Customer Perception and Brand Loyalty - Essay Example

Perception and Brand Loyalty Introduction Perception is not only hard to define but also to understand especially when it comes to s. In the competitive business environment, a customer perceives products and their utilities based on pre conceived notions, ideas and references of opinion leaders and reference groups and through experiencing the overall utilities. Pomerantz, (2003) defined perception as a process of attaining awareness or understanding environments by interpreting information. This statement is based on normal human psychology that can be related to the customer perception. Customer perception is a process that is based on the information collected from wide arrays of sources and resources. It can be the case that customers using the existing product or service may create awareness along with changing the level of perception about that particular product or service. Organisations need to understand the perception of customers in order to market their products and services along with offering them something that will exceed the level of perceived perception. Customer perception decides their buying behavior to an extent. Considering the fact that good and valid perception about a product often creates a positive image that allures customers to get associated with that product or service in the short as well as in the long run. Customer perception can be considered as the first stage of buying behavior where there is a difference between the reality and perception. Until and unless, customers use the product; ascertaining the reality can be a cumbersome task offering irrelevant attention and importance to perception (Reichheld, 1993). Customers’ perceptions can be influenced through reference groups and opinion leaders but should offer desired and more than perceived results in order to create long term value and mutual benefits in the competitive business environment. Perception leads to interest and zeal that forms the foundation of accepting products and services. On the other hand brand loyalty is consumers’ commitment to repurchase or continue using the brand for a long period of time. Brand loyalty is based on enhanced level of positive customer satisfaction that is built and developed through effective and quality services. In short, brand loyalty is driven by effective customer relationship management programs and initiatives offering mutual benefits and advantages to organizations and customers. The research is based on identifying the Ducati customer perception and brand loyalty. It needs to be mentioned that in spite of a number of companies manufacturing high quality and attractive motorcycles, a certain group of customers prefer to buy Ducati motorcycles. The research aims at identifying their perception towards Ducati and its motorcycles along with assessing brand loyalty. However, in this particular discussion, only theoretical aspects of brand loyalty and customer perception has been presented and practical implication will be highlighted in the later part of the research in an illustrative and logical manner. A highly satisfied customer will tend to buy more product and services of the brand with whom he can relate to in the short as well as in the long run. It needs to be understood that brand loyalty is often useful and economical for the buyer and seller. The buyer can stick to a particular brand without investing much in competitors brand along with availing great benefits of brand loyalty offered by organizations. Loyalty is awarded and rewarded in different ways depending on the structure and policies of organizations. When it comes to expensive products and services, customer perception and loyalty is driven by wide arrays of variables. Price can be considered as one of the most important variables deciding the perception and loyalty level of customers. Ducati Motorcycles come with a hefty price tag and with a positive perception of motorcycles; customers are willing to invest their money in it. If the actual and real performance and services of the product exceeds the perceived level of performance and services; customer satisfaction increases. However, enhanced customer satisfaction does not assure customer and brand loyalty as it is dependent on the overall customer relationship management that needs to be understood and defined well by organizations in order to understand customers. This helps in retaining them for a long period of time. Kotler (1991) stated that brand loyalists are differentiated on the basis of product usage. They are classified as heavy, medium and light users. His statement holds great importance and relevance to economical products but in case of luxury and expensive products; it is pretty hard to differentiate between customers on the basis of their usage and consumption. Ducati manufactures wide arrays of motorcycles priced moderately to expensive. Customers do not but motorcycles everyday and more importantly do not buy motorcycles in numbers. This suggests that in terms of motorcycles; customers are often light users in terms of buying motorcycles. Kotler (1999) also defined different behaviors of brand loyalists in a logical manner but relating his sense of behavior to the buying behavior of customers preferring Ducati may not be logically appropriate. There are hard core brand loyal who buy the brand all the time, there are split loyal being loyal to two-three brands and there are shifting loyals shifting from one brand to another. (Kotler, 1991). A customer buying Ducati motorcycle can be considered as a hard core brand loyal having great and positive perception about the brand. This customer is not going to change his preference for good number of years if the actual experience of driving the motorcycle is better and more than the perceived experience. Thus, brand loyalty is decided by the number of purchases and repurchases but in terms of cars and motorcycles, there are limited purchases and repurchases and brand loyalty is hard to define and explain. One more thing that plays an important role in deciding the buying behavior, customer perception and brand loyalty is the reputation, image, brand equity and acceptance of the product in the competitive business environment. The next part of the discussion presents a thorough analysis of Porter’s Five Forces Model Theory to identify and assess the internal and external environment often affecting the image and performance of the organization. Porter’s Five Forces Model Theory Michael Porter of Harvard Business School introduced the five forces model theory in 1979 to assess and determine the competitive intensity and attractiveness of markets. Key elements of this theory are as follow: (Porter, 2008) Threat of New Competition- competition exists in every business environment. However, there are few brands and companies enjoying little competition. The likes of Harley Davidson, Ducati, BMW and Mercedes do not compete with large number of brands. Moreover, threat of new competition is pretty low for these brands considering their image and reputation in the competitive business environment. Threat of Substitute Products- threat of substitute products can be considered as quite moderate as customers preferring Ducati motorcycles will always prefer riding them rather than opting for cars and other transportation tools. Satisfied customers are not going to switch to substitute products even though it is hard to find a perfect substitute in the short as well as in the long run considering the perception level towards riding Ducati motorcycles. Buying Power of Customers- buying power of customers is pretty moderate in this case considering the fact that buyers do not have much of choices while buying expensive products and services. There are few organizations offering same quality of products and services but if the perception and urge to buy a product is high, the buying power often reduces in the short as well as in the long run. Buying Power of Suppliers- buying power of suppliers is pretty high in this case as not many suppliers produce or manufacture the parts and bodies required to manufacture Ducati motorcycle. This buying power of suppliers can only be altered through backward integration that may cost a bit to the organization. Intensity of Competitive Rivalry- the intensity of competitive rivalry can be considered as quite moderate but considering the price and sales of products; it can be considered as quite high. The main competitors of Ducati are Harley Davidson and Honda Motors. Both these players have great market share and great products that have the potential to attract customers willing to invest a fortune in their products and services. This competitive rivalry can only be mitigated through effective customer services and product differentiation in the long run. Conclusion The concept of customer perception and brand loyalty is interrelated based on the efficiency and effectiveness of organizations to attract and mould them in a desired manner. Customer perception is developed through personal and social ideas, views and opinions that affect the brand loyalty. Brand loyalty is developed through positive experiences that are based on the satisfaction level of customers. Brand loyalty is earned by enhancing the customer satisfaction and perception level by enhancing the actual quality of products and services in a unique manner. The discussion has been presented in an illustrative manner offering an insight over customer perception and brand loyalty in an illustrative manner along with presenting the importance of five forces model theory that plays an important role in understanding and assessing the attractiveness of market driven by internal and external factors. REFERENCES Pomerantz, James R. (2003): "Perception: Overview". In: Lynn Nadel (Ed.), Encyclopedia of Cognitive Science, Vol. 3, London: Nature Publishing Group, pp. 527–537 Porter, M.E. (2008) The Five Competitive Forces That Shape Strategy, Harvard business Review Kotler, P (1991), 'Marketing Management, Prentice-Hall, 7th Edition Reichheld, Frederick F. (1993), "Loyalty-Based Management," Harvard Business Review, 71 (2), 64-73. Read More