What is Brand Loyalty?

“Brand loyalty” is a term used to describe the tendency that consumers have to stick with the products or services bearing brand names they know and trust. Brand loyalty translates to repeat sales, so it’s in the best interest of the company that carries the brand to maintain its reputation and recognizability in order to maintain profit. Altering the look and feel of a brand can have disastrous consequences for a company, as it runs the risk of alienating brand-loyal consumers who may not recognize or trust the product or service under different packaging.

In addition to the greater security offered by trusted brand names, many consumers simply don’t want the hassle of trying out different products or services once they’ve found one they’re comfortable with. Purchasing different products and services can result in wasted time if the product or service is unsatisfactory to the consumer, not to mention wasted money if the product or service is non-refundable.

While products and services with established brands are usually priced higher than generic products and services, most consumers feel a greater sense of security with brand names for a number of reasons. As well-known brands depend on their reputation to foster good business, it’s in their best interest to actively work toward resolving any consumer disputes that may arise. This gives consumers a sense of security in knowing that they are less likely to be taken advantage of, and acts as a type of informal insurance. Big brands work more actively toward mitigating any damage that may result from customer dissatisfaction, as consumer complaints directed at big brand names automatically generate instant and wide-spread interest in the media.

One of the most memorable examples of the ramifications that can happen when a company dismisses brand loyalty occurred in 1985, when The Coca-Cola Company launched “New Coke.” A reformulation of the company’s eponymous soft drink, Coca-Cola, “New Coke” was launched in the market to replace Coca-Cola after several focus groups gave it mostly positive reviews. Amidst disappointing sales and a backlash from consumers, which included public protests in the streets of certain States, The Coca-Cola Company withdrew New Coke from the shelves and reissued their original soft drink under the new brand, “Coca-Cola Classic.” The Coca-Cola Company then directed their marketing efforts toward assuaging consumers by running a campaign with the slogan “Red White and You,” in an effort to reflect the brand loyalty and national pride felt by consumers toward their product.