The Impact of Brand Loyalty on New Product Launches

Abstract

Establishing brand loyalty for a new product launch in the jewelry sector in Taiwan is an extremely challenging component of developing marketing campaigns. Whether the new product is a novel entity or one that adds value to existing products, a vital aspect of such functions is the prevalence of a hypercompetitive environment.

As this paper has proposed and demonstrated, the present marketing research methodologies used by majority of the companies in ascertaining their ideal brand positioning are not efficient and do not allow the development of actual and aspiring themes for creating brand loyalty. Perhaps this is due to the fact that potential customers are made to consider the characteristics of the products from the firm’s perspectives and the marketing strategies do not exhaustively address the aspirations of customers.

This paper has examined several approaches in the context of brand loyalty for new product launches in the Taiwanese jewellery sector with a focus on customer driven positioning in keeping with other quantitative and qualitative means that are utilized in professional development of new product launches. The paper has also delved into the processes that firms engage in while undertaking to launch new product lines.

The feasibility of introducing new products including testing, designing and marketing in regard to product launches have been examined in the context of marketing and impact of brand loyalty on new products in the jewellery sector. The most important and critical factors that positively impact the determination of a product’s brand loyalty have been examined in the light of factors that makes firms to achieve such a situation.

Introduction

Scope of New Brands in Jewellery Market

The jewellery market is considered to be one of the most fragmented although it is amongst the most lucrative sectors in providing products that are aimed at men and women.

Jewellery items are sold as luxurious goods, and are primarily of three types, fine jewellery that comprises of 14 carat gold and precious stones; bridge jewellery that is often referred to semiprecious and sterling silver costume; and fashion jewellery that is made of different materials such as white metal, brass, wood, glass and plastics.

The present business environment is now collectivised more than ever before in requiring maximum information, which is the major determinant in making all business decisions.

As most consumer goods markets and segments near maturity, the significance of customer retention has assumed greater proportions, primarily because the numbers of new customers are gradually getting reduced. Strong brand loyalty has thus become the primary objective of all marketing teams as they bear in mind that there is a strong link between increased profits and loyal customers.

It is thus important to have insight about the different levels of importance placed by consumers to specific brands in the context of democratic and national perceptions. There is strong need to have adaptation and summaries in the context of strong academic structures that are aligned with realistic issues pertaining to brand purchases.

The firms stand to gain in having detailed action plans that offer examples and strategies pertaining to more innovation and better marketing campaigns. It is known that almost half the consumers recognize that there is a lot of choice available to them while making purchase decisions.

However customers also understand that they have to be open-minded in trying new experiences with new products. Brand loyalty increases with age and the purchase process is driven in being inhibited by the introduction of new products by the same company.

On the one side, experimental and promiscuous customers get encouraged to try new products, while customers that are hard pressed for time have no choice but to continue buying their trusted brands.

In today’s world where new product launches in different industries may vary greatly depending on whether it is an established brand, which may differ only slightly from the existing product line. Competition may also come from a relatively young brand that tends to innovate and change more from its existing products.

In the fashion industry, specifically in the Taiwanese jewellery field, new product launches are generally followed by trends in the established luxury brands such as Tiffany, Chanel, Cartier, SWAROVSKI, Coach, and etc. with the leading brands’ great influence in fashion magazines and often set the theme for the next desirable items for people to seek after.

Thus, jewellery retailers in Taiwan will tend to launch new products design that has features to catch consumers’ desire of fashionable items in terms of features of the new products from the established luxury brands. This strategy is regarded as a low risk strategy of introducing a new jewellery product.

Because a brand name has great impact on how the consumer perceives the products and services, it is able to communicate messages to the consumers from prior purchases which allow them to specify, reject or recommend based on their experiences (Fred & Paul, 2000). It is important to investigate the effects of brand loyalty on the consumer’s behaviours, to separate from the effects of a new product on an existing brand from a new brand.

All successful businesses depend a great deal on brand loyalty, which is the ultimate objective that any company aims for. Essentially, brand loyalty implies the customer’s commitments towards the brand and indicates that not only he looks for his own benefits but is also open about thinking from the brand’s perspective.

Brand loyalty is expressed through repeat purchases and is often reflected in the customers’ positive behaviours such as praising the brand before other people and enhancing the brand’s image through word of mouth. The ultimate measure of brand loyalty is not the repurchasing pattern for any product because the people chasing can also be done because of other factors such as the absence of alternatives. Such behaviour is referred to as spurious loyalty.

However brand loyalty implies much more and becomes possible when companies successfully create emotional attachments of customers with their brands. Brand loyalty is thus a big asset for the company. Brand loyalty is the conscious or unconscious decision of the customer that is revealed through his or her purchase behaviours.

Customers develop brand loyalty because they believe that the brand offers quality products and services at appropriate prices. When customers realise that they are getting value for their money they get encouraged to buy the firm’s product repeatedly (Bryman, 2006).

Brand loyalty impacts a number of issues that range from designing of the product to making its advertisement strategy and understanding the clients need to use efficient marketing strategies. Brand loyalty becomes possible because customers have positive perceptions about the product.

It is equally important for firms to develop loyalty amongst customers for its new brands and to retain them. It is thus crucial that customers view the firm and the product positively because that will create a strong basis in their buying habits and patterns. When consumers buy products they initially make trial purchases and if they are satisfied with the product they will make repeat purchases. It is important to understand that customers will buy products that are safe and of good quality and that meet their aspirations.

New products development in the jewellery industry require in depth market research of not only the current industry trends, but also of the consumers’ brand loyalty and their commitments (Hofmeyr & Rice 1999). Concepts and ideas testing through market survey prior to launch would help to develop strategies that will increase the prospect of success.

However, as Hofmeyr & Rice (1999) pointed out that commitment has to do with consumer’s mindsets such that uncommitted people’s experience over a brand may be unhappy or it may be overcrowded or simply not have a clear image over any brand.

Moreover, possible reasons that may explain the purchase behaviour of customers may relate to the location, structure of consumption, market maps, and frequency of the purchase as noted by Tranberg & Hansen (1996) in being the success determinants for leading brands. Tranberg & Hansen (1996) performed a study of more than 600 branded consumer products to conduct a research analysis for pattern of consumer purchases.

Customers that are loyal to a brand have typical mindsets and in being committed to a brand they make repeat purchases. Loyal customers will be willing to pay higher prices for their preferred brands once they realise that the brand offers value for money. Brand loyalty is of significance because it ascertains the sales volumes of products and services.

When customers are loyal to the brand they will not be sensitive to price changes and will be ready to pay high prices in getting the unique values that are offered by the brand. Brand loyalty eventually leads to higher profit margins and cost-cutting because loyal customers are not sensitive to sales promotions. Once the firm establishes brand loyalty it does not require to spend significant amounts on marketing and advertising efforts.

Business wisdom is clearly suggestive of the fact that a costly winning customers than retaining them. Irrespective of the size of the industry, businesses that are able to retain customers will be better off because of lower marketing costs, higher brand values, less customer sensitivity to prices and better financial outcomes.

Thus there is a strong need to invest in behavioural research about customer behaviour in order to understand the underpinning on which retention and loyalty is developed. While retaining brand loyal customers firms have to consider the effect of brand loyalty on the profitability of the company (Pickton, 2004).

In order to understand the concept of brand loyalty it is vital to view it in the context of the firm’s over all marketing and business plans, specifically its strategies and objectives. Along with the traditional marketing activities, other aspects of the marketing plan are also pertinent in this regard.

Other elements in the context of optimal branding of new products include distribution, pricing, product and the quality of service provided to customers. Branding activities must be carried out during the last phase of the marketing and business planning processes and must not be viewed as a stand alone set of actions which have little relevance to the firm’s markets, purpose and goals.

When launching a new product the starting point of effective branding in order to create brand loyalty is its efficient product positioning. But whatever position that the firms aims at creating for the product, the ultimate position is the one that comes to prevail in the minds of the target audience.

Efficient positioning of new products has to be based on the actual needs of consumers, researched market facts and the quantifiable attributes of the new product. The product attributes have to be precisely and strongly communicated to the target audience since branding is based on hard facts and impacts business results to a great extent.

In gaining a larger share of the market, firms are mostly engaged in product launch strategies and tactical launching capabilities. New product launches are exciting, rewarding and challenging at the same time and creating a strong and efficient positioning for new products is a highly methodical exercise which may not surely result in concrete marketing results. An effective product launch implies that there is a powerful brand and a well crafted marketing strategy.

To create brand loyalty, the marketing team of the jewellery firm comprising of brand managers, advertisement agency and marketing research teams make a strategy a few months before the actual launch of the product. Various customer attributes and aspirations are considered so that a template is designed that considers certain concept statements:

  • Target audience is indicative of the customer groups addressed by the concept statement.
  • Frame of reference defines the aspirations of customers.
  • The benefits statement outlines the major advantages that the product offers.
  • A basis for substantiating the positive attributes of the new product.

