building loyalty for fmcg brands - personal care products - by emrah seyit

8/3/2019 Building Loyalty for FMCG Brands - Personal Care Products - By Emrah SEYIT

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Master Thesissubmitted by Emrah SEYT

Universit degli studi di TrentoUniversit de Savoie dAnnecy

Universitt Kassel

Universidad de Len

Date of Submission21/05/2010

BUILDING LOYALTY FOR FMCG BRANDS

- P

ERSONALC

AREP

RODUCTS-


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Building Loyalty For FMCG Brands by Emrah SEYT

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Acknowledgements

Sincere gratitude and thanks must go to the following ones:

- My parents and relatives for their invaluable and everlasting love and support

- Dr. Andrea GEILE, from the University of Kassel (GER), for her help in

structuring the thesis and her suggestions- Prof. Pablo GUTIERREZ, from the University of Len (SP), for his guidance

and kindly providing some useful contacts for the thesis

- Mr. Moataz ABDALLA, who is my colleague from the European Master inBusiness Studies, for his rereading, feedback and brilliant suggestions

- Mr. Carlos MILLAN MURCIEGO, who is my class mate at the European

Master in Business Studies, for his accompany in the libraries in Kassel andLen


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Table of ContentsDeclaration __________________________________________________________________ 1

Acknowledgements ___________________________________________________________ 2

Table of figures ______________________________________________________________ 6

Abbreviations ________________________________________________________________ 7

1 Introduction _____________________________________________________________ 8

1.1 Relevance of the Subject _______________________________________________ 8

1.2 Major Terms ________________________________________________________ 9

1.3 Focus and Goals of the Thesis __________________________________________ 10

1.4 Structure of the Thesis ________________________________________________ 11

2 Literature review of Brand Loyalty __________________________________________ 13

2.1 The Loyalty Factor and the Brand _______________________________________ 14

2.2 Loyalty Matrixes ____________________________________________________ 17

2.3 The Brand Loyalty Models ____________________________________________ 21

2.3.1 Overview of Brand Loyalty Models _________________________________ 21

2.3.2 Evaluation of Brand Loyalty Models _________________________________ 25

3 Loyalty for Personal Care Products __________________________________________ 27

3.1 Building Loyalty for Personal Care Products Brands ________________________ 27

3.1.1 Steps to follow __________________________________________________ 27

3.1.2 Motivators and Demotivators ______________________________________ 30

3.1.3 The Benefits of Brand Loyalty _____________________________________ 35

3.2 Analysis of Building Loyalty for Personal Care Products by means of Marketing MixElements ________________________________________________________________ 37

3.2.1 Product Strategies _______________________________________________ 38

3.2.2 Price __________________________________________________________ 39

3.2.3 Place __________________________________________________________ 40


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3.2.4 Promotion _____________________________________________________ 40

4 Case Studies ____________________________________________________________ 53

4.1 LOral Case - Microsoft CRM Solution _________________________________ 53

4.1.1 Introduction ____________________________________________________ 53

4.1.2 Company background ____________________________________________ 54

4.1.3 Implementation of CRM Solution ___________________________________ 55

4.1.4 Benefits of CRM Solution _________________________________________ 57

4.1.5 Conclusion of LOral Case _______________________________________ 58

4.2 Procter & Gamble Case 1 - Pert Plus BC-18 technology _____________________ 59

4.2.1 Introduction ____________________________________________________ 59


4.2.3 The Situation in the USA and the introduction of the BC-18 in the US market61

4.2.4 The Situation in Europe in 1988 and introduction of BC-18 into Europe _____ 63

4.2.5 General Overview and Current Situation in Europe and the USA __________ 65

4.2.6 Conclusion of Pert Plus Case _______________________________________ 68

4.3 Procter & Gamble Case 2 Max Factor & Cover Girl _______________________ 69

4.3.1 Introduction ____________________________________________________ 69


4.3.3 Implementation of Loyalty Strategies ________________________________ 70

4.3.4 Conclusion of Max Factor & Cover Girl Case _________________________ 74

4.4 Procter & Gamble Case 4 Gillette _____________________________________ 75

4.4.1 Introduction ____________________________________________________ 75


4.4.3 Evolution of Gillettes loyalty strategy _______________________________ 76

4.4.4 Conclusion of Gillette Case ________________________________________ 78


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4.5 Henkel Case Schwarzkopf Salon Loyalty Program ________________________ 79

4.5.1 Introduction ____________________________________________________ 79


4.5.3 Rules and Regulations of Salon Loyalty Program, and how it works ________ 80

4.5.4 Conclusion of Schwarzkopf Case ___________________________________ 82

5 Recommended Brand Loyalty Strategies for FMCG companies ___________________ 84

5.1 Product Coaching ____________________________________________________ 84

5.2 Co-operation with hairdressers and beauty centers __________________________ 86

5.3 Games and Tournaments ______________________________________________ 88

5.4 Wedding Sponsorship and Rewarding Top Purchasers _______________________ 90

5.5 Special editions of products having the pictures of its customers _______________ 91

5.6 Reminder of special days ______________________________________________ 92

5.7 Free Health Care Services _____________________________________________ 94

Conclusion _________________________________________________________________ 95

References _________________________________________________________________ 99


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Table of figures

Figure 1: Four Categories of Loyalty (Dick and Basu, 1994)........................ ........................ 17 Figure 2: Loyalty grid based on satisfaction (TO Jones and WE Sasser,(1995),p. 88, ff.) ... 19 Figure 3: Summary of Dick and Basu model (Evans, OMalley, and Patterson, (2004),p.283). ........................ ......................... ...................... ....................... ......................... ............. 20 Figure 4: The Hierarchy of Effects (Solomon, Marshall, Stuart, (2008), p.393)................... .. 28 Figure 5: Ambivalent loyalty forces (Thurau & Hansen (2000), p.40)............... ................... 31

Figure 6: Adopted from Possible economic effects of customer loyalty(Thurau&Hansen(2000), p.32)........ ....................... ...................... ............................ .. 35 Figure 7: Types of Promotion............................ ......................... ......................... ................... 41 Figure 8: Lancome Interactive Beauty App ...................... .......................... ........................ 46 Figure 9: L'Oreal Paris Skating Game ...................... ......................... ......................... ........... 47 Figure 10: Reckitt Benckiser - Match the Brand Game ...................... ......................... ........ 48 Figure 11: Henkel Innovation Challenge - Vision 2050 .................... ....................... ............. 49 Figure 12: Gillette's website for US ......................... ...................... ......................... ................ 50 Figure 13: Illustration of Microsoft CRM ......................... ...................... ......................... ........ 56 Figure 14: Microsoft CRM System Benefits........................ ...................... ............................ .. 57 Figure 15: Illustration of US shampoo market, 1985-8 (Montana J., (1994), p. 124) ........... 61

Figure 16: Size and shelf prices of shampoo in US market, 1985 (Montana J., (1994), p.124) ....................... ......................... ......................... ...................... ......................... ................ 62 Figure 17: Market sizes of shampoo/conditioner in Europe, 1988 (Montana J., (1994), p.126) ....................... ......................... ......................... ...................... ......................... ................ 63 Figure 18: Key Milestones of Innovations in Pert Plus' History......................... ...................... 65 Figure 19: Strong Customer Loyalty - % of Buyers Repeat Purchasing .................. ............. 66 Figure 20: Pert's Product Range ...................... ......................... ...................... ...................... 67 Figure 21: Max Factor Friend on Windows Live Messenger ..................... ...................... ..... 71 Figure 22: Illustration of CoverGirl .................... ......................... ......................... ................... 72 Figure 23: Gillette Happy 18th Birthday Gift ...................... .......................... ........................ 75 Figure 24: Reward Chart of Salon Loyalty Program ........................ ....................... ............. 80

Figure 25: Schwarzkopf Salon Loyalty Program...... ......................... ....................... ............. 81


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Abbreviations

BOT Robot

FMCG Fast Moving Consumer Goods

J&J Johnson & Johnson

PCP Personal Care Products

P&G Procter and Gamble

PR Public Relations


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1 Introduction

1.1 Relevance of the Subject

The concept of brand loyalty has firstly appeared in 1923 when Copeland suggested aphenomenon, which he labeled brand insistence, was related to brand loyalty (see

Theng Lau and Han Lee, (1999), p.342). Afterwards brand loyalty has been investigatedby many researchers and there are plenty of studies on this concept.

