Consumer behavioral loyalty: A segmentation model and analysis

Abstract

Extant literature on behavioral brand loyalty has mostly considered loyalty as a notion of consumers being exclusively loyal to a single alternative. With the unprecedented increase in the number of competing product alternatives in the present decade, there has been a clear decrease in the number of such loyal consumers who purchase an alternative exclusively. Many consumers have started to embrace more than one alternative as their Javorite brands, thus exhibiting divided loyalties among a Jew brands. In this article, we propose a modeling framework to study consumer behavioral loyalty as evidenced by these two types of loyalty: the first is hard-core loyalty, when consumers exclusively repeat purchase one product alternative, and the second is reinforcing loyalty, when consumers may switch among product alternatives, but predominantly repeat purchase one or more product alternatives to a significant extent. We posit that the market is made up of segments of hard-core loyals and segments of potential switchers (reinforcing loyals or otherwise) who are homogeneous in terms of their switching response to product attribute and marketing mix variables. We then model consumers' aggregate conditional switching responses using a linear logit latent class formulation. Our application to the cracker data shows that measuring a product's loyalty in terms of both hard-core and reinforcing loyalties provides more valuable information that is critical to the management of brand loyalty. Our results also reveal that the loyalty-building strategies depend very much on the composition of a brand's hard-core loyal and reinforcing loyal base and on the factors (marketing mix or product attributes) that motivate reinforcers to repeat purchase the brands. Thus, loyalty building at any cost may not necessarily be the right strategy for all the brands competing in the market. This has important implications for managers interested in adopting loyalty-building strategies to increase market shares of their products, J BUSN RES 1999. 44.75-92. © 1998 Elsevier Science Inc.