Brand Loyalty Segmentation

Loyalty segmentation helps in building strong brands. A market can usually be divided into the following groups:

   Noncustomers: Those who use the competitor’s brand or are not product   class users.

   Price switchers: Those who are price switchers.

   The passively loyal: Those who buy out of habit rather than reason.

   Fence sitters: those who are indifferent between two or more brands.

   The committed: those who are committed to our brands.

The challenges to improve the brand’s loyalty profile are to increase the number of customers who are not price switchers, to strengthen the fence sitters and committed ties to the brand and to increase the number who would pay more to use the brand or service. Two segments where the companies generally under invest are passively loyal and the committed customers. The passively loyal customers are often taken for granted. At the other end of the spectrum are the highly loyal or committed customers. Firms also tend to take this group for granted. Yet there may be significant potential to increase business from the very loyal.

For e.g. the loyal Marriott customer might be encouraged to select even more than often with a improved portfolio of business support services such as fax machines in rooms.

Further there is a risk that loyal customers can be enticed away by a competitor if the performance of the product or service is not improved. For these reasons firms should avoid diverting resources from the loyal core to the non-customers and price switchers. One approach to enhancing the loyalty of fence sitters and the committed is to develop or strengthen their relationship with the brand. Brand awareness, perceived quality, and an effective, clear brand identity can contribute to this goal.