Furthermore, this concept is recognized worthwhile because it is the peak experiencethat most companies aim for and not many achieve: becoming a brand that customerslove and cannot leave without (Durkin (2005), p.77). However, FMCG are the productthat all of us use in our daily life, and this sector is the one which holds vital importancein building brand loyalty.

Since the first appearance of brand loyalty concept marketers have been interested in ibecause it is a way to measure the attachment that a customer has to a brand. Brandloyalty brings firms plenty of benefits such as high profitability, competitive advantagefor firms, decrease in marketing-operational costs (see: Bowen and Chen, (2001), p213,ff.), greater levels of repeat purchase by brand users, greater attitudinal loyaltywhich leads to greater willingness to sacrifice by paying a premium price for a valuebrand (see: Chaudhuri and Holbrook, (2001), p.81,ff.), word of mouth leading indirectly

to an increase in market share (see: Mittal & Lassare, (1998), p.177, ff.), and higher rateof return on investment through increases in market share (see: Gounaris andStathakapoulos, (2004), 283,ff.).To sum up it can be told that all the benefits mentioned above and the probabledifficulties to overcome on the way of building brand loyalty have taken my attentionand have encouraged me to focus my thesis on building loyalty for FMCG (especially opersonal care products).


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1.2 Major Terms

In this work you will see a lot about the following terms: brand loyalty, FMCG andpersonal care products.

Brand loyalty is characterized by a series of repeat purchases of the same brand,frequently accompanied by a positive attitude towards the brand (Antonides and vanRaaij, (1998), p.270). It can be also defined as a pattern of repeat purchases,accompanied by an underlying positive attitude toward the brand that is based on thebelief that the brand makes product superior to those of its competition (SolomonMarshall, Stuart, (2008), p.146).

FMCG is the acronym of Fast Moving Consumer Goods which refers the frequentlypurchased consumer items, such as food, toiletries, cleaning products,personal careproducts , and soft drinks and so on.

Personal care products include diverse types of products such as hair care productsincludingshampoo, hair dye, hair conditioner, hair gel, hair spray , pomades, hair clippers, and oral care products such astoothpaste, toothbrush, and mouthwash, besidesthesechap stick, lipstick, lip gloss, cleansing pads and wipes, colognes, cotton swabs,deodorant & perfumes, eye liner, facial tissue, lotion, makeup, nail files, personal

lubricant, razors, shaving cream & foam, skin cream, toilet paper and so on.

After mentioning about brand loyalty, FMCG and personal care products, the majorcorporations in the personal care industry must be mentioned, because these are theactors which are mostly interested in building customer loyalty for personal careproducts. They are as follow:

Avon

Colgate-Palmolive

Combe Incorporated


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Henkel

Johnson & Johnson

Kimberley Clark

LOreal

Lancme

Maybelline

Procter & Gamble Reckitt Benckiser

Remington Products

Unilever

1.3 Focus and Goals of the Thesis

The following thesis focuses on examininghow to build loyalty for FMCG brands(mainly focus on Personal Care Products) , then assess whether nowadays the brandloyalty is floating downward or it is still vital.There are plenty of goals as follow:

to define FMCG, personal care products, brand loyalty and how to build brandloyalty and keep it

to show the benefits of brand loyalty for companies to assess the steps to follow on the way of success to define the ways to overcome the probable difficulties to overview brand loyalty models and evaluate them to analyze factors contributing to build brand loyalty to analyze real loyalty strategies applied by FMCG companies


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As mentioned above, the fourth chapter will analyze and provide number of case studieabout the loyalty strategies of some strong FMCG companies, and show how they hav

achieved creating loyalty and keeping customers loyal in the long run. It means that thichapter will enable the ones who read this thesis to observe real examples of loyaltystrategies applied by FMCG companies.In the fifth chapter, possible brand loyalty strategies, which either have not been usedyet or have been partly used by FMCG companies, will be recommended. Each strategywill be explained in details and will be tried to show how companies could apply themMoreover, currently used strategies which need some modifications will be highlighted

and recommendations for further improvements will be made.In the conclusion part, all the findings will be summarized and will be used to makesome comments about the current situation of brand loyalty issue including negative anpositive aspects. Moreover, the possible further researches will be highlighted. Inaddition, the bullet points will be highlighted one more time to summarize the thesis.


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2 Literature review of Brand Loyalty

Brand loyalty has been interested by marketers and has been investigated by researcherfor a long time because of the fact that it might bring several advantages to the firmsBased on different perspective of researchers, diverse definitions of brand loyalty havebeen made.

In 1923 Copeland has suggested a phenomenon of brand insistence related to brandloyalty, then Brown and Cunningham in 1950s tried to measure brand purchase patternsand found out that consumers have strong and operative brand loyalty. This phenomenonwas also verified by Lipstein, Frank, and Farley (see: Theng Lau & Han Lee, (1999)p.342).

The investigations mentioned above were followed by several other researches abouhow brand loyalty is related to the following variables: loyalty proneness, store loyaltyconsumer knowledge about available brands, product categories, consumers riskreduction behavior, perceived quality, consumer characteristics, shopping patterncharacteristics, and the possibility of multi-brand loyalty (see: Theng Lau & Han Lee(1999), p.342). However, several significant problems about the researches, such as anabsence of a conceptual framework for viewing brand loyalty, extreme focus onoutcome of behavior and simple definitions, have been highlighted by Engel et al., DaySegger, Jacoby and Kyner in late 1960s and early 1970s (see: Theng Lau & Han Lee,

June (1999), p.342).

Besides these, brand loyalty has been also viewed as multidimensional frame whichincludes attitudinal components and as a subset of repeat purchase behavior (see: Jacobyand Kyner, (1973), p.1,ff.). In addition, the terms stochastic and deterministic wereused in order to label the alternative views of cognitive and behavioral brand loyalties.

Later on, two models were introduced. These models were Dick and Basu Model whichconceptualizes loyalty as the relationship between the relative attitude towards a brand


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and patronage behavior, and Jones Loyalty Model which summarizes the relationshipbetween behavioral repeat purchase and affective satisfaction (see: Evans, OMalley,

Patterson, (2004) 282,ff.).

In 2003, Quester and Lim claimed that there are two alternative approaches to theconstruct of brand loyalty. They had made this conclusion based on the literature reviewAccording to them a consistent purchase behavior of a specific brand over time is thefirst approach. On the other hand, the second one is a favorable attitude towards abrand (see: Quester and Lim, (2003), p.22, ff).

As a last but not least, it should be noted that the researches and models which areapplicable to the construct of brand loyalty for FMCG mainly for personal careproducts- will be analyzed in the following chapters.

2.1 The Loyalty Factor and the Brand

Plenty of different types of definitions combining the loyalty factor and brand have beenmade in the previous studies, and some distinctions among the studies exist. In order tunderstand these differences in the term, we have to examine the usage of the term brandloyalty by various investigators. By doing so, we will be able to see the relationshipbetween the loyalty factor and a brand in depth.

The definitions described by various researches include:

brand-choice sequences;

preferences over time;

proportion of purchases;

other measures based both on preferences and purchases

Lets start explaining one of the earliest studies defined brand loyalty according to brand-choice sequence; this approach date backs to the 1950s and 1960s and include


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works by Brown and Parfitt and Collins. Brown has studied the behavior of 100 of thepanel members during the panel ran by the Chicago Tribune and he noticed that there are

some consistencies in the way brands of various products were bought and then heproposed four patterns of loyalty (see: Evans, Jamal and Foxall, (2006), p. 265). Thesare as follow;undivided loyalty, divided loyalty, unstable loyalty andno loyalty .