The marketing team will have to devise a problem statement that defines the unmet needs of the market in the given product category and the advantages that will accrue to consumers, emotionally and physically, by purchasing the new product. Marketing teams normally aim at developing several statements that are differentiated amongst each other and which define the wide array of different places where the new product could succeed and occupy a strong place in relation to present and future competitors.

Such concept statements can be tested by way of consistent rounds of marketing research efforts in ascertaining which ones resonate with different consumer segments in terms of different parameters such as motivational value, credibility and relevance.

This way the branding can be determined by finalizing a few strategies in keeping with the expected share of markets from different segments. After the branding decision has been taken, the next step is to ascertain how to efficiently deploy positioning amongst customers. Subsequent actions include material testing, logo testing and testing of promotional concepts.

Brand loyalty has become a widely discussed issue in recent years. It has been found to have strong relationship to brand personality, consumer personality traits, and relative attitude toward the brand and so on (Assael, 2003).

By knowing the drivers to the brand loyalty, it would allow the company to lower the failure rate for new product by devising a new product launch strategy.

The objective of this study is to explore the relationship of brand loyalty and consumers’ commitment, product satisfaction and perceived value and to examine the impacts of brand loyalty on new product launch especially in Jewellery Company in Taiwan. The research will be shown how a jewellery brand image can make customer eager to buy and what kind of strategies in the context of the brand can let people have their own loyalty.

Characteristics of the Taiwanese Market

Given that the majority of the fine jewellery and related materials in Taiwan come almost entirely from imports, it is important to examine the characteristics of the Taiwanese market in this regard. It is also important to analyse and determine the circumstances that impact the jewellery market.

Before launching a new jewellery brand, the firm will have to ascertain if people in the country can afford the new product and whether the income of citizens is adequate in implementing such purchases. There are some legal barriers that have to be examined in the context of the extent to which the government permits and promotes the import of such products.

The competitive environment, potential customers, market size and the potential for demand have to be ascertained. It is known that the local fine jewellery industry in Taiwan is not very competitive and is facing extreme difficulties in surviving the competition from branded and imported fine jewellery that is of excellent quality, higher quality of precious stones and superior designing and craftsmanship.

However, it is also known that Taiwan is considered the largest centre in the world for processed semiprecious stones and the country’s facilities in this regard are equipped with advanced processing and cutting procedures.

Aims and Objectives

The purpose of this research is to find out how to make customers’ brand loyalty while launching a new jewellery product in Taiwan. Because of some special brand the jewellery company made, other competitors find it difficult to penetrate this particular market. It is a way to discover why customers would choose their ideal brand instead of other competitors and why they have brand loyalty.

This research will examine the issues relating to what kinds of customers choose to become loyal to a brand and why they think that the brand is worth buying. This information will then be discussed on the secondary research and may show how a successful brand can result in higher profitability while being launched as a new product in the jewellery market in Taiwan.

Litrature Review

Influence of Brand Loyalty on Consumer Behaviour

The 20th-century has not given way to new trends in the jewellery industry; in fact the prevailing patterns are the continuation of trends in human behaviours that have revealed cyclical patterns across Taiwan’s history. Just because the world is becoming modernised does not mean that to introduce a new jewellery brand a firm has to start from scratch in investigating why some customers are loyal to brands and what kinds of issues impact their aspirations.

In essence, brand loyalty is a conscious or unconscious decision by customers that is revealed through intentions and behaviours to purchase the brand continuously. Such behaviours occur because customers perceive that the brand provides the right product features and quality at the right price.

Customer behaviour in this regard becomes habitual because customers feel familiar and safe with the product. To create brand loyalty, the jewellery firm will have to impact customer habits and motivate them in acquiring new ones while reinforcing in them the belief that the purchase of the new brand of jewellery will help them in getting enhanced values.

The principal source of competitive advantage for a firm in this context is the one that surrounds the image of which brand proves to become a valuable strategic asset. However many companies are not successful in creating a strong and clear message that differentiates their brand from those of its competitors.

It is required to distinguish the brand in a positive and memorable manner. The main challenge faced by a firm in this regard pertains to avoiding the shortcomings and removing the negative image that the firm or brand may be carrying in the market. A brand identity and vision has to be created that gives recognition to the brand as being higher than the attributes of other products in being surpassed or copied by them.

The firm has to view its brand as not only a service or product but as an entity that describes the company’s philosophy. More than an identity, the jewellery firm will have to create a unique brand personality for the new product. Unless the product has attention grabbing qualities and a strong personality, it can be easily surpassed by others. The new brand must have an exclusive company logo or symbol that will assist in generating brand loyalty and making it immediately identifiable (Brassington, 2002).

Effective marketing strategies depend upon design of the product and the extension of a mature brand by creating a complete understanding of memory, learning, motivation and decision procedures that impact what customers buy. Managerial decisions are highly dependent on theories of consumer behaviour while launching new products; in terms of timing of entry in the market, segmentation and brand management.

Branding is the most significant factor that impacts a product’s success or failure in the market and can have a significant influence on how the firm is perceived by customers. The brand is essentially not only a representation of the company’s product but it also symbolises the company and it is in this characteristic of the company that brand loyalty will emerge (Duboff, 2000). The cost of administering a product is quite costly and a complex effort.

Thus it is required to have strong market potential in ensuring the consistent financial viability of the product. Usually, financial hurdles are measured in terms of returns on investments and market shares. A significant benchmark for firms is the internal rate of return which is arrived at on the basis of the opportunity costs, which implies the amounts that the firm could have earned in the next best investment. Some firms are not proactive and just cap the amounts of investment dollars that are made available for rolling out the initial products.

If the jewellery brand is able to get recognition in the market it will benefit from economies of scale by way of packaging, recognition and production. Although the product itself may remain the same, the marketing strategy has to consider conditions in the local market and the marketing campaign will have to be tailored accordingly. Caution has to be exercised in that nothing offensive is revealed in terms of packaging in relation to culture and language.

Ehrenberg et al (2000) have asserted that a successful jewellery brand has to anticipate evolving consumer values, style and cultural trends so that the product appeals to customers in different segments. If the brand differentiates the consumers it may not be able to achieve the required positioning in the market. Multicultural advertisement campaigns will have to be devised to ascertain brand loyalty in diverse cultural and consumer segments.

The success of the new brand will be quite dependent upon the present status of the company. If the company has been successful in maintaining independent brands for jewellery products in different markets it will become risky and difficult to popularise a single brand. If the firm has been patronised in different markets and regions in accommodating local tastes the creation of a new brand is not recommended.

Competitive Environment in Taiwan

Presently, the import of precious metals jewellery, diamonds, pearls and gemstones account for more than 90 per cent of the total jewellery market size in Taiwan. In the year 2006, Taiwan imported fine jewellery valued at US dollar 1489 million which was 26 per cent more than the imports as compared to 2005.

The growth of imports of fine jewellery in Taiwan is projected to increase to US$745 million in 2010. Diamond imports in Taiwan are the second-largest amongst jewellery items and account for 25 per cent of total yearly imports. Majority of the jewellery imports into Taiwan are supplied by other Asian countries followed by European exporters and suppliers from Central America.

Branded and imported fine jewellery dominates the local Taiwan market and industry experts have estimated that fine jewellery imports will continue to increase at about 20 per cent per year for the next two years. Fine branded jewellery from America is widely recognized and popular amongst local customers.

In fact, branded jewellery from the US and from European nations are considered to be of excellent quality in terms of their design and processes. Brisk sales of Japanese and European brands in terms of excellent quality of pearls also characterises the Taiwanese Market.

Some of the well-known US brands of fine jewellery that are available in Taiwan are Harry Winston, Tiffany and Hearts on Fire. Popular fine jewellery brands from other nations include De Beers, Louis Vuitton, Hermes’s, Dior, Cartier, Mikimoto, Georg Jenson, Gucci, Boucheron and Chanel.

Demand Analysis of Jewellery Market in Taiwan

Constantly rising incomes, high levels of per capita Gross National Product (US$ 16,461) have allowed citizens to spend some parts of their income on luxury goods such as jewellery which is a strong symbol of individuality, social status and personal wealth in the country. In keeping with Maslow’s Hierarchy of Needs, people in China have begun to look up because their lower needs are being satisfied.

This elevation can be interpreted in assuming that many people consider jewellery as a means to express themselves and their status. In this context it is proper to assume that loyal customers will be willing to pay higher prices for their preferred brands once they realise that the brand offers value for money.

Brand loyalty is of significance because it ascertains the sales volumes of products and services. When customers are loyal to the brand they will not be sensitive to price changes and will be ready to pay high prices in getting the unique values that are offered by the brand. Brand loyalty eventually leads to higher profit margins and cost-cutting because loyal customers are not sensitive to sales promotions

It is now well established that upscale people in Taiwan prefer luxury items and have started purchasing branded fine jewellery. High-end customers prefer large sized diamonds of one to ten carats and also look out for precious gemstones. There is immense potential for jewellery brands in major cities of Taiwan such as Kaohsiung, Tainan, Taichung and Taipei, where the living standards are quite high and people have comparatively higher disposable incomes.

