Satisfaction with products and brand confidence affect customer loyalty


Brand loyalty can be defined as customers’ repeated behavior of buying certain brands’ products. And this is the final goal of brand management. But this raises a question: What are the factors to decide customer loyalty?

To understand it, we first have to look at the procedure of how consumers purchase products.

Before deciding what to buy, customers ask their friends and families about the product they have in mind.

Once their thorough exploration is done, then they move on to the stage of looking for alternative products or services. After searching through the alternatives, they make their purchase.

Among these people, only those who are satisfied with what they bought make their second purchase automatically and habitually. This leads to customers’ trust and attachment to the brand.

We call this “customer loyalty.” In the big picture, factors affecting customer loyalty are consumers’ satisfaction, brand credibility and attachment to the brand.

We have witnessed Toyota, the world’s No. 1 carmaker, suffer a series of product recalls, and also how many sacrifices it has made to regain the people’s trust.

The rapid development of new media, such as social networking services, and deepening globalization brought our society to a whole new level of conflict.

Customers have even less trust in companies now, and thus companies these days are timid in finding ways to rebuild their brand images.

Consumers are now spending their money on “nice” brands. They are beyond the stage of buying products through its image and eager to look for the most trusted brand. The traditional method of promoting a brand image, advertising, is losing its effect as well. This is primarily because consumers are producing the information about products by themselves, instead of passively receiving it from advertisements. Publishing their own reviews through their SNS accounts, consumers are expanding their power and influence.

Moreover, smart consumers are requiring corporations to be more responsible and authentic. This means consumers are speaking out for their rights that have been neglected in the past. The reason why consumers lack trust in companies is because they perceive companies as greedy entities that try to take advantages of them.

Taking advantages here means stealing all the benefits that companies produced by risking the trust of consumers. When companies make consumers feel deceived, ignored and forced, then they are producing what we call “bad profit.”

Even this “bad profit” approach could succeed in the past but not anymore. The eyes of 100 million bloggers are watching and the spread of SNS is making consumers’ surveillance more severe than ever.

In this sense, entrepreneurs need to figure out ways to achieve their companies’ sustainable development. The answer lies in a company’s genuine concern for their customers.

In his book “Marketing 3.0,” the top business management guru Philip Kotler suggests that there are three stages in marketing development. Marketing 1.0 is the product-centric period when companies focus on product features regardless of consumers’ needs.

Marketing 2.0 is the era of building consumers’ attachment to the brand upon emotional parameters.

Finally, with Marketing 3.0 Kotler stresses that only marketing based on authenticity can guarantee long-term success. Marketing 3.0 does not simply try to promote their products through emotional marketing but to show sincerity by giving them what they need.

A new marketing paradigm like this is desperately needed in our generation. “Marketing 3.0,” the era of marketing where consumers and companies’ mutual survival is a prerequisite, has finally arrived.

According to Adelman’s Trust Barometer in 2010, 72 percent of consumers answered “yes” to a question asking whether they feel that companies generally deceive consumers for their own profits. Market research firm Nielson Company’s survey in 2009 also asked whether consumers feel that corporations only focus on profits. About 80 percent said “yes.”

They believe that as long as consumers do not notice, companies will always try to take advantages of them. Showing corporate actions that represent their interests ― and we’re not talking about any legal measures ― is the only way to regain people’s fading trust. It is about time that companies realize that consumers will open their wallets only for responsible and respected companies’ products.

Now is the time to view consumers as strong. Only when companies understand this can confidence between consumers and brands last and their products become top brands.

By Park Heung-soo, Professor of Yonsei University School of Business