Now it is time to have a look at the meanings of these patterns. First of all, undividedloyalty refers that the consumer buys just one of the brands within a product category(Evans, Jamal and Foxall, (2006), p. 265), namely its sequence goes as AAAAA.

Secondly, divided loyalty means that the consumer buys from a repertoire of alternative brands in a product category on different buying occasions (Evans, Jamaland Foxall, (2006), p. 265), namely its sequence is as ABABAB.

Thirdly, unstable loyalty is really brand switching because the consumer switchesfrom undivided loyalty to one brand to a similarly regular pattern for anotherbrand(Evans, Jamal and Foxall, (2006), p. 265). This pattern can be shown asAAABBB.

As a last,no loyalty refers the situation that the customer buy randomly from all thebrands available, and does not repeat purchasing from the same brand. This sequence ishown as ABCDEF.

By means of this definition of brand loyalty, Brown has observed that the degree ofhouseholds loyalty had varied from 54 to 95%, depending on the product involved, buin fact the percentage of undividedly loyal households had varied from 12 to 73 %across products (see: Brown, (1953), p. 75,f).

This approach has shown that there are just few generalizable results. Because of the facthat each consumer buys at different rates, it is not easy way to summarize purchasesequence quantitatively. In other words, it is not easy to aggregate the purchasingbehaviors of a consumer with another who purchases more frequently (see: Engel,Blackwell, (1982), p.567).


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As a consequence, it could be said that it is not easy to have some comparisons betweenconsumers, brands, or product fields which could be used to reach at generalizable

results.

Preference over time is the second definition to examine the usage of the term brandloyalty by various investigators. This definition states that sometimes loyalty has beendefined as preference statements over time rather than actual purchase (Engel,Blackwell, (1982), p.567).

According to the findings of Guests research in 1941 concerning the brand awareness

and preferences of students, and follow-up studies of same students 12 and 20 yearslater, there was an evidence of high degree of loyalty toward brand names although noto specific brands (see: Guest, (1964), p. 93, ff.).

Proportion of Purchases is one of the most frequently used definitions of brand loyalty.This conceptual definition is used both as a conceptual definition and operationalmeasure of brand loyalty in empirical researches. In addition, this is a useful method tobe used in mathematical models because of its feature of quantifiability (see: Engel

Blackwell, (1982), p.567).Moreover, Cunningham has introduced the concept of multi-brand loyalty in variousforms such asdual-brand loyalty and triple-brand loyalty, based on the definition of brand loyalty above (see: Cunningham, (1961), p.127, ff.).

When it comes to talk aboutOther Measures of Loyalty, we can say that the othermeasures used by various researchers have applied a combination of two or more of theabove mentioned criteria. Some of the researchers and their researches are as followSheths factor analytic approach using the definition based on both frequency andpattern of purchase of a brand (see: Sheth, (1968), p.395,ff.) andPessemiers approach mentioning about brand switching based on the increase in the price of most preferredbrand comparing to the others (see: Pessemier, (1959), p.41, ff). On the other hand,Cunningham has focused his research on evaluating probable behavior in case ofabsence of ones favorite brand (see: Cunningham, (1967), p.507, ff.).


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2.2 Loyalty Matrixes

After examining the various definitions related to both the loyalty factor and brand, it itime to have a look at the loyalty matrixes in order to observe better different types ofloyalty. In this section, we will analyze two different models which are Dick and Basumodel (1994) and Jones loyalty model (1996).

Figure 1: Four Categories of Loyalty (Dick and Basu, 1994)

You can see above the illustration of first matrix called as Dick and Basu model. As it isseen this conceptualizes loyalty as the relationship between relative attitude andpatronage behavior.

Now lets explain the framework in detail. First of all, it should be noted that relativeattitude not only focuses on attitude to the entity, but also incorporates comparison toother organizations or brands, on the other hand, patronage behavior in this chart are


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traditional retention measures, share of wallet, purchase sequence etc (Evans,OMalley, Patterson, (2004), p. 282).

After mentioning both axes, it is time to focus on four categories in the model. Letsstart withno loyalty referring that both consumer relative attitude and patronagebehavior are low (see: Evans, OMalley, Patterson, (2004), p.283). For example,customers in this segment are not loyal to any brand. Therefore we may assume thatwhen they need some personal care products such as a tooth paste, they just getwhatever brand is present in the shop which is close to their house. Consumers in thisegment can be generated into spurious loyal through in-store promotions, loyalty club

and special offers.

The second one isspurious loyalty , which exists when consumers have low relativeattitude while having high patronage behavior. This type refers repeat buying of low-value, low-involvement and frequently purchased items. This kind of behavior is verysimilar to the concepts of inertia and habit (see: Evans,Jamal and Foxall, (2006), p.273).

The third segment islatent loyalty , which refers that consumer has high relative attitude

to a brand but low patronage behavior (see: Evans, OMalley, Patterson, (2004), p.284)For instance, if we take the tooth paste as an example again, we may assume that aconsumer might have a preference for a tooth paste brand called A, but if it is moreconvenient to buy from the brand B, he or she will buy from brand B.

Now it is time to mention the last segment which isloyalty . In this segment, there areboth high relative attitude and high patronage behavior. However, this signifies the factthat customers in this segment have strong preferences for a brand, and regularly buy

from that brand. When loyalty is present, managerial efforts are to strengthen relativeattitudes including maintaining a price advantage and/or offering additional services(see: Evans, OMalley, Patterson, (2004), p.284). In the case of toothpaste, these mighinclude giving a toothbrush or a little bottle of mouthwash as a present for each sale.

After examining Dick and Basu model, lets analyze the second one; Jones loyaltymodel. In this model, consumers are grouped into 4 distinct groups on the basis of theisatisfaction and loyalty levels (Figure 3).


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Figure 2: Loyalty grid based on satisfaction (TO Jones and WE Sasser,(1995),p. 88, ff.)

As it is also seen in the figure above, there aremercenaries who are satisfied with acurrent organization but there is a low loyalty, besides they may move to others easily ithey see similar or higher satisfaction (see: Evans, OMalley, Patterson, (2004), p.285).

On the other hand, there arehostages who show low to medium levels of satisfactionbut they have high level of loyalty (see: Evans, Jamal and Foxall, (2006), p.275). Inother words, they repeat purchase because of the lack of alternatives.

The third segment involvesdefectors who switch easily because they have low tomedium levels of satisfaction and loyalty (see: Evans, Jamal and Foxall, (2006), p.274)Furthermore, some of the defectors can becomeconsumer terrorist . This kind of consumers is positioned at the left of the horizontal axis and anywhere along the verticaaxis. This category includes those who cannot wait to tell others about their badpurchase experiences which have dissatisfied their expectations. When the bad word o


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mouth starts spreading, the facts about the real experience become distorted while gointhrough one individual to other (see: Evans, Jamal and Foxall, (2006), p.275). Moreover

these consumer terrorists can spread ill concerning the organization or even play gamessuch as swapping loyalty cards to be awkward or to see what happens to their targetedoffers (Evans, Jamal and Foxall, (2006), p.275).

Loyalists , who show both high level of satisfaction and loyalty, are the fourth segmentin this model. They dont switch to any other brand, because they are totally satisfiedwith the organization or brand concerned, besides some of these can even turn intoadvocates (see: Evans, Jamal and Foxall, (2006), p.274).

As a result, you can have a look at the table below in order have an overview of bothmodels which were previously mentioned.

Figure 3: Summary of Dick and Basu model (Evans, OMalley, and Patterson, (2004),p.283).


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2.3 The Brand Loyalty Models

Over time plenty of models have been designed in order to observe and understandbrand loyalty behavior. Firstly, stochastic models, which use probability theory inorder to predict which brand will be purchased next after whatever sequence of brandswas previously bought, have been mainly emphasized (Evans, Jamal and Foxall,(2006), p.265). In other words, the perception of these models is that response ofconsumers in the market place occurs as a result of some probabilistic process.

