall sick less frequently as it kills bacteria. Dettol with its germ-killing association may be trying to create involvement in a category in which penetration levels are low and in which there are a number of local brands which belong to the unorganised sector.

Sales promotions

The more the number of price-discount led sales promotions, the lesser the likelihood of brand loyalty in the category/segment which is the focus of such efforts. This is because the consumers are inducted into the price war mind set. Sales promotions by themselves as a concept is not a bad idea provided they are used well with the overall strategy of the brand. A premium brand which gets into frequent sales promotion has the risk of losing its premiumness — a permanent damage to a brand which has spent years creating the premium aura.

The Indian context

The following were the observations from the literature survey and the examples chosen from the Indian context.

The factors in Table 1 indicate that there will be a large segment of consumers for whom price-led loyalty will dominate. Hence there will be strong behavioural loyalty in the segment and only weak attitudinal loyalty. There is thus spurious loyalty in this sector.

There is a moderate level of symbolic and functional differentiation which has been exploited by strong brands to build a loyal following. Examples of this include brands such as Dove, Pond's Dreamflower talcum powder, Gold Flake, Will's Navy Cut, Amul and Cadbury. These brands have probably built strong attitudinal loyalty through their brand personality and other brand building efforts.

In the FMCG sector, brand habit is high whereas attitudinal loyalty is low. As creating attitudinal loyalty based on functional differentiation is difficult, symbolic differentiation is the key. Building strong brand personalities and associated symbolic benefits is important for crafting customer loyalty.

The factors discussed cannot be treated in isolation: they are to provide a synergy to result in brand loyalty. The combination of these factors and the timing of the combination is the topical challenge which marketers face in an environment where loyalty is slowly eroding.

(S. Ramesh Kumar is Professor of Marketing, IIM Bangalore; Aalap Sharma is a student of the post-graduate programme in management at the same institute.)

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