Fine jewellery customers can be classified into those that are price oriented, quality oriented and brand oriented. In order to create brand loyalty amongst customers for its newly introduced jewellery brand, the firm will have to address the aspirations of people in keeping with this classification, which will allow the winning over of added customers.

From the perspective of geographical distribution, the city that has maximum potential is Taipei that has a population in excess of 2.6 million and is believed to be the major market for fine jewellery because it has the highest number of income recipients in the country and is also a major centre of jewellery collectors, wealthy entrepreneurs and high income professionals.

The new jewellery brand must be launched in Taipei in order to pave the way for its popularity that will further be carried on to other cities in the country. The jewellery firm will have two arrange for promotion events that include effective advertisement campaigns that should be very appealing in stimulating consumption in order to achieve successful sales figures.

Market Size and Features

Female customers in Taiwan are considered the third biggest consumer group in the world that purchases fine jewellery and diamonds for themselves and are only next to Saudi Arabia and India in this regard. The size of the annual market in fine jewellery in the country was estimated at US$ 1145 million in the year 2005, which was an increase of 24 per cent as compared to 2004.

Many jewellery firms that sell global brands of fine jewellery have observed that there is immense potential for fine jewellery in the country. Several stores have opened in the country during the last five years and they have been constantly hosting private jewellery shows and functions for their customers. It has been found that on an average, the female Diamond customer in Taiwan owns three diamonds.

Given that in Taiwan, 24K carat gold accessories and diamond jewellery are a major choice amongst fine jewellery items followed by ruby, sapphire, emerald and green jade as the first choice in the local market, the new firm that desires to introduce a new jewellery brand in the market faces a positive though competitive environment and will hence have to adopt marketing techniques and strategies to lure customers and develop brand loyalty amongst them.

An added advantage for the new jewellery brands pertains to the fact that people in Taiwan prefer 24K gold accessories that are very popular and accounted for about 40 per cent of fine jewellery purchases made in Taiwan during 2005. People in Taiwan have always had a preference for gold that has figured prominently during marriages in addition to being widely used as valuable presents for newborn babies.

For several years 24K gold jewellery has been the largest market segment for fine jewellery in the Taiwan jewellery market and is followed by pearls, gemstones and diamonds. Another popular segment in fine jewellery items in the country is 14K and 18K gold items that continue to be market leaders. There is immense potential in this segment because the working age group from 22 to 35 that has average monthly incomes of more than US$1,500 is patronising more and more of such items.

In the last five years, there has been significant increase in the market share of branded premium fine jewellery items in Taiwan. Users and collectors of branded fine jewellery items in Taiwan are considered to be very quality conscious in addition to being knowledgeable and sophisticated.

They have immense interest in collecting fine jewellery items made of high-quality gemstones with excellent designs that are designed and crafted by experienced craftsmen. Additionally, in Taiwan jewellery items are also bought for the purpose of preserving personal wealth, allocation of property arrangements and for personal preferences.

Because of increasing personal income and added global exposure to Internet and mobility, local customers in Taiwan have begun to develop attitudes towards purchasing branded jewellery. In fact, purchasing jewellery has become a virtue of necessity, mainly amongst wealthy women in Taiwan.

More and more young working women comprise the workforce now and prefer gold accessories and diamond rings. The circumstances clearly indicate that there is immense potential for new jewellery brands to succeed in the Taiwanese market if they are professionally handled by making use of the right marketing, segmentation and positioning strategies.

Need For Market Segmentation

Before attempting to delve into further aspects of product positioning it is better to fully grasp the goals and processes of market segmentation. According to Charlene Prounis (2007), “positioning is the strategic process of analyzing a brand and identifying what makes it relevant and unique.

When done well, it should result in a compelling perception of a product relative to its competitors’. A sound positioning strategy can then be used to facilitate creative communications. In general, positioning must achieve three critical goals: It must be relevant, it must be differentiating and it must be simple” (Prounis, 2007).

In order to create brand loyalty the firm will have to adopt efficient positioning that is a task essentially performed by the brand and marketing teams and aims at influencing customers’ thinking patterns.

While positioning new products, a radical shift may be involved in the landscape of the specific customer segments whereby the objective is to venture into territories that open avenues in terms of what the product can be instead of what it should be.

Essentially, positioning does not pertain to what a customer likes or does not like but about what kind of persuasion will work in taking the desired course of actions. The positioning statement relates to integral and ideal enduring statements of purpose which represent a signal and organizing principle for every promotional development activity that follows. The idea is to establish major elements of messages which may fall in each of the under mentioned rubrics:

  • Problem statements- Optional elements of market positioning are inclusive of problem statements which build upon specific unmet requirements of the market that will be met by the new product.
  • Functional benefits refer to certain mechanistic or scientific properties of the new product which adds further utility to existing brands.
  • Emotional benefits pertain to the emotion which is derived by customers by using the product in question, in terms of for example, trust, confidence and reassurance.
  • Main themes are the truly exclusive benefits provided by the new product.

Marketing Strategy

By working upon such a learning and building technique, customers can be made to realize the actual advantages of a product and through this approach eventually arrive at a higher satisfaction level of new products. This approach can further serve as the basis for development of promotional materials in future campaigns.

Once the new jewellery brand is launched by the firm, its success depends upon whether the market has noticed it and whether average revenues and profits are ramping at a higher speed than costs during the first two quarters. A significant measure for the new product’s success is to see whether competition has reacted and market changed in keeping with the firm’s expectations.

This aspect is ascertained if the product reaches new markets and grabs sizable market shares from competitors. If the product demonstrates sales so that the firm is ahead of its projected profit curve the launch has been successful. The successful launch will then provide the jewellery form an opportunity to create a market environment that encourages brand loyalty (Mahajan et al, 1995).

Product launch has now become an art which can make or break new products. Successful product launches enables potential consumers to become conscious of the new product and they become eager to try it out.

The process of launching new products plays a crucial role in ensuring that the offering reaches the markets at the right time and in a cost effective method, though the entire process can prove to be a resource intensive and arduous effort.

But if the product launch process is executed efficiently, it makes a positive difference between victory and failure for the firm and paves the way for brand loyalty as more customers will have confidence in buying the product (Ehrenberg, 2001).

It is often said that a product that is well designed, suitably priced and distributed will not need much efforts for creating brand loyalty, rather consumers would be readily buying it. Some of the new products have the good fortune of being positioned in a seller’s market and producers of such products are able to sell their entire production without the need for promotion.

But the fact remains that in the Taiwan jewellery market, the competition is fierce whereby every jewellery firm has to make hectic efforts in communicating with buyers and luring them in providing exclusive advantages from buying their respective products (Aaker, 2004).

In the context of positioning of new products, Monica Brand has asserted that “product launch is marked by initial low sales and high start-up costs, mostly because of the heavy promotion needed to build customer awareness and entice demand.

This staff-intensive period should be brief if the pilot test was effective because early adopters should already be familiar with the product. The main challenge for the institution at this phase is to make sure the systems and staff are prepared for the subsequent growth phase, which will likely put a strain on the organization” (Brand, 1998).

The problem with the present research in the context of brand loyalty is that it is rather vivid. It is not enough for a product to enjoy a good brand image to be successful in the market. The product has to enjoy an explicit and distinctive image in the mind of the present and potential customer as compared to other brands in the market.

Successful positioning pertains to a situation whereby the product is able to establish a strong place in the minds of consumers. The objective of positioning is to establish an exclusive and advantageous image in the mind of target customers (Bhat, 1998).

According to Fill (2006), “positioning, therefore, is the natural conclusion to the sequence of activities that constitute a core part of the marketing strategy. Market segmentation and target marketing are prerequisites to successful positioning (Fill, 2006).

Current Research

As per research carried out by Goodhardt (1984) in terms of his study on nderstanding the path to purchase, the main drivers of purchasing a product are functionality and product attributes, present relationships, social contexts of consumers and psychographics and personality of consumers.

Goodhardt (1984) found that customers make choices on the basis of internal and external product characteristics that explicitly relate with the desirable characteristics and incurred costs for them while they buy goods and services by making choices amongst the several options that are available.

In this regard, intrinsic attributes of the product are the ones that cannot be altered unless the physical characteristics of the product or altered, such as comfort, safety, appearance, design, colour and style.

Extrinsic attributes are imposed by retailers and manufacturers and do not include integral components of the product such as, warranty, country of origin, brand and price. Research has clearly indicated that there are several factors that impact customers whereby they buy the given products.

The prevailing fashion trend is a major factor that customers consider while making purchases, which is clearly indicative of their change in tastes.

In the case of jewellery brands, a new brand has immense potential in conveying a specific social status or fashion image than existing brands. It is important to note in the context of a new jewellery brand that social identification implies great value and a sense of belonging to a given organisation or group (Lilien, Kotler and Sridhar, 2001).

Perfection consciousness and brand consciousness are directly associated with fashion consciousness amongst customers. Such consciousness further leads to the creation of to a new aspiration that can be termed as brand and fashion consciousness. Customers that are aware of such styles will be more likely to purchase the new jewellery brand.