On one hand, stochastic models are relatively mechanistic and based on probabilities orepeat purchasing behavior; on the other hand there is another type of model calleddeterministic models that are based on cognitive process. This model assumes thatrepeat purchase loyalty includes commitment and a stronger motivator. According tothis model, the consumer would continue to buy the first brand that he or she hascommitment and/or trust even if there is a cheaper alternative.

After summarizing both models, now it is time to analyze them more in depth. In thefollowing parts, you will see the overview of brand loyalty models and their evaluation.

2.3.1 Overview of Brand Loyalty Models

As mentioned above there are two different types of brand loyalty models and eachmodel combines some sub-models in itself.

We will firstly analyzethe stochastic models depending on the assumptions madeconcerning the effects of experience on behavior.

However, the stochastic models have two basic philosophies. The first philosophystates that the outcome of behavior are determined by plenty of actors even though mosof these actors are not measured nor explicitly included in the model of marketresponse (Engel, Blackwell, (1982), p.579, f.). Above mentioned factors might be bothindividual consumer variables such as personality, attitudes, income and so forth, and


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this to have also a new probability of purchasing the brand after some trial-periodpurchases. Moreover, it should be noted that this assumption varies from consumer to

consumer (see: Engel, Blackwell, (1982), p.584).

Besides these,Markov model , which is the fourth one, takes into account the influenceof past purchases on the probability of current purchases.

However, this model aims in general to deal with repeat-buying and brand-switchingbehavior primarily for frequently brought nondurable consumer goods. Consumerpurchasing of different brands within a single product field is usually analyzed for

successive equal periods of time such as months or quarters (Ehrberg, (1965), p.347).It should be noted that Markov model is not applicable to our case, because personalcare products are mostly durable products.

The fifth stochastic model, which has been used to explain brand switching, is theLinear Learning Model . The idea, which refers that there is a linear relationshipbetween pre- and post purchase probabilities, lies in the core of this model. However, ialso signifies that past brand choices affect future behavior (see: Engel, Blackwell,(1982), p.590).

Moreover, linear learning models have not been preferred as much as its counterpartsMarkov models. Especially Markov models have been more popular amongpractitioners, and this may be due to the fact that it is more difficult to estimate theparameters of the learning model, besides these it is also hard to estimate the limitationimposed by the need to treat brand choice in dichotomous fashion (see: Engel,Blackwell, (1982), p.592). To sum up, a consumers behavior is affected by his/herprevious brand choices. The act of purchasing and using a particular brand is assumedto affect the probability that this brand will be selected the next time the product class ito be purchased (Massy, William, Montgomery, David, Morrison, Donald, (1970),p.141).

There is one other interesting model to be developed isthe Entropy Model . This modelhad been firstly discussed by Carman and Stromberg (see: Carman and Stromberg,


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(1967), p.26), then was more fully developed by Herniter (see: Herniter, (1973), p.361ff).

The Entropy model, which is borrowed from the study of thermodynamics, is a measurof uncertainty in a probabilistic system. Moreover, the model is based upon a multinominal distribution to account for changes in response probabilities. Under the light othis information, a measure of loyalty can be determined that it is defined by for allvalues of the parameters of the underlying multi nominal model (see: Engel, Blackwell(1982), p.593).

The entropy model is considered valuable to marketers because this model relies onmarket share data which are more readily available than many other kinds of data basedon the characteristics of individual consumers. The results of the empirical tests of thimodel were mostly good although the model as originally proposed by Herniter assomewhat limited in applications, because it was difficult to apply it to a market withmore than a few brands (see: Bass, (1974), p.1,ff.).

The seventh model called asthe Cognitive Brand Loyalty Model . In this methodology,

subjects were asked to place the brands in order to see their awareness of the presentbrands. Besides these, subjects were also asked to place each product of the brands intothree affective regions according to their acceptability for the next purchase event. Thesthree regions were acceptable, not acceptable, and uncertain (Engel, Blackwell,(1982), p.593). After this classification, proportion of brands of which an individual waaware is observed.

After mentioning about the stochastic models, it is time to analyzethe deterministic

models . Such kind of models view consumer purchasing as being caused by somefactor, namely it is said that purchasing does not occur by chance. The term loyalty habeen used to name the commonly observed phenomenon that consumers do notdistribute their choices randomly within a given product area (Hansen, (1972), p.332).

Jacoby and Kyner had tried to find a unified explanation of brand loyalty, because therewas the dichotomy between theories. Later on, they found empirical support for aconceptual definition of brand loyalty. Their definition refers that brand loyalty is a form


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of a repeat purchasing. However, their conceptual definition includes the followingconditions: purchasing that is nonrandom, behavioral responses, temporal responses

availability of alternatives, and behavior that is a result of a decision-making process. Bmeans of their definition, they contributed to tie together two views of brand loyaltyrepeat purchases (behavioral) to underlying processes (cognitive) (see: Jacoby andKyner, (1973), p.1,ff.).

2.3.2 Evaluation of Brand Loyalty Models

In an attempt to understand and predict brand-loyalty behavior plenty of models havebeen used. As it is known brand choice is very complex, therefore many differentmodels have been developed. Each model tries to solve specific problems because it inot possible to solve the problems that vary between product categories and buyingsituations just by using one of these models.

Naturally many assumptions are introduced by researchers in order to make the modelmanageable, and those assumptions often create artificialities. The zero-orderassumption, inability of cooperating the influences of external factors, heterogeneity inpopulation are some of the problems occurred through the models (see: Engel,Blackwell, (1982), p.594).

It must be highlighted that there is a need to develop methods discriminating amongcompeting models in order to determine the appropriate model for a specific productcategory, market structure and timing or buying situation (see: Engel, Blackwell, (1982)p.594). It is true that same model cannot be applied to different products. For instance, stochastic model, which is applied to a shampoo brand, may not be applicable to adetergent brand. Therefore, this situation could be taken into account as a problem ofstochastic models.

Moreover, there is also a need to develop methods assuming only short-run stationaritybecause the stochastic process which generates the response of probabilities may alsoitself change (see: Engel, Blackwell, (1982), p.594).


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Furthermore, most of loyalty models ignore the issue of multibrand loyalty (see: EngelBlackwell, (1982), p.594). It is possible that, for example, a person may have a loyalty

both for tooth pastes of brands such as Colgate and Signal. The common mistake is tharesearchers generally avoid the possibility of having loyalty to several brands of aspecific product.

In addition, preference and purchase probabilities are assumed as equivalent, and thiscauses artificiality in the models.

Moreover, it can be said that the deterministic models have not been successful in

accounting for the variance in the dependent variable. Therefore, many stochasticmodels seem to predict consumer behavior more accurately than the deterministic onesActually the stochastic models suffer from a lack of a consideration of why loyaltyexists (see: Wheeler, D.B.A, (1974), p.656).

As a result, it must be highlighted that sometimes one of the deterministic and stochastimodels cannot be enough to explain brand loyalty, therefore we might need to use bothfor better and clear explanations according to a product and conditions.


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3 Loyalty for Personal Care Products

3.1 Building Loyalty for Personal Care Products Brands

In the previous sections, we had a look at the brand loyalty as a general, analyzed thebrand loyalty models which are helpful to understand brand loyalty behaviors, and thenevaluated them. In other words, we drew general framework of the thesis as an initiastep, now it is time to examine the steps on the way of building loyalty for personal careproducts.

We will firstly observe the steps to follow by means of hierarchy of effects, and ofcourse will have a look at the motivators and demotivators which might be confronted ithe next steps.

3.1.1 Steps to follow

Hierarchy of effects is a series of steps prospective customers move through, from initiaawareness of a product to brand loyalty (see: Solomon, Marshall, Stuart, (2008), p.392)In other words, we can call this process as the steps to follow on the way of buildingloyalty.

