Consumer loyalty

A study by Bain & Co. shows that a 5% increase in customer loyalty can increase a company's profitability from 40 to 95 %, and an increase in customer loyalty of 1 % is the equivalent of a 10% cost reduction (Reichheld and Teal, 2001). So how do you make consumers have brand loyalty? based on Smith and Swinyard (1983) and their research advertisement can influence the development of brand loyalty by establishing source credibility and setting up a predisposition for a favourable user experience. That should have an effect on later purchases. there is another argument that suggests that advertisement can be used as a framework for the brand user experience which relates to brand loyalty. The theory is divided into two one is the prediction, which explains advertising's preceding effect on brand user experience. Advertising can help consumers focus on the brand's best attributes; consumers' brand usage experience can then be more favourable as advertised, which in turn will aid in the formation of brand loyalty. The second type of framing is diagnostic, which explains the effect of advertising placed after the usage experience. Diagnostic framing argues that advertising can help consumers to find ways to make sense of what they have experienced with a brand. (Tucker, 1964) Accordingly, if the advertisement is delivered before (predictive framing) or after (diagnostic framing) consumers brand experiences, knowing "how" they would become loyal to the brands of different product types would greatly help advertisers in shaping their long-term and short-term messages more effectively (Deighton, 1984)

Tucker, W.T. (1964). The Development of Brand Loyalty. Journal of Marketing Research, 1(3), p.32.

Reichheld, F.F. and Teal, T. (2001). The loyalty effect : the hidden force behind growth, profits, and lasting value. Boston, Mass Harvard Business School Press.

‌‌Smith, Robert E., and William R. Swinyard (1983), "Informa tion Response Models: An Integrated Approach," Journal of Marketing Research, 20 (August), 257-267. 

 Deighton, John (1984), "The Interaction of Advertising and Evidence," Journal of Consumer Research, 11 (December), 763-770.