Price and Quality

Price is a very important factor in this regard and has been described as the money that is charged for a product or service or the sum of values that consumers are willing to give in exchange for getting the benefits pertaining to the product or service. Price plays a major role when customers make choices about a brand.

Most customers are known to organise their knowledge of product categories in terms of the price levels pertaining to different products and bands (Sharp and Wright, 1999). In fact, price impacts perceived similarities of the given product to the psychological prototypes of lower or higher quality products. But prices are not the only attributes that customers use in making quality judgements.

There are other product attributes that impact quality judgements about price. Secondly, in keeping with the sense of sacrifice, price helps in forming the benchmark to compare utility gains pertaining to superior quality products. However such procedures of comparison are quite dynamic because the associated elements of money and quality of product alter during different times of purchase and consumption.

Several researchers have found that a status conscious market stands higher chances of being impacted by the characteristics represented by the brand, such as; feelings that the brand creates and the extent of agreements amongst the customers opinion and the brand image.

Research outcomes have also revealed that if representative and symbolic characteristics are higher, the positive feeling amongst customers will also be higher and they will be a congruent relationship amongst brand image and customer.

This will also lead to higher chances of the brand being perceived as having higher elements of status. Researchers have developed a concrete relationship amongst status consciousness and branded products in regard to the manner in which customers may become status conscious and adopt such an approach by displaying their personality through association with the brand (Bell, 1991).

An important factor considered by consumers while making purchases is quality and they constantly watch the fierce competition amongst companies in the context of quality. Many analysts believe that if a product is purchased by more and more people, it is implied that its quality is very good.

Urban and Hauser (1993) have emphasised that marketing teams must focus upon quality in their marketing strategies because it is not just possible to compete on the basis of price alone. In order to maintain a superior product position, companies have to invest in research and development for new products being introduced by them as also in terms of the manufacturing methods.

Quality can also be improved by focusing upon design and countries such as Taiwan are known to have government support in terms of financial assistance to improve quality and design.

Such policies in Taiwan are applicable to the jewellery industry also and hence the firm can benefit by getting financial assistance to improve its product design for the new brand of jewellery. A pertinent factor that the firm will have to be careful about is that the brand must meet ISO 9000 standards, which is strictly provided for by the Taiwanese government.

Advertisements and Celebrity Endorsements

Advertisements are non-personal communications from identified sponsors through the use of the mass media in attempts to influence and persuade the audience. It is all about effective communication of the required messages by making use of effective media such as newspapers, Internet, brochures, banners, billboards, magazines, radio and television.

The jewellery firm in question will have to make use of brand advertising which is the most visible and focuses upon developing long-term brand image and identity. In the modern business environment, celebrity endorsement is now commonly recognized as a necessity in advertising campaigns.

The jewellery firm in Taiwan will have to develop characters that are congruently associated with the product and the target customers. Companies have restricted control over the personality of the celebrity that has been created over the years.

But with the association of the celebrity with the brand, a brand personality is created and consumers are motivated to associate themselves with such brand personality by making purchases of the product.

The jewellery market has immense potential in this regard and because the jewellery item is a fashionable product, customers will not hesitate to associate themselves with the brand ambassador (Uncles et al, 1995).

Endorsements by celebrities have been known to create positive results through advertising and have led to increasing sales as compared to non-celebrity endorsements. Because the public feels motivated in being related to their stars, advertising companies use celebrities and capitalise on the customers feelings in order to make them attracted towards the brand.

It is well accepted that in sectors such as jewellery, clothing and sports advertising is a multi-billion-dollar industry whose prime objective is to impact customers in responding positively towards the advertised goods and services. Research has also revealed that majority of the people enjoyed watching advertisements that depict their favourite celebrities after which desire is created in them to buy the products promoted by such celebrities (Kim, 2002).

According to Joshi et al (2009), companies consistently face challenges while making decisions about entering new markets where they have a leveraging advantage in the current markets but there is no positive impact on the corresponding social influences. They held that the optimal entry strategies of firms under such circumstances cannot be compared to the well known strategies of now or never or now or at maturity, which have been widely cited in the available literature.

They attempted to establish that a powerful leveraging impact is not in the nature of enabling adequate reason for firms to try out new markets nor they should have any expectation of a back lash impact in deterring firms from entering new markets. The optimal strategy in this regard is necessitated by way of a careful trade off amongst the three issues of patience, back lash and leveraging.

Therefore, Joshi et al (2009) feel that “an astute manager can always find the opportune time to enter the new market if she takes into account the dynamic and recursive nature of cross-market interaction effects, where leverage enhances the backlash but backlash weakens the leverage in a nonlinear, dynamic fashion.

We illustrate that firms stand to benefit from explicit considerations of these effects in deciding whether and when to enter a new market. Furthermore, we explore how the optimal time of entry into the new market relates to the time of peak sales for the existing market, demonstrating that depending on the interactive effects of leverage and backlash, entry could be optimal either before or after peak sales in the existing market” (Joshi et al, 2009).

Brand Loyalty

The concept of brand loyalty has been researched extensively in the field of marketing as well as practitioners within their industry. Successful firms with large market share in their industry are often found to have large group of loyal customers that made repeat purchases.

Many researchers have tried to explain the factors, such as relative attitude, personality traits, brand personality, product involvement or consumer behaviours that leads to brand loyalty (Jensen & Hansen, 2006; Lin 2010, Quester & Lim 2003; Delgado-Ballester & Munuera-Aleman, 1999). From these personal traits, the customers will have different horizon to choose their brands.

While these factors have found to be quite significant drivers of building a successfully brand that leads to consumer loyalty, other researchers such as Sharp, Sharp & Wright (1999) questioned whether there’s any link between the consumer’s loyal behaviours to the brand loyalty, i.e. the repeated purchase of the consumer may be contributed to the lack of choice rather than satisfaction.

Also, Sharp & Wright (1999) argued that although attitude is an important factor to the brand, consumer’s attitude toward a brand may change as the situation chances and studies have shown that individual’s attitude towards brand only averages around 50% repeat-response rates.

Thus, the attitudinal loyalty is a situational variable that’s less stable and low predicative power over brand loyalty (Sharp, Sharp & Wright, 1999). Many researches can not explain this phenomenon for sure until now because the unstable element of keeping people brand loyalty.

While other researchers started to investigate brand loyalty in a different market environment such as e-commerce to look for similarities between them so that existing factors for brand loyalty can be used to explained e-loyalty (Gommans, Krishnan & Scheffold, 2001). Gommans, Krishnan & Scheffold (2001) investigated the e-loyalty framework in five sections: Website & Technology, Value Proposition, Brand Building, Trust & Security and Customer Service.

In the value proposition, traditional brands enjoy less competition, thus easier to maintain brand loyalty compare to e-commerce where price range is more important in maintaining e-loyalty. Website & Technology often comes together with Trust & Security, such that the consumer often judge the brand based on their first impression over the website, the look and feel and ease of use for navigation (Gommans, Krishnan & Scheffold, 2001).

Since consumers can not physically see the products and talk to the sales person in the traditional business, their feeling only judgement for the brand is through the web browser, so the stereotype always comes from the website which can make customers the e-brand loyalty. Therefore, generally the consumer’s satisfaction level is directly related to the brand loyalty which corresponds to their market share within the jewellery industry.

That is to say that the consumer tends to purchase a particular brand’s product is through the satisfaction level over the previous purchases rather than their perceived value, which is the factor driving the repurchase.

A new product launch and better strategy may be the group of consumers that have less commitment level on brand in order to gain market share. Otherwise, a customer who has brand loyalty, the competitors are hard to penetrate into the particular market share.

New Product Launch Strategy

New product development is essential for companies to remain competitive, and sustaining long-term growth. In today’s world where information is ubiquitous and innovation happens at breath-taking speed, a strategy for a new product from the initial stage of design to development and finally launching the product requires a careful and well tested plan to minimizes the risk of failure.

As pointed out by Jan Hofmeyr & John Rice (1999) that new product in grocery market is still extraordinarily high of up to 60% in the U.S.A.. Many models have been introduced in the market research academia to investigate the success or failure rate in a new product development in a hope to increase of success rate when the new product is introduced.

Model such as Simulated Test Market (STM) Models by Watkins is aimed to overcome some of the existing models’ lack of consumers’ orientation and overt social interaction dimension.

Also, as Clancy & Shulman (1992) pointed out that STM is a much cheaper way of evaluation of the new product and may provide an insight into how to maximize the profit for the company. Another advantage that STM offers is not only it takes less time in marketing results, noted by Clancy & Shulman (1992), but also that time is equivalent of money which is an important element of competitive advantage.

Moreover, STM maintains products security, such that the company doesn’t have to expose the new products test to the world that may potentially give competitors ideas and time to produce a similar competitive product or knock-off the products (Clancy & Shulman, 1992). Once other potential competitors make the similar products, the profit for the original company will be decreased by the market share.

