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What Is Brand Loyalty in Marketing? - Definition & Examples

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  • 0:01 Definition of Brand Loyalty
  • 1:34 Examples
  • 2:17 Lesson Summary
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Lesson Transcript
Instructor: Shawn Grimsley
Do you always drink the same brand of soda or coffee? If so, why? In this lesson, you'll learn about brand loyalty. You'll also have a chance to take a short quiz after the lesson.

Definition of Brand Loyalty

Brand loyalty occurs when a customer chooses to repeatedly purchase a product produced by the same company instead of a substitute product produced by a competitor. For example, some people will always buy Coke at the grocery store, while other people will always purchase Pepsi.

Brand loyalty is often based upon perception. A consumer will consistently purchase the same product because she perceives it as being the superior product among the choices available. You should note that brand loyalty usually relates to a product, not a company. For example, while you may be loyal to your Honda Accord, but when it comes to motorcycles, you might believe that a Harley leaves a Honda motorcycle in the dust.

Brand loyalty is important for several reasons. First, it reduces the cost of production because the sales volume is higher. Second, companies with brand-loyal customers don't have to spend as much money on marketing the product, which will permit the company to either retain more earnings or to invest resources elsewhere. Third, companies may use premium pricing that will increase profit margins. Finally, loyal customers tend to recommend products that they like.

Businesses have to exert significant effort to facilitate brand loyalty. You need to convince potential customers that your product has a significant advantage over other products to justify consistent purchases of your product. Businesses also will attempt to leverage brand loyalty developed for a product to other products offered by the company. The hope is to create brand loyalty for as many products as possible.

Examples

Examples of brand loyalty abound:

  • Mac users v. PC users
  • Pepsi drinkers v. Coke drinkers
  • McDonalds v. Burger King devotees
  • iPhone v. Android smart phones

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