As it is seen in the figure below, the task becomes harder at each step, therefore thepossibility to drop out some potential customers increase from one step to another onealong the way. Each step has different communication objectives; on the other hand theonly thing that they have as a common is to push people to the next step.

Furthermore, it should be noted that this hierarchy of effects is highly applicable to thebuilding loyalty for personal care products.


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Figure 4: The Hierarchy of Effects (Solomon, Marshall, Stuart, (2008), p.393).

In order to understand better, lets examine the hierarchy of effects step by step. Theinitial step is about creating awareness which refers to making the target potentialcustomers aware that there is a new brand on the market (see: Solomon, Marshall,Stuart, (2008), p. 392).

Generally marketers achieve this through simple, repetitive advertising campaigns inmagazines, newspapers, on television, and radio. Besides these, they also try to findsome slogans and jingles which easily get the attention, so it might make people keepthe brand name in their minds. For example, Signal, which is a toothpaste brandproduced by Unilever, had developed a toothpaste with a slogan which is also its nameWhite now. This helped the brand to develop the White Now product concept LikeMake-Up for my smile. Nowadays it is seen that this repetitive advertising and jinglwere extremely successful to create awareness. So we can appreciate the brand assuccessful for the initial step on the way of building loyalty.


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In the second step, prospective users should be informed about the benefits the newproduct has and also be told about its features (see: Solomon, Marshall, Stuart, (2008), p

392).

For this second task, descriptive copy, brochures, informecials, public relations, personaselling and website are used as tools to inform the market. Lets take cologne of LOrealas an example, and think what could be done. For example, it could have a strong, buslightly mentholated scent with a hint of a liniment smell to remind the wearer of how hfeels after a good workout (Solomon, Marshall, Stuart, (2008), p. 392). These featureof the product should be emphasized on communication ways. Besides these, Signa

White Now can be taken as an example again. In this case, the features of creating animmediate and noticeable whitening effect of this tooth paste with a blue dye shouldhighly be mentioned.

The next step is to create desire or favorable feelings toward the product and convincesome portion of this group that a brand of a product is preferred more than the otherbrands. Advertising spreads in magazines are used as a communication method at thistage, in addition a celebrity might be used as an ambassador to get more attention (seeSolomon, Marshall, Stuart, (2008), p. 393).

Before advertising companies should take into account that there is a need for a goodunderstanding of media opportunities, namely marketers should initially realize whichmagazines or sources more editorial space has devoted for the product (see: Caywood(1997), p.348). For example, if the product is related with hair and skin care for womenmagazines, such as Redbook, Mc CAlls, Womans Day, Cosmopolitan, Glamour, Ellewhich are devoted to such products, should be chosen as a source.

However, celebrity endorsements are very common way to create desire for personalcare products, because this is assumed as a proof of a products effectiveness by targetaudience which is appealed by companies. For example, Cybill Shepard take part as anambassador in the advertisements for LOreals Ultress hair coloring and supermodelNiki Taylor did it for Pantene Pro V hair care products. To sum up, trusted celebritiesare really helpful to create a great image in the eyes of the target audience, and thisautomatically helps to create desire (see: Caywood, (1997), p.349).


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The fourth step of hierarchy of effects is about encouraging purchase and trial. This isextremely important because if people dont try a product, there is no possibility for

being interested in it. Therefore, companies need to get people try their products. Thereare plenty of ways to encourage purchase and trial. One of the ways intends toencourage trial by mailing samples of a product to members of the target market (seeSolomon, Marshall, Stuart, (2008), p. 393). For instance, some brands such asMaybelline, Lancme insert some samples in magazines; some others place elaboratedisplays in stores dispensing money-saving coupons. In addition to these, sponsoring contest, in which the winner has a chance to meet the ambassador of the brand, might b

good way to encourage purchase.The last step of the hierarchy is called as building loyalty which refers convincingcustomers to stay with the brand. Promotion efforts must maintain ongoingcommunication with current users to reinforce the bond they feel with the product. Abefore, they will accomplish this with some mix of strategies, perhaps including directmail advertising to current users, product placements in popular television programs omovies, and maybe even the development of a workout clothing line bearing logo of th

brand (Solomon, Marshall, Stuart, (2008), p. 393).

3.1.2 Motivators and Demotivators

The figure below presents a proposed model of loyalty motivators and demotivators. Ihas not yet been fully tested using empirical studies; although a lot of evidence exis

suggesting that the model is valid (see: Thurau & Hansen (2000), p.39). Thebackground theory stems from consumer motivation research (Engel, Blackwell &Miniard (1995), p.403, ff.; Kroeber-Riel &Weinberg (1996), p. 141, ff.) and is wellknown, for example, in price awareness/interest theory (see: Diller (1991), p.86).


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be highly effected by economic pressures and tasks. Depending on this, they are awareof alternative human values, such as humanity, solidarity or personal loyalty.

Under the light of the information given above, I can suggest that marketers may use thikind of particular ambivalence and offer some incentives in order to weakenopportunism. However, some incentives might be offered to strengthen factors whichaddress the need for relief.

Guarantees of quality, performance or price competitiveness can be taken into accounas some ways of weakening opportunism (see: Spremann, (1988), p.613, ff.). However

it is not logical to expect too much from smart shoppers in any one step, because theyare the ones who are not willing to depend on only one supplier. Namely, they may nowant to lose their flexibility. Therefore marketers should always give the smart shopperthe opportunity to withdraw from relationship in case they are not satisfied.

It should be noted that there are some other ways to weaken opportunism. One of thesimple methods isselecting the type of customers who are not very opportunistic, orthe customers who have a strong need for relied or like the advantages of a cooperative

business relationship (see: Thurau & Hansen (2000), p.41).Another method might be to build uppersonal relationships which build ethicalbarriers to a change of supplier (see: Belz, (1993), p.23, ff.). Furthermore,contact withother customers, who are loyal and prefer the supplier, should be encouraged, becausethis way might also be a good way. It should be noted that companies, suppliers shouldavoid fully monopolizing all their customers in all above mentioned cases (see: Thurau& Hansen (2000), p.41).

The second ambivalent loyalty forces arevariety seeking and continuity seeking .As human beings on one hand we always search for variety, on the other hand we are thecreatures of habit who love the well-known and familiar. For example, when it comes totalk about personal care products we do not always choose the same product even if alof us have our favorites for each category of products, and buy them again and againMoreover, we are curious creatures, but we also have habits and like to know exactlywhat we will get for our money. As it is seen, the needs are various whereas importance


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of the needs change depending on the respective product category and the marketingpolicies of the suppliers (see: Thurau & Hansen (2000), p.41).

Some manufacturers of a product offer relatively few varieties, so habits are dominantand loyalty is high. In contrast, other manufacturers of another product offer a range ofnew and different innovations and products each year; this encourages a high degree ovariety seeking and therefore loyalty is low in the specific market. Furthermore,marketers have to create some incentives in order to strengthen the need for continuityand weaken the need for supplier variety (Thurau & Hansen (2000), p.41).

When it comes to talk about personal care products, the second approach mentionedabove is more highly applicable, because in many markets such as personal careproducts markets product variation and differentiation offers variety and preventscustomers from changing their brand preferences.

On the other hand, there are other markets in which variety is introduced by means odifferent services such as offering mobility, financial services, organizing entertainmenevents. These kinds of services might be applied by car manufacturers, namely these

cannot be easily applied by manufacturers, marketers in personal care products sector inorder to motivate customers to stay in contact with them (see: Thurau & Hansen (2000)p.42). Moreover, some temporary discounts and price stimuli such as bonus programcan be offered to customers looking for varieties, but it should be taken into account thathese kinds of offers might have harmful effects in long term.

Motivational forces might be exploited by supporting the desire for continuity, but thisapproach might be appropriate in the markets where there is a lack of attractive

competitors. However, loyalty can therefore be increased by maintaining or developingmarket position of the company.