Other variable, such as value-based orientation model proposed by Mazumdar (1993) that takes into the account of the perceived value of the products by linking the benefit and sacrifice which provided a framework for helping decision makers in a new product launch planning. From the company benefit view, the products will be made depending on worth it is for the company.

Relationship Variable

Wellan (1993) has conducted research on four different types of businesses: life insurance, telephone services, Business College, and salmon feed supplier to investigate if the relationship between product performances to brand loyalty is significant through variables, such as consumer satisfaction and brand reputation.

It has been found that brand reputation has effect on loyalty in all four types of businesses while satisfaction only has effect on loyalty when consumer has sufficient knowledge to evaluation the product and service they have purchased, such as the telephone services and Business College.

Jan & Rice (1999) also probed whether the consumer’s level of commitment is what’s driving the brand loyalty; hence a committed person is more difficult to switch to another brand, to explain a successful new product launch by consumers’ commitment level to the brand. It has been found that in a case study where a market dominated by a brand over 50% without brand commitment can easily lose their market share when a new brand appears (Jan & Rice, 1999).

Jan & Rice further noted the implication for the new product launch strategies are: to target a market where there is less committed people, secondly, targeting uncommitted consumer of existing brands to the best way to gain market share and lastly, differentiating uncommitted consumer from those who are involved and uninvolved about the brand choice and a different strategy of targeting them can yield better in the new product launch. Through the theory, how to make people have their own brand loyalty is an issue for company to have some unique branding strategies.

Cultural values in Taiwan, which has similar cultural background to the Mainland China, is very different from the Western countries can have very different marketing implications. As pointed out by Yau (2007) that Chinese way of life and values systems have particular implications for attributing product success or failure to fate rather to the manufacturer or reasons behind the facts.

Hence, the consumer may be more reluctant to complain about the performance of the products they have purchased (Yau, 2007). Since this study is to investigate the effects of new products launch on brand loyalty in the Taiwanese jewellery market factors, such as Chinese cultural marketing and behaviour implications such as “man-to-himself” and “situation” orientation needs to be taking into account in the evaluation of the new product launch strategy for a company.

The jewellery firm that will launch the new jewellery brand in Taiwan will have to make use of CRM strategies to enhance customer loyalty and maximize profits by adopting critical capabilities such as managing multiple channels of communication to capture customer interactions that could take place through call centres, e-mail, Internet portal or face-to-face contact.

The firm will also have to provide a unified viewpoint for customers throughout the value chains. The efficiency and quality of every customer interaction has to be improved and the usual customer queries can be addressed through self-service procedures. All the available information has to be analysed to make improvements in customer segmentation strategies, research and development abilities and marketing campaign management strategies.

Hiam (2001) had determined the following steps in the product positioning process, which is very relevant in the context of establishing brand loyalty for the new jewellery brand in Taiwan.

  • Identification of competitors
  • Singling out decision making attributes
  • Evaluation of decision making attribute
  • Identification of competitor position according to the most important attributes
  • Identification of consumer needs
  • Preparation of a consumer map
  • Selection of the desired position
  • Selection of positioning strategy

Traditional Approach to Brand Positioning

While discussing positioning of new jewelry brand in Taiwan it is beneficial to define the terminology. Al Ries and Jack Trout have pointed out in their influential work, Positioning, that “positioning is where the company wants its product to be placed in the customer’s mind so that it will achieve optimal utilization” (Trout and Ries, 1972).

Positioning is the basis for product marketing and the firm’s internal statement of objectives which provides information and leads to the establishment of the complete marketing communication framework of the firm. A positioning statement can be judged as efficient only if it holds strength against the objective performances of the product.

The positioning statement has to be exclusive in differentiating from other remedial options and in being of relevance and motivation to encourage a prescribing behavioral pattern amongst customers. It has been pointed out by Trout and Ries that “history shows that the first brand into the brain, on average, gets twice the long-term market share of the number 2 brand.

Almost all the material advantages accrue to the leader. In the absence of any strong reasons to the contrary, consumers probably will select the same brand for their next purchase as they selected for their last purchase” (Trout and Ries, 1972).

Presently the traditional approaches towards brand positioning relate to reaction statements of customers developed by the marketing teams of firms. Generally the first step in the process is pre-positioning which entails meetings amongst marketing teams and primary research that is conducted externally.

The main objective for such exercise is to establish a thorough knowledge of the areas in which the new product can be fitted and to commence with the development of promotional communication which serves as a means for the positioning concepts. Qualitative research helps a great deal in exposing customers to the product profiles as also the profiles of the main competitors. This way the firm gains clarification about the prevailing and possible competitive benefits provided by the new product (Sreekumar et al, 2009).

Methodology

Methods

Due to the complexity in the model testing of new product development, it was necessary to conduct sampling survey with a selected group of respondents while conducting the market research. The survey method comprised of interviews and questionnaires the questionnaires were designed with 18 questions for different people and ages that were chosen at random amongst customers that visited high end departmental stores in Taipei in Taiwan.

The questionnaire included Yes/ No, multiple choices, and open questions. One hundred and twenty people were asked to complete the questionnaires from 6th of March 2010 to 26th of March 2010. From this data, it could be inferred how a successful Taiwanese jewellery brand can create an excellent brand image to attract customers who can demonstrate brand loyalty in repurchasing the jewellery on a consistent basis as regular customers.

The structure of the questionnaires was based on measurement of consumer’s commitment levels as proposed by Hofmeyr & Rice (1999) by asking the respondents to answer questions relating to the following:

  1. Rate the brands they use with a satisfaction scale
  2. Rate the importance of the brand choice with an ‘importance” scale
  3. Say whether they are learning toward or away from their brands
  4. Rate all the brands in terms of how they feel about them

In regard to new product launches, it is possible to relate consumers’ satisfaction levels along with their perceived value of the products to represent the purchase intention for a product or a brand. As pointed out by Selnes (1993) that satisfaction factor has significant influence over brand loyalty, many researchers have agreed that the success of a new product launch has significant bearing on the brand loyalty.

More specifically, for a new product, the consumers are likely to lean toward a brand that is trustworthy, satisfactory in meeting their aspirations and proves worthy for the money that is spent on it.

Thus, searching for relational factors such as satisfaction and perceived value would allow this research to infer the impact of a new product launch on brand loyalty; in other words, a strategy for the new product launch can be ascertained that maximizes the chance of success and enhancement of the brand image in helping the company to make more profit.

Sample

The sample group was 60 men and 60 women who walked into one of the jewellery floor of a department store in the city of Taipei, Taiwan.

The department store was chosen for the survey in view of its location and because there are many different jewellery brands, ranging from low-end priced brands to international well-established brands, available in the store that cater to all age ranges and occupations. The store is also visited by people who come as tourists from other countries. Hence, the diversified backgrounds of people allowed this research to gather a sample of population that was realistically representative of the consumers in Taiwan.

The study collected the primary data by interviewing each person individually and by taking the responses to the questionnaires that were distributed and collected after completion at the same time.

This strategy allowed the research team to avoid any questions raised by respondents to remain unanswered, which also enabled the survey to be accurate in terms of the responses to the questions that were placed before the respondents. The sample survey helped the research effort a great deal in building up the database for analyzing what elements influenced them to have brand loyalty for jewelry products.

The survey also had important implications in the context of:

  • Identifying areas where problems occur or where changes are required
  • Understanding why people behave in a certain manner and what can be done to provide alternate solutions to the problems
  • Understanding the relationships between different variables
  • Diagnosing or analyzing the situation rather than just describing the situation

Data gathered using the said instruments has been collated for analysis. Data analysis was primarily characterized by:

  • Comparative and statistical approach.
  • In being in line with the interview method that was conducted amongst the shoppers at the departmental store.
  • The gathered data from respondents in the departmental store has been analyzed.
  • A data analysis process has been developed to analyze all the responses.
  • The templates for data entry can be generated from questionnaires, and records can be checked, revised and manipulated.

The data results of the study were analyzed by determining their corresponding frequency, percentage and weighted mean. Different statistical procedures were used for this purpose.

The survey-questionnaire attempted to acquire the following information:

  • To acquire the demographic profile of the respondents,
  • Solicit attitude statements on different aspects of consumer aspirations in the context of jewellery.
  • Ascertain the purpose of the set of attitude statements and to determine the level of agreement or disagreement in the context of the present brand strategy of jewellers.

The questionnaire first required respondents to give specific demographic information such as name, age, gender, education and nationality.

A major effort was made to ascertain the relationship that customers had with specific jewellery stores and their reasons for choosing to visit the specific store. Attempts were also made to seek their suggestions about the extent to which their expectations were fulfilled and about their perceived shortcomings in the context of the jewellery products available in Taiwan.

The sample group was 60 men and 60 women chosen amongst customers that walked into the jewellery floor of a department store in the city of Taipei, Taiwan. The survey method used by the research team did not allow any question from the respondents to remain unanswered and the accuracy was maintained at the highest possible level.

