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What Is the Importance of Brand Loyalty?

A consumer's negative impression of a brand can send them searching for a new brand.
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  • Written By: Osmand Vitez
  • Edited By: A. Joseph
  • Last Modified Date: 25 September 2014
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Brand loyalty is the act of consumers consistently purchasing a product or patronizing a company. Companies typically build this loyalty through strong advertising and marketing campaigns that influence consumers as well as high-quality products or services. Marketing is necessary to entice consumers to purchase one company’s goods over competing goods. The importance of brand loyalty leads to increased market share, higher profits and better goodwill among consumers. Companies will often go through a series of activities that improve their loyalty among customers.

Market share represents the amount of a market’s total sales that one company earns when consumers make purchases. Brand loyalty allows a company to market and advertise its goods or services in the market. Companies are often unable to capture a significant portion of market share without informing consumers. Additionally, new companies might have no customers who are informed or loyal to the business and its products. Therefore, building loyalty by offering quality products or undercutting another company’s brand loyalty can improve market share.

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Profit is the main reason why a company operates in a given business environment. A company makes profit by selling goods and/or services to consumers, with profits coming from either a high volume of sales or high profit margins. Brand loyalty allows a company to generate higher sales through word-of-mouth advertisement. Word-of-mouth advertising occurs when current customers have enough loyalty that they recommend a company’s products or services to other consumers. This allows the company to build a loyal consumer base through its current customers.

Goodwill is the positive relationship that a company has with its customers. Companies can establish goodwill by offering high-quality products at a fair price. Brand loyalty built through goodwill often means that a company is able to sell products to consumers regardless of price changes or alterations in the company’s operations. In some cases, however, changes that leave a negative outlook with consumers can decrease brand loyalty. To avoid a reduction in goodwill, companies must be sure to listen and react properly when consumers provide feedback.

Brand loyalty is often expensive for companies to achieve. Though it sounds simple enough, it is not always easy. Competitors that have a strong, loyal consumer base can make it difficult for a new company to enter a market. Other times, the necessary expenditures for advertising products might be prohibitive for some companies. Well-managed plans and operations can be more successful than blanketing an entire market with advertising.

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Discuss this Article

sunshined
Post 7

We have a local dairy in our community that has been here for many years. This company has a large customer brand loyalty not only in our community but all over the place.

There are many people who grew up here and have moved away, that will ask people to bring their products if they are coming to visit.

This company consistently produces quality products that taste better than the competition and people are willing to spend a few cents more to purchase their products.

They also have great marketing campaigns, whether it be TV commercials or billboard advertising. Another reason I think they have such strong customer loyalty for their brand is they are always creating new and delicious products.

Most people like to try new products, and when they know they are made by a company they trust and always has good quality, it doesn't take long for that new product to be a success.

honeybees
Post 6

Once our kids were raised and on their own, we joined the motorcycle world. My husband had owned one when he was growing up, but this was a first for me.

After looking at many different brands and styles, he bought a Harley Davidson trike. This didn't mean much to me, except that it was comfortable for me to ride on the back.

I had no idea of the strong Harley Davidson brand loyalty there is before we bought this trike. There can be quite a rivalry between this brand and other brands of motorcycles - sometimes it's not all that friendly either.

I have met several people who are passionate Harley Davidson fans, and would never consider owning or riding any other kind of motorcycle. I don't know what Harley Davidson has done to get this kind of brand loyalty, but from what I have seen, it is very strong.

LisaLou
Post 5

If I find a product or restaurant that I really like and feel it is reasonably priced, I am a very loyal customer.

I think a business creates strong brand loyalty by consistently providing their customers with the service they expect. If they continually make good on their advertising, and have a good product, they should have no trouble creating brand loyalty.

We have a favorite local pizza restaurant that we frequent almost every week. We have become familiar with the owner and many of the staff and are very loyal to their business. Any time we are hungry for pizza, that is where we go.

We have also brought many of our friends with us and this has also been good business for them. We have never been disappointed in the food or the service and will continue to keep going back.

Azuza
Post 4

@indemnifyme - That's an interesting perspective on the insurance industry. I'll admit that I would switch carriers at the drop of a hat if I could find something cheaper!

I know there are a lot of other areas where brand loyalty runs deep. I think computer are a good example of this. We all know people that are diehard Mac or PC fans. These people would never consider purchasing another type of computer and they're convinced that the type they've chosen is the absolute best. That's brand marketing at work right there!

indemnifyme
Post 3

We struggle with brand loyalty a lot in the insurance industry. Somewhere along the way people got this crazy idea that the only factor in choosing an insurance company was price. All the advertisements focus on saving people money instead of the importance of having good insurance.

It's really hard to build up brand loyalty when the only thing consumers care about is the price. Plus, it's so easy to get a quote for insurance and to switch carriers. If you work in an agency you have to really focus on giving good customer service so the customers feel loyal to your particular brand!

MrSmirnov
Post 2

Brant loyalty in my opinion is what keeps even the smallest businesses afloat. Whether you are making a new toothpaste, or promoting yourself as a graphic designer, you need to recognize the importance of brand loyalty.

I think having a strong image of what you or your product represents is vital to keeping customers. Also, knowing what works for your brand allows you to keep your focus so that you can consistently deliver a quality product.

In every business plan the importance of brand loyalty should be discussed. You need to know what sets your brand apart from all the others.

manykitties2
Post 1

As a consumer I think that sticking with a single brand can be the easiest way to support something you like. While I am sure those in marketing have spent a lot of time making brand loyalty the focus of their campaigns, I think that just having a really good product is the way to keep customers.

I wonder how many people find that supporting a certain brand is inherited?

For myself almost all of the products in my cupboards are the same ones my mother uses. I honestly never made a conscious decision to choose those products, I just always assumed they were the best because my mom used them.

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