In addition to these, there is one more way to increase loyalty rates is to make orderingroutine or automated via e-commerce or electronic data exchange. It is known that easeof purchase is vital for the customers purchasing goods or services from mail ordercompanies (see: Thurau & Hansen (2000), p.42).


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The third ambivalent loyalty forcesautonomy against social integration . Now letsfirstly explain what autonomy means. It refers to the freedom from others and decision

making interdependence. This motivation increases its importance day by day in all thmarkets involving customers who have high self-esteem. However, customers are verysensitive to any attempts restricting their freedom. Actually those kinds of attempts maycreate exactly the opposite of the intended effect on consumers behavior, because theycannot stand any restrictions to their freedom (see: Thurau & Hansen (2000), p.42).

Furthermore, it should be noted that the contrary force of autonomy, which is socialintegration, remains a widespread need even in times of individual isolation, because

many customers want to have a sense of social security, a sense of affiliation or socialesteem within different relationships or groups. As it is seen this is very important frommarketing point of view, marketers, therefore, should take this ambivalence into accounto be successful and should try to support the desire for autonomy and/or emphasizesocial integration when customers are bound to the supplier (see: Thurau & Hansen(2000), p.42).

Individualization of services, products and communication activities might be thestarting point of the approaches. If the customer is offered a genuinely individual andunique package, then this satisfies his or her desire for autonomy, but is still a means oincreasing loyalty (Berry & Gresham, (1986), p.43, ff.;Gilmore & Pine, (1994), p.91ff. ).

There is one more possibility called graduated customer bonding which increasescustomer loyalty stepwise. It achieves this by rewarding the customers for each stepforward (see: Thurau & Hansen (2000), p.43).

Apart from this, social integration aspects of customer loyalty can be also highlightedFor example, loyal customers can be brought together in customer clubs where theymight satisfy their needs for affiliation. A supplier can also arrange some events orfacilities which are not related with business itself, customers and staff or customersamong them can meet informally there and they can develop private relationships.Group events such as sightseeing activities, courses, parties, trips might be really usefu


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instruments in this respect. Such kind of activities is vital tools to emphasize customerslinks to a company.

After analyzing all three ambivalence fields, we can summarize that managing theseforces is very tough task, because this does not only rely on intuition, but it also usesanalytical approach on the way developing relationships and planning and controllingthe success of those marketing initiatives (see: Thurau & Hansen (2000), p.43).

3.1.3 The Benefits of Brand Loyalty

There are three main benefits of brand loyalty such asmore certainty, more growth and more profitability ; of course these are the ones which can be seen through the eyes of thecompanies. We can observe the summary of the illustration of the benefits in the tablebelow.

Figure 6: Adopted from Possible economic effects of customerloyalty(Thurau&Hansen(2000), p.32)


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First of all, lets explain whatmore certainty means; it actually refers that loyalcustomers might bring more certainty into the business. However, certainty purports

more stability within the customer relationship (see: Thurau & Hansen (2000), p.31)For example, this stability may be expressed in habitual purchase decisions, apparencustomer immunity to competitors activities (a failure to even perceive these activities)and also a higher tolerance of mistakes made by the supplier (Diller, (1994), p.201,ff.).

Moreover, more certainty might be achieved through more intensive customer feedbackbut the feedback has to be received by loyal customers in order to have an accurate oneOtherwise, the feedback received from opportunistic customer might be misleading.

It should be noted that loyal customers are more prepared to complain, to answerquestionnaires, besides they might even work together with the supplier of a brand inbuilding customer satisfaction programs which is a great tool to build up brand loyalty(Status & Seidel, (1998), p.18).

When companies have more feedback and more frequent contact with customers, thishelps them to have more scope in terms of marketing (see: Thurau & Hansen (2000)

p.31,f.). In other words, companies might have the opportunity to address to their loyacustomers on a personal basis, namely if their names, social demographics featuresconsumption habits are known by the suppliers of the brands, building brand loyalty wilbe easier for them, because getting in touch with them will be easier and more intensive

To sum up, it can be said that agreements between suppliers and customers are morereliable when loyal customers are involved in relationship between them.

A second important benefit of brand loyalty called asthe growth of the company . Manyactivities should be arranged in order to retain existing customers, besides this growthcan only be achieved by examining the potential of these customers and also by gainingnew customers. The first one mentioned above can be done through deeper customerpenetration and the latter by encouraging and convincing the existing customers torecommend the brand to others. It is an obvious fact that positive word of mouth is thebest and cheapest way to get the attention of other customers (see: Thurau & Hansen(2000), p.32,f.).


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The third benefit of loyalty leads to more profitability through cost savings and revenuincreases (see: Reicheld & Sasser, (1990), p.105,ff.).

Furthermore, it may indeed be true that loyal customers cost less to serve because theyare more familiar with the company and its operations. In other words, it is cheaper todeal with them because they require less hand-holding (Evans, OMalley, andPatterson,(2004), p.287).

There is an argument, which has been defended by Diller, highlights that loyalcustomers might be less sensitive to price and accept higher prices (see: Diller, (1997)

p.749,ff.). In contrast, it is also possible that loyal customers demand better process as areward for their loyalty. Actually, such kind of attitudes may vary depending on the typeof goods or services. According to me, it is more highly possible especially in the sectoof personal care products that loyal customers expect such rewards. However, this kindof rewarding may cost to the companies in the sector, because this kind of activitiesrequire allocation of budget in order to run a customer club or maintain customerdatabase. As a result of such rewarding, customers will then feel more committed to thbrands, and may bring additional revenues through their cross-buying activities fromdifferent products of the same brands.

Depending on what we have described so far, I can say in summary that building loyaltyis a vital thing to be considered by the companies because as we have observed theloyalty brings companies some extremely important benefits.

3.2 Analysis of Building Loyalty for Personal Care Products by means

of Marketing Mix Elements

Almost everybody uses personal care products now. However, this market is also openfor newcomers, in other words it is obvious that there is a huge scope for them becauseFMCG companies do their best to attract the attention of new users and create loyalty inthem. This situation has increased the intensity of the competition in the market.However, strong brands try to make huge profits; therefore they fight with each other tocapture the market.


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In order to survive in the market or capture it, companies try to do their best by means osome methods. Moreover, as seen brand loyalty in fast moving consumer goods

categories is an interesting issue because it has been observed many times that plenty obrands having cut prices across the categories, but price cuts or sales promotions werenot successful enough in terms of sustaining their brands loyalty.

In other words, companies may attract consumers in the short run, they may keep usingtheir products for some time and companies may also get some new customers, but abrands value might lose its importance in the eyes of the customers over a period oftime, unless brand loyalty is built.

Under the light of the information given above, it can be summarized that brand loyaltyhas vital importance for FMCG companies. It should be noted that there are some factorcontributing to brand loyalty in cases they are used efficiently and effectively by FMCGcompanies. The factors contributing to brand loyalty can be analyzed through marketingmix elements, namely 4Ps.

3.2.1 Product Strategies

Product strategies may vary depending on the type of good and the customer profile. Foexample, some products can be manufactured and sold by using the same strategies indifferent countries, however some other products need to be modified or adapted andsold by using a specially designed strategy (see: Rugman and Collinson, (2006), p.315).

In order to build brand loyalty, some factors such as culture, product life cycle should bseriously taken into account before deciding on product strategies. The first factor which

is cultural factors has an impact on consumers purchasing decisions on the basis ofaesthetics or style. As personal care products; cosmetics and other beauty aids could begiven as examples related to culture factor. For instance, many products such asshampoos and deodorants sell well in the United States might have limited marketappeal elsewhere. On the other hand, perfumes that sell well in Europe might have somedifficulties to gain market share in the US if products do not appeal to consumers thereThere might be two different reasons for this situation; either people may not use these

products or may not see any difference from local offerings. Gillette might be given as


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customers, because they might think that the reason why a company sets lower prices ithat it starts to provide goods with lower quality. As it is seen, this is just a matter of

perception by consumers, so it may change from country to country.