This sample survey helped this research to build up the database for analyzing what elements could influence customers in demonstrating brand loyalty towards the new jewelry brand. The respondents were asked the following questions:

  1. What is your name
  2. What is your gender
  3. What is your nationality
  4. What is your education level
  5. How often do you visit this jewellery store
  6. Please give the names of the jewellery brands that you buy
  7. What is your favourite jewellery brand
  8. What are the main points that stand out when you buy jewellery
  9. Do you feel satisfied with the quality of jewellery available in Taiwan
  10. What in your opinion is the reason for making the choice in choosing your best brand.
  11. How often do you purchase jewellery
  12. While making jewellery purchases what is your prime consideration; latest fashion or the durability of the jewellery item.
  13. What in your opinion makes the best jewellery brand successful.
  14. Which cities in Taiwan would you like the world’s best jewellery brands to set up stores.
  15. Would you prefer to buy global jewellery brands or you would prefer to continue with locally established Taiwanese brands.
  16. Do you feel the Taiwan market has matured for sale of world class jewellery.
  17. What in your opinion is the basic condition for foreign luxury jewellery brands to introduce their products in Taiwan.
  18. What is your opinion about the success potential for such brands in Taiwan.

Observations

The demographic information pertaining to all the respondents was compiled and included in the data. Amongst the total respondents, 77 per cent were between the age of 21 to 35, 18 per cent were between the age of 36 to 50 and five per cent of those that were more than 50 years of age. 57 per cent of the respondents were male and 43 per cent were female.

Most of the respondents conveyed that they often visited the department store to make purchases in the context of their daily needs and sometimes stepped into the jewellery store to see if they could afford to buy items of their interest. Amongst female respondents, 64 percent responded in saying that they visited the store on a regular basis and presently they had come in order to see if there were some latest additions to the jewellery collection.

Upon being asked about their favourite brands of fine jewellery, 73 per cent of the females conveyed that they would prefer to buy foreign branded jewellery items because local brands were not of the latest technology or fashion. Most of the male customers said that they visited the jewellery shop in keeping with their interest to keep a watch on the latest trends and designs so that they could make plans for the investments and jewellery purchase for their families.

Female respondents were almost unanimous in responding that they would certainly prefer the entry of new global brands because it was in keeping with their taste for trendy and fashionable fine jewellery that was popular in Western countries. Young and working females between the age of 21 and 25 did not have a good opinion about local jewellery brands in view of their poor quality.

On being asked what were the main points that stand out when they make jewellery purchases 77 per cent of females responded in saying that their top priority was the unique design that had not been introduced in markets so far. Their next preference was the quality and price, which were dependent upon the brand and country of origin.

It appears that females are not very excited about making purchases of local jewellery. In view of the results that emerge from the survey it can be concluded that there are favourable circumstances for launching of new branded products in the jewellery market in Taiwan because customers are looking forward to new products and new brands that have the stamp and quality of globally successful brands.

While considering the issues that make the jewellery brand a success, respondents felt that quality, design and above all the brand are the most important considerations when they make jewellery purchases. Most customers were not satisfied with the quality of local jewellery in Taiwan.

This is perhaps because for decades Taiwan has been the centre of precious stones and domestically produced jewellery items that are made with traditional techniques and procedures. However 69 per cent of male respondents were not much concerned about jewellery items being imported from other countries because their primary objective in buying jewellery was for investment and for providing security.

Nevertheless, the jewellery sector in Taiwan is quite strong and has immense potential for growth and development if its designs and manufacturing processes can be altered in adopting the latest designing and manufacturing techniques.

It is evident that females comprise of the largest segment of jewellery customers in Taiwan and they need to be targeted appropriately to achieve success of a new brand. This can be possible only by creating brand loyalty in adopting appropriate measures of marketing strategy, segmentation and positioning.

Most of the female respondents were in favour of buying global jewellery brands and felt that the Taiwan market was now matured for sale of world class jewellery in view of the rising standards of living of the local population that has developed higher aspirations to have better quality products.

Obviously, fine jewellery cannot be left behind and Taiwanese people now feel that they also deserve to have the best products in terms of style, quality and satisfaction. They do not wish to be left behind in buying traditional jewellery designs when people across the world are buying trendy and fashionable designs.

Upon being asked about the strategy that should be adopted by foreign brands while making entry in the Taiwan market, respondents asserted that they should first prove their worth while attracting customers through low prices, better designs and higher rewards for making purchases of such brands.

This indicates that jewellery customers in Taiwan, especially women, are very wise and know how to extract the maximum values from their money. In other words, the respondents unconsciously implied that any jewellery brand that is launched in Taiwan will have to create an environment where by it spontaneously creates brand loyalty amongst the largest possible number of customers in the country.

Discussion

Just as a product’s failure can result from changes in environmental factors and consumer tastes, a product can succeed due to the same reasons. A competitive environment which is favourable can lead the product to become a grand success.

Jewellery firms that wish to launch new brands should aim at developing new products that cater to specific requirement of the markets because a product can actually lead to creation of market demand instead of responding to it, under circumstances that are created by appropriate marketing segmentation techniques.

If the product is well aligned with the core competencies and the organization goals of the firm, it will receive a great deal of support from the market. The top management has a crucial role to play in supporting the product by marshalling the organization’s resources for effective implementation (Cachon and Terwiesch, 2006).

It is known that a major part of the branded jewellery and related materials in Taiwan come almost entirely from imports and thus any jewellery firm that wants to enter the market will have to be aware of the characteristics of the Taiwanese market in this regard. It is important to analyse and determine the circumstances that impact the jewellery market in the country.

Before launching a new jewellery brand the firm will have to ascertain if people in the country can afford the new product and whether the income of citizens is adequate in implementing such purchases. There are some legal barriers that have to be examined in the context of the extent to which the government permits and promotes the import of such products.

The competitive environment, potential customers, market size and the potential for demand have to be ascertained. It is known that the local fine jewellery industry in Taiwan is not very competitive and is facing extreme difficulties in surviving the competition from branded and imported fine jewellery that is of excellent quality, higher quality of precious stones and superior designing and craftsmanship.

However, it is also known that Taiwan is considered the largest centre in the world for processed semiprecious stones and the country’s facilities in this regard are well equipped with advanced processing and cutting procedures.

However, it should be kept in mind that new products usually fail due to the following reasons:

  • Overestimation of Market Size
  • Product Design Problems
  • Product Incorrectly Positioned, Priced or Advertised
  • Costs of Product Development
  • Competitive Actions

In order to create new products successfully, the jewellery firm must understand its customers, competitors and the markets as also develop products that provide immense value to customers. The development of new products goes through a process whereby ideas are generated, ideas are screened and the concept developed and tested. A suitable market strategy has to be framed which is then analyzed from the business perspective.

The next stage is of product development, test marketing and finally the product is commercialized. Krishnan and Ulrich have said about concept development that “decisions define not only the product specifications and the product’s basic physical configuration, but also the extended product offerings such as life-cycle services and after-sale supplies.

There are five basic decisions to be made. What are the target values of the product attributes? What will the product concept be? What variants of the product will be offered? What is the product architecture? And, what will be the overall physical form and industrial design of the product?” (Krishnan and Ulrich, 2001)

It should be kept in mind in the context of new jewellery brands that the development of a new product is marked by a process which evolves with its maturity and the growth of the firm. Under such circumstances the firm will have to be patient in watching the brand’s performance, which will improve in due course with the creation of brand loyalty for the same.

Success of the product is to some extent due to the constant readjustments and fine tuning of the changes in market demands and the gradual aging process with the evolvement of the product through its life cycles. The launch of the product is usually characterized with high start up costs and low sales initially since there is a heavy need of promotion to create awareness amongst customers and to enhance demand.

This period is considered to be short if the product’s pilot test was positive since the initial adaptors would have become familiar with the new product. The firm has to ensure that the institutional systems in the organization are ready for the ensuing phase of growth which will put pressure on the firm (Kotler, 1997).

The growth phase of the jewellery brand is characterized with increased sales, reduction in average costs and the first stage of profits. Market penetration is a phase that needs a lot of marketing efforts in maintaining volumes and reducing costs per customer in order to get maximum profits. The product then gets fully integrated as a regular product of the firm and the firm starts the identification of cross selling prospects with other products.

This is the right time to thing about establishing brand loyalty amongst customers. As the track record of the product develops new competitors enter the field and the firm has to make further efforts in identifying potential consumers and in implementing incentive schemes to reward staff for getting new customers. Additionally, the firm has to conduct more market research and initiate added publicity campaigns. In order to successfully position a new product the firm has to keep track of the following:

  • Solicit client feedback throughout the process to continually refine the product.
  • Expect problems to arise along the way.
  • Generate institutional buy-in early and continually throughout the product development process
  • Test the product in actual market settings and expand slowly.
  • Make realistic cost revenue projections to prepare for the financial impact of adding another product.
  • Make sure systems have sufficient capacity and flexibility to manage and track new products.
  • Provide appropriate training and incentives to staff to ensure effective implementation.
  • Cancel the project if external or internal conditions are not conducive to new products.
  • Identify a product champion who will maintain momentum throughout the development process.
  • Create a client-centred institution.

While making plans for launching new products it is required to make forecasts and in making forecasts innumerable possibilities are considered. One of them is to assume that business circumstances will remain the same and another could be the assumption that the economy may witness some level of recession thus making the business to suffer a little.

There is an element of chance or likelihood for every possibility and when the firm takes into account all possible results, such probabilities should ideally sum up to unity. Every possible result for the firm is indicative of certain aspects of business such as the fact that if there is some level of recession in the economy the firm will have a decline in its sales.

Once the combined outcomes are analyzed, an average or expected value in terms of future sales is derived. Such approaches need to be elaborated and analyzed. After the sales figures are forecasted the firm has to make forecasts about cash flow statements, balance sheets and income statements for the entire period under consideration.

This will enable the firm to have an estimate of its profits, requirement of equipments and the needs for capital and liquidity. Unless the firm has this information it will run immense risks of ruining the business in terms of losing suppliers and consumers (McCarthy and Perreault, 1993).

There are several tools that assist firms in understanding perceptions which have a bearing on purchase decisions that lead to the creation of brand loyalty. Perceptual map is a visual arrangement and a means to portray the diverse options available to firms while positioning products.

Marketing teams have the option to develop perceptual maps from data obtained through marketing research in order to locate customer needs which have not yet been realized. For instance, consumers can be asked to rank jewellery items on elements pertaining to design, quality, durability and appearance.

These four qualities can be merged to form perceptual dimensions such as utility and technical. All brands of jewellery available in the market are incorporated in the data in keeping with the preference ranks given by consumers. If the results indicate that a large number of jewellery firms focused upon the specific characteristics of the product, there is added potential for new firms to emphasize on the ease of use and provision of better services.

There are a number of positioning options that can be availed of by firms in creating an exclusive market environment that favours the creation of brand loyalty for jewellery products in Taiwan. One of them is quality emphasis whereby production is made to become free of any defects while customer service and product designs are made to meet or exceed consumer expectations.

An alternative option for marketing teams is to offer exclusive features and advantages which customers do not find with other competing products, which can vary from unique styles to production that is environmental friendly. Usually these exclusive features are a result of the firm’s unique resources in having competitive advantages in the market place.

This aspect creates difficulties for the firm’s competitors in matching the unique benefits and features due to the enhanced costs resulting on adding the same features to their products.

In this context, Urban and Star have observed that “if we develop a unique competitive advantage on a dimension of importance to a significant portion of the market, we can enjoy a substantial share and high margins,” (Urban and Star, 1991). However innovations and marketing research have to be carried out on a consistent basis in maintaining such competitive advantages.

Conclusion

A few decades ago brand loyalty was considered a simplistic concept for creation amongst customers and was a popular term amongst marketing professionals in the areas of promotion ad advertising. It is still a commonly used term in marketing literature. But the concept is difficult to conceptualize and involves a number of different interpretations.

The objective of this paper has been to explore the different ideas of brand loyalty in the context of new product launches in the jewellery sector in Taiwan, especially in the context of new products and to ascertain the new developments in the concept. Internal positioning, external positioning, positioning for social accountability, positioning with ideas and head on positioning are some of the variants that have a strong bearing on the creation of brand loyalty.

There are a large number of efficient elements of marketing strategies that are embodied in the over all concept of brand loyalty. Most of them are connected quite closely to the promotional and advertisement positions of the marketing mix. Hence brand loyalty cannot be said to be an entirely new or revolutionary concept for marketing strategies.

As this paper has proposed and demonstrated, the present marketing research methodologies used by majority of the companies in ascertaining their ideal brand positioning in the jewellery sector are not efficient and do not allow the development of actual and aspiring themes for creating brand loyalty. Perhaps this is due to the fact that potential customers are made to consider the characteristics of the products from the firm’s perspectives and the marketing strategies do not exhaustively address the aspirations of customers.

Positioning plays a major role in creating brand loyalty and the desired impact in the minds of present and potential customers. Most marketing professionals view positioning of products as an arrangement whereby a product occupies a specific, desirable and distinct place in the mind set of target consumers in relation to the products competing in the same market segment.

The position of a product is ascertained by the manner in which customers view the features of the product in correspondence to the features of the competing products.

Product positioning cannot be separated from segmentation and customer targeting and if there are faults in these two processes, product positioning will not succeed.

A combined conclusion can be drawn from the opinion of different scholars in the field, in saying that product positioning is a complicated and continuous chain process. While executing positioning plans firms have to follow specific marketing steps.

The use of brand loyalty strategies has been made from the days when firms had to operate in intensely competitive markets where products competed to grab the maximum share of the market. Innovation of products has conventionally been carried out with the advent of new ideas and the concept of social accountability. It is however not intended to mention that concepts of positioning are not useful in creation of brand loyalty.

They are actually valuable conceptual vehicles that are utilized meaningfully to frame strategic techniques that are more productive and efficient. Market research activities enable a meaningful and deeper sense of knowledge about the product as a company frames its positioning strategies.

However positioning is not a static exercise and although a positioning statement may be relevant for some time, clear signs develop when the time comes to reposition. Such signs pertain to reducing sales, new entrants in the competitive environment, shifts in the markets, new procedures and change in the treatment paradigms.

Nevertheless, as firms gain experience they become prepared in shifting gears at the opportune time in creating higher levels of utilities and providing better services to their clients in order to create brand loyalty. It is required to keep watch and conduct regular checking which improves and proves to be informative in regard to the available marketing decisions and choices.

For firms that are launching new products in the jewellery market in Taiwan It is thus important to have knowledge about the different levels of importance placed by consumers to specific brands in the context of democratic and national perceptions. There is need to have adaptation and summaries in the context of strong academic structures that are aligned with realistic issues pertaining to brand purchases.

The firms stand to gain in having detailed action plans that offer examples and strategies pertaining to more innovations and efficient marketing campaigns. It is known that, almost half the consumers recognize that there is a lot of choice available to them while making purchase decisions.

However customers also understand that they have to be open-minded in trying new experiences with new products. Brand loyalty increases with age, and the purchase process is driven in being influenced by the introduction of new products by the same company. On the one side, experimental and promiscuous customers get encouraged to try new products, while customers that are hard pressed for time have no choice but to continue buying their trusted brands.

The new jewellery brand has to tap this segment of customers that are open in trying out new brands. In the light of the findings of this research paper, it is evident that branded and imported fine jewellery dominates the local Taiwan market and industry experts have estimated that fine jewellery imports will continue to increase consistently in the coming few years.

The ultimate measure of brand loyalty in the jewellery sector is not the repurchasing pattern for any product because customers can be influenced in other ways such as the absence of alternatives for the given product. But this is not so in the jewellery industry where brand loyalty implies different strategies and becomes possible when companies successfully create emotional attachments for customers with their brands.

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Consumer Behavior Group Project (Loyalty Program)

Company Background

Apple is a multinational corporation from America that is in the business of designing, manufacturing and selling personal computers, software and consumer electronics. Its headquarters are based in Cupertino, California. The company was founded by Steve Jobs and Steve Wozniak in 1976. It is unimaginable that both gentlemen were college drop-outs.

Consequently, many people in the society did not want to associate with them. Until early nineties, the company had made great strides in coming up with best personal computers in the market. Such brands included Macintosh, Apple brand, Power Mac computers, iLife, iWork, iTunes browser, iPhones and software (Linzmayer, 31).

Product Opportunities

The company applies proper marketing tactics and majority of adverts are conducted online. The unique feature with the adverts is an ability to use familiar terms instead of difficult ones; therefore, they are easily understood.

The pricing strategy makes the products almost two times expensive relatively (Linzmayer, 33). However, the fulfillment consumers derive out of it justifies the price. As the company kept on growing, its products drastically improved. Currently, everyone in the technological market talks about Apple since the company is well-known for innovation.

Some of the factors that Apple has enjoyed and boosted its growth include customer loyalty and the growing closed ecosystem. Earlier, closed ecosystem has been a setback for business, but currently it supports the operations. Apple now possesses a variety of applications, products and software. Production of new products and supplements at a fast rate has expanded the ecosystem.

In addition, strong loyalty from clients gives Apple a competitive edge. Another reason that serves as a plus to the Apple Company is the reality that it has strong financial backbone (Hitt,43). Apple Company is one of the leading organizations in terms of profitability.

By the end of year 2012, it was estimated that the company had $10,000,000,000, with gross profit margin totaled to be 43.9%, which was far greater than its competitors’ financial indicators. Extra cash is channeled into business activities like acquisitions, purchasing back of the company shares among other things.

Innovation in mobile handsets technology plays a crucial role in a success of the company. In 2012, for the third time, Apple was awarded as the most innovative company in the world. As a result, the organization has capacity to bring technologically innovative products to the market. Apple also enjoys global reputation (Hitt,45).