Similar example might be given for make-up stuff; women in Middle-East generallyperceive high value for these goods, therefore companies need to take this fact intoaccount and set their prices in accordance with womens perceptions.

3.2.3 Place

Place means the location where products can be bought or it is sometimes called as thedistribution channel. It should be noted that it is really difficult to standardize adistribution system which can be used for every country. In other words, it might not bpossible to reach all the customers around the world by using the same distributionchannel because there are many individual differences to be considered.

Nowadays FMCG companies are aware of this fact; therefore they started to usemultiple channel distribution systems, namely they either try to reach customers viaphysical stores or virtual stores on the Internet.

3.2.4 Promotion

As a core framework, promotion efforts of a company attempt to tell consumers thecompanys products or services, but in fact these are modified in order to grab attentioncreate considerable interest among customers, create desire and encourage people to tak

action. Whereas these are not enough to meet the expectations of the companies, theycould be satisfied when the customers become loyal to their brands indeed.

Furthermore, there are plenty of ways for promotions which are illustrated in the belowgraph;


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Figure 7: Types of Promotion

After having a look at the illustration of the types of promotion, now it is time to analyzthem more in details.

One of the types of promotion isadvertising which vary from ads in magazines andnewspapers to mobile advertising. For example, many companies selling personal careproducts advertise in magazines such as Womans Day, Cosmopolitan, Glamour, Elleand so on.

Besides these, twitter and facebook are used by many FMCG companies in order tobuild brand awareness, awareness of promotions and incentives, listen and understandthe customers, build strong relationships with customers through dialogue, personalconnection, generate positive word of mouth and so on.

Moreover, mobile advertising, which helps FMCG companies to be closer to theircustomers, is a rising method of advertising. Nowadays many FMCG companies

perceive mobile advertising as a tool enabling them to have two-way communication


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with their customers, and as a unique way enabling them to reach a target audience andgenerate information about them while fulfilling promotional activities easier and more

cost effective. Moreover, it is a great tool allowing FMCG companies to know whetherthe message sent is received by customers within some seconds. However, there is alsohigh possibility to receive a response in a short time if the consumer is interested in theoffer.

Some of the wide range possibilities that mobile advertising offer are as follow:

Sending frequent updates on products, new launches, and promotional offers;

Allowing consumers to request catalogues, brochures and product samples;

Providing access to information which is easy to find, easy to use, and time andlocation sensitive;

Developing interactive click-to-action campaigns, enabling customers to interactwith the brand;

Promoting mobile clubs to offer loyal members information alerts, discounts, andrewards;

Creating appealing mobile internet sites featuring graphical ads, links to newsand top stories and search capability. (Velti, (2010), Velti.com)

Now lets give an example of mobile advertising which is conducted by Johnson &Johnson. This is partnership between Velti and J & J is an extension of its popular BabyCenter en Espanol website to the mobile.

(see: Velti, (2010), Velti.com)

The second type of promotion way is conducted throughdirect mailing . This way is awell-known way because almost every internet user has received these kinds of mailssuch as junk mail. However, it should be noted that this way is not so influential becausemany people delete these mails before reading.


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programs for personal care products may use celebrities for limited engagements such a judges for contests, emcees for events and so on (see: Caywood, (1997), p.349).

The other way of PR is the use of experts which is less expensive than celebrities. Ahair care brand may hire a well-known salon stylist to speak to beauty media, atoothpaste brand might retain an advisory board of dentists and hygienists, or a babycare brand may use a child psychologist as a spokesperson (Caywood, (1997), p.349,f.)In short, these kinds of experts may give really useful information about brandsattributes, and this makes a brand more credible, then consumers might be easily loyal tthat brand.

The other type of PR as a promotion method is sports marketing that is highlycorrelated with sports equipment, drinks, and tournaments (see: Caywood, (1997)p.350). For instance, Henkel sponsors a beach volley tournament in order to raiseawareness, besides these Unilever may also sponsor such tournaments for itsantiperspirant and deodorant brand called Rexona in order to demonstrate its benefitsof keeping consumers dry.

Contests might be used as well to generate interest and awareness, and rewardcustomers for using the product. Such kinds of activities are useful to increaseinvolvement of users and they can also experience how the product performs. Forexample, a hair care brand could hold a contest for then girls in a mall by asking them tostyle their hair using the product. This would provide rewards for the participants; creata good visual for the media, and build awareness with other mall shoppers (Caywood(1997), p.350).

Surveys and research might be a useful tool to have worthiness in the media if theseare carefully executed and crafted. Therefore, such methods are sometimes used bycompanies (see: Caywood, (1997), p.351).

The sixth type of promotion method is entertaining extra services in which consumerare involved. In order to analyze this method, there is a need to give some real exampleexisting in the market. For instance, interactive beauty app of Lancome is a great tooto build brand loyalty. As it is known, marketing for a make-up producer means


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establishing a personal connection between the brand and the consumer. Therefore,French cosmetic company, Lancome has made cooperation with mobile agency,

Phonevalley in order to launch iPhone app. This app enables women try out the newcolor combinations, get some make-up tips from experts, and share their creations withtheir friends (N.N.,(2009), Mobiadnews.com).

As it is seen, this app is really useful to build strong connections between Lancome andthe consumers. It seems like Lancome will keep developing the content of applicationsoon. Moreover, Lancome had also launched the Make-up Blog where women couldget plenty of tips from the experts. In addition to this, the company also intends to creat

an opportunity to enable consumers to have a dialogue with the brands National MakeUp Artists (N.N.,(2009), Mobiadnews.com).

In order to observe in details how the app works, lets have a look at the illustration of ibelow.

Figure 8: Lancome Interactive Beauty App

(N.N.,(2009), Mobiadnews.com)


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The second example of a brand, which offers an entertaining extra service to involvecurrent customers or potential customers in a promotion method, is LOreal Paris. It is

obvious that such kind of promotion is an amazing way to capture customers, namelymake them become loyal to a brand.

Besides these, LOreal Paris skating game, which has been launched in 2008, has agood impact on especially young generation, because they really love such kind ofgames and while playing this game, they might unconsciously become loyal to thebrand. As you can see in the illustration in the following page, the boy in the game has stylish hair style, so many children playing this game might be willing to have simila

style, and hence they might probably start or keep using LOreal hair gel.

Figure 9: L'Oreal Paris Skating Game

(Rollernews, (2008), RollerNews.com)


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Figure 10: Reckitt Benckiser - Match the Brand Game

(ReckittBenckiser, (2010),ReckittBenckiser.jobs)

The third example which is conducted by a FMCG company, Reckitt Benckiser isMatch the Brand Game that tries to measure the awareness of consumers about thebrands of the mentioned company (see: Figure 10). According to me, this is not such apromotion method which is as successful as previous examples, but at least it might ban initial approach to create awareness about the brands.

The fourth example is not the one which has been exactly planned as a promotionmethod that can be used as a loyalty strategy. This example is Henkel Innovation

Challenge, which is a game requiring team of two or three students to create theirinnovative product idea for a Henkel brand which can satisfy peoples needs in 2050namely taking a Henkel brand into the future.


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Figure 11: Henkel Innovation Challenge - Vision 2050

(Henkel, (2010), Henkel.com)

During this game, many students will have the chance to compete against internationastudents, build up their own Henkel network, get business experience and have a lot ofun. Moreover, their task is to explain what future trends they expect and whatconsumers will need in 2050 according to their vision, describe their innovative producidea for a Henkel brand in 2050 and they should also state their motivation (see: Henkel(2010), Henkel.com)

Now lets mention why this innovation challenge game was given as an example of a

promotion method; it is obvious that the students, who take part in this game, will be sinvolved in this challenging game and unconsciously will become loyal to the brand, analso they will influence the people around them. Depending on this, we can say that thigame can be seen as a promotion method trying to create loyalty among consumers.

Much more examples might be given for the promotion methods of companies to createloyalty or attract consumer to repeat their purchase behaviors. Now it is time to give anexample from a company combining several promotion tools such as entertaining


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services/games, expert advice, sports marketing, celebrity endorsement, videos teachinghow to use the products and telling the features of the products in its website. The abov

mentioned company is Gillette.

Figure 12: Gillette's website for US

(Gillette, (2010), Gillette.com)

As you can see in the figure above illustrating some examples, there are plenty ofentertaining activities in the U.S. website of Gillette. Now lets try to explain some othose activities.

The first one is about getting feedback about how you look. In this application, there arfive girls from different countries, consumer choose the one that they want to impressstate their preference of hair style and how they are going to shave, and they alsomention the place they will go such as the graduation, job interview, meet the parentswedding, concert, camping, beach, sports events, coffee shop, night club, gym, andcinema. And then, they ask her to get feedback on their look, and after some secondthey receive the suggestion (see: Gillette, (2010), Gillette.com)


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The second one is product coach telling you which products of Gillette are better forconsumers after they customize their look by using the application in the website. For

example, this helps to find a suitable shampoo and conditioner according to your hairstyle, to find the right razor and best shave care products, the right body wash,deodorants and antiperspirants (see: Gillette, (2010), Gillette.com)

Moreover, there are some games that can be played online by consumers, and anotherapplication in which celebrities successful and famous sports players such as TigerWoods, Federer explain the features of the products in details. Besides these, there arealso some videos about the consumer experiences and so on.

As it is seen, the U.S. website of Gillette combines many methods in its website in ordeto attract the attention of American consumers.

After mentioning about entertaining extra services, now it is to analyze one of the mosimportant type of promotions which sales promotions . Classically free gifts, specialoffers and such things can be taken into account as sales promotions.

In addition to these, loyalty programs can be seen as a way of sales promotionsalthough they are seen as being more sophisticated than sales promotions. Loyaltyprograms are more sophisticated for customers because these programs directly targetindividuals by the help of the database companies have.

Moreover, it should be noted that such programs are used both to acquire new customerand to retain existing customers. Such programs are generally perceived as an extensionof traditional sales promotion discounting programs, because these do not only givecustomers an opportunity to have cheaper shopping, but also provide the sponsoringorganization with a great deal of information about individual customers (see: EvansOMalley, Patterson, (2004), p.288).

Furthermore, loyalty programs are developed for various reasons as follow:

to generate information;

to reward loyal customers;


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to manipulate consumer behavior;

to increase switching costs (Evans, OMalley, Patterson, (2004), p.288).

As it is seen above, there are some advantages of loyalty programs. One of them is that loyalty program could provide information about the customers if it is usedappropriately. The information, that could be get via a loyalty program, are frequency opurchase, previous purchases, age, date of birth, geo-demographic, lifestyle, credithistory of the customers and so on. By means of these, companies could build newstrategies in order to appeal to each consumer in a better and more influential way (see

Evans, OMalley, Patterson, (2004), p.288,f.).However, most programs offer a direct discount as traditional sales promotions doingThis kind of discounts are mostly based on the amount of purchases, or these programgive some points that can be collected and then those might be used for the nextpurchases. As it is seen, these programs try to encourage consumers to be frequentshoppers, namely loyal customers. Moreover, such a sophisticated program, includingwide range database about customers, might be used to encourage customers to buy th

products they havent tried yet, and might be used to encourage them to pay premiumprices. Actually companies firstly try to understand their customer well, and thenrespond by continually enhancing value. Under the light of these, it could be concludedthat loyalty programs are conducted in order to prevent customers switching tocompeting brands and to increase the amount spent by each customer (see: Evans,OMalley, Patterson, (2004), p.290).

After mentioning about the benefits and use of loyalty programs, now it is time to

criticize them. Some critics about them might be as follow:

No huge difference between loyalty programs and traditional sales promotions

Huge possibility to achieve loyalty towards a program instead of a brand

In case of existence of loyalty card for each company or brand, there might beconfusion among consumers, and this might decrease the willingness of consumers to own such cards.


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4 Case Studies

4.1 LOral Case - Microsoft CRM Solution(Adopted from the case done by Microsoft (2006), Microsoft.com)

4.1.1 Introduction

LOral, one of the largest personal care products companies, has a huge customerportfolio for skin care and cosmetic products.

As it is known, strengthening brand loyalty is as much vital as building that, becauseonce you build it, you should achieve to keep it for forever otherwise it will be not soprofitable. Therefore LOral has decided to implement a company-wide customerrelationship management system which starts with a pilot project in South Korea. Inorder to implement this CRM system, it started working with Siebel and advised onarchitecture by Microsoft Services. By doing so, LOral has standardized on SiebelCRM and Analytic software that is run on Windows Server 2003 and a Microsoft SQLServer 2005 database (see: Microsoft (2006), Microsoft.com).

It should be noted that the CRM solution has helped LOral to increase customerloyalty and reduce the fluctuations, namely it enabled LOral to have more consistentview of customers across all marketing channels.

Let me give some information briefly about the situation before mentioning whyLOral implemented the CRM and what kind of benefits it provided. LOral is theworlds leading cosmetics and skin care producer with 18 global brands including RalphLauren, Lancome and Garnier. Moreover, it distributes to 130 countries on fivecontinents and it is obvious that keeping its customer loyal to its brands is a very hardtask. Therefore, it wanted to sustain its high performance in the industry by sharpeningits knowledge of customers by having a wide customer relationship management systemIn other words, its high performance in the industry could just be maintained bystrengthening brand loyalty (see: Microsoft (2006), Microsoft.com).

We wanted a consistent, integrated view of our customers across various marketing

channels, including the Internet, point of sale, and customer call centers. We also needed


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to find a new business driver and combine the product-centric marketing approach witha greater focus on the customer. We were only too aware that, as competition increases,

business growth can be stunted by customer churn. We wanted a CRM capability thatwould provide us with more opportunities for building customer relationships has beesaid by Head Customer Strategy Officer of LOral, Daniela Giacchetti (Microsoft(2006), Microsoft.com).

As it can be understood from the speech of Giachetti, LOral was keen onimplementing a CRM which might enable to have closer contacts with their customerbecause they thought it was an influential way to strengthen brand loyalty and it would

bring some other opportunities.

However, it seems like the prediction of Giachetti was right because a data-mining studyon customer behavior for Lancome France, for example, has shown strong cross-sellingpotential to market beauty products for lips and other products such as products for nailsMoreover, there was a need to create a single in-house database with its entire customedata, which had been hosted by several different agencies in order to cross-selleffectively according to Head Customer Strategy Officer of LOral, DanielaGiacchetti(see: Microsoft (2006), Microsoft.com).

In addition to these, Giacchetti has said that this kind of standardization on one databassolution might improve their flexibility to respond quickly with new marketingcampaigns and promotions. However, it is obvious that this flexibility is useful to keepcustomers be aware of new campaigns and promotions, and there is no doubt that beinaware of those will keep customers loyal to the brand (see: Microsoft (2006),Microsoft.com).

4.1.2 Company background

LOral Group, which celebrated its centenary in 2009, is the worlds largest cosmeticand beauty company. However, it has pursued its adventure in the beauty industry tokeep its position as the worlds leading company in its sector.


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There is an important fact behind its success which is an endless quest such as a quesfor innovation that begun a century ago by scientist and inventor Eugene Schueller, a

quest for excellence through increasingly safe, imaginative and effective products, aquest for diversity and a range of cultures to meet needs globally, and a quest forpurpose that is combining economic growth, ethics, social and environmentalresponsibility (see: LOral (2010), Loreal.com).

4.1.3 Implementation of CRM Solution

After explaining the situation, now it is time to mention the implementation process othe CRM Solution conducted by LOral.

It should be noted that LOral had already worked with Microsoft for IT servicesworldwide, but the company has decided to ask

building loyalty for fmcg brands - personal care products - by emrah seyit

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