The company has a world reputation because its products are technologically up to date and well structured. In addition, its products function well. The Apple brand has the property value of $76.5 billion. Moreover, the company has a well-coordinated marketing team and it takes pride in it. This is achieved through the building of superior stores (Hitt,45).

Product Threats

Despite the great opportunities, which Apple Inc. enjoys, the company is facing some threats that pose a great challenge to its business. The demise of Steve Jobs, who has played significant executive role in engineering of the company to its present position, is a major threat. Deep managerial questions arise as to whether his predecessor will keep the track record that has been already established.

In addition, the company is facing challenges of the legal environment, which have chances of curtailing its operations. For example, the lawsuit brought by HTC in which Apple was alleged to have used various patented technologies belonging to the claimant (Young, 110). This stands as a time bomb to Apple.

Competitive Analysis

Another big threat for Apple is the competition from other companies in the technology industry. It is noted that Apple is ranked as the second company in the world after Korean Samsung. This provides the greatest competition in the industry. In Europe, we also have the fast growing Android tide. While there is no doubt that Apple’s products, especially the iPhone, face a great success, the Android platform has started to overtake it.

This is attributable to the finely designed Google software (Young, 113). If Google keeps this momentum, then we will expect tough competition between the two producers. Google also released their Operating System: the Google Chrome, which is now implemented into net-books with users being able to access a variety of contents online as well as surfing the web. This has an impact on the computer sales of the Apple (Hitt,47).

Another potential competitor of the Apple is the Microsoft. The company is in a process of developing Windows Phone 7, which is a direct target of the Apple’s iPhone. Also, the software is admitted to be one of the latest version after the touch screen.

As a result, this move will challenge Apple drastically. Therefore, it is very necessary for Apple to become more creative and come up with competitive strategies due to the new entrants (Hitt, 49).

Demographic Characteristics of the Target Market

Apple has put in place a number of strategies to remain ecologically friendly. For instance, all the company’s data centers completely rely on power retrieved from renewable sources like wind, solar, geothermal and hydro. The products are designed such way that they are environmentally friendly and efficient.

Demographically, the iPhone and iPod have hit their highest rates of usage among the adults in Asian, White and Non-Hispanic market (Young, 117).

It is estimated that 52% of Non-Hispanic adults use the iPod online and the rate of the usage by Hispanic adults is roughly 42%. Currently, Apple maintains over 408 retail stores as well as online stores in fourteen countries. In African markets, the products target the medium and rich layers of the society.

Works Cited

Hitt, Michael, Duane Ireland, & Robert Hoskisson. “Strategic Management Cases.” Competitiveness and Globalization. 2012. 43-50. Print.

Linzmayer, Owen W. “Apple confidential 2.0.”The definitive history of the world’s most colorful company. 2004. 31-39. Print.

Young, Jeffrey, & William Simon. “iCon.”Steve Jobs, the greatest second act in the history of business. 2005. 110-115.Print.

“The Mismanagement of Customer Loyalty” by Reinartz & Kumar

The article in question entitled “The Mismanagement of Customer Loyalty” is written by Reinartz and Kumar (2002). The article deals with a very important issue concerning developing relationships with loyal customers. The present research is well-grounded as it is based on the analysis of three companies: “large US mail-order company, a French retail food Business, and a German direct brokerage house” (Reinartz & Kumar, 2002, p. 5).

The researchers point out that it is believed that loyal customers tend to pay more, to require less attention and to be word-of-mouth marketers. However, Reinartz and Kumar (2002) argue that this belief does not have proper background. The researchers prove that many loyal customers do not fit the description mentioned above.

The authors analyze each point of the ‘conventional’ description of the loyal customer. It turns out that each point of the description is arguable. Thus, the researchers claim that loyal customers often require discounts for their loyalty, they are not that active word-of-mouth marketers. Besides, companies often spend far too much money to stay in touch with their loyal customers.

Therfeore, the reserchers claim that it is important for companies to be able to let customers go when necessary. Apart from this, the researchers provide several strategies to measure the level of customers’ loyalty. Notably, Reinartz and Kumar (2002) provide a brief description of three major types of ‘loyal’ customers: “true friends”, “enjoying butterflies”, “smoothing barnacles” (p. 10-11).

Finally, the researchers provide possible ways to treat different types of ‘loyal’ customers to decrease expenditures and, at the same time, to increase profits. The researchers depict quite easy methods which can be used by any company. The researchers also note that there can be no single way to develop communication with customers as well as there can be no single strategy of making customers more loyal. However, marketers can use existing techniques and strategies, combine them and work out their own ways. More so, the researchers conclude that development of technology opens up new horizons for marketers.

Key points

One of the major findings of the present research is the fact that loyal customers do not necessarily make profits. The researchers provide evidence that communication with loyal customers often leads to extra expenditure. Admittedly, this finding can (or rather should) change marketing strategies of many companies. The authors claim that companies should reshape their communication with loyal customers.

Thus, the researchers argue that marketers should continue close connections with ‘profitable’ customers while ignoring unpromising customers. It is important to note that the researchers suggest certain ways to communicate customers. Thus, profitable customers should feel the company’s care, but the company should not cross the line. Admittedly, many marketers make the same mistake sending loads of emails to loyal customers, which often has a reverse effect.

The researchers give advice to balance communication. As for unpromising customers, the researchers suggest to ignore them as this will enable companies to save a lot. Notably, the researchers point out when it is really necessary to let the customer go and when it is possible to try to enhance his loyalty.

Such approach can reshape the major trends in marketing. Thus, instead of chasing for ‘loyal’ customers, companies will, first, be able to understand whether the customers are really loyal. Marketers will be able to estimate profitability of their loyal customers. Secondly, companies will be able to sort customers which will enable them to allocate their funds properly. Remarkably, the researchers also depict some successful techniques to measure customer loyalty.

The article under consideration shows that this process is not that difficult and effort-consuming these days. The researchers prove that it is rather easy to develop certain pattern of communication with this or that customer if the company has certain data. It goes without saying that this will help companies to allocate their funds more effectively.

Follow-on research

It is important to note that now researchers are aware of the dual nature of loyalty of customers. On one hand, researchers understand that customer’s loyalty is one of the most important factors to take into account when developing various strategies for companies. On the other hand, many researchers as well as marketers understand that it is still important to focus on profitable loyal customers. Thus, Pitta et al. (2006) exploit major principles stated in the article under consideration.

The researchers point out that companies should work out various strategies for profitable loyal customers only. Apart from this, the researchers focus on the sphere of online services. More so, Pitta et al. (2006) present the most effective strategies to acquire profitable loyal customers and to develop proper relationships between the company and such customers. Another interesting work by Kumar et al. (2011) focuses on factors that influence customer loyalty.

The research concentrates on telecommunication services sphere. The researchers claim that operations speed often enables companies to acquire new customers, whereas operations dependability leads to customer loyalty. It is important to note that the three articles have much in common.

However, Reinartz and Kumar (2002) focus on the essence and significance of different levels of loyalty. Whereas, the other two articles dwell upon effective strategies to win customer loaylty. This fact suggests that now people have acknowledged the difference between profitable and non-profitable loyal customers. Now the major concern of researchers is to work out effective strategies to enhance loyalty of profitable customers.

Applications

Admittedly, the article under consideration does open up new horizons for marketers. Reinartz and Kumar (2002) analyze the essence of such notion as the loyal customer. The researchers unmask certain myths concerning customer loyalty. Thus, marketers have acknowledged that there are different types of loyal customers: profitable and non-profitable.

Undoubtedly, this understanding will enable many companies work out effective strategies of communication with their profitable loyal customers. Previously, it was believed that companies should develop proper communication with all of their loyal customers. Of course, this often led to ineffective allocation of funds as many loyal customers were not profitable ones.

However, now companies can start with sorting their customers. There are at least several techniques to sort loyal customers. Thus, loyal customers can be placed in several groups (at least three groups suggested by Reinartz and Kumar (2002)).

When the company understands which customers are profitable (or can soon become profitable), the company can focus on those customers allocating the funds effectively. Therefore, it is possible to conclude that the article under consideration contributed greatly to the development of effective marketing strategies in the field of customer loyalty. Now marketers can fosuc on developing precise communication patterns with particular groups of customers (depending on the level of their loyalty).

References

Kumar, V., Batista, L. & Maull, R. (2011). The impact of operations performance on customer loyalty. Service Science, 3(2), 158-171.

Pitta, D., Franzak, F. & Fowler, D. (2006). A strategic approach to building online customer loyalty: Integrating customer profitability tiers. Journal of Consumer Marketing, 23(7), 421-429.

Reinartz, W. & Kumar, V. (2002). The mismanagement of customer loyalty. Harvard Business Review, 80(7), 4-12.

Implications of Loyalty Program Membership and Service Experiences for Customer Retention and Value

Introduction

The article selected for this critique is titled, “Implications of Loyalty Program Membership and Service Experiences for Customer Retention and Value”. The authors of the article are Ruth N. Bolton from the University of Oklahoma, P. K. Kannan, and Matthew D. Bramlett, from the University of Maryland.

The article was published in the year 2000 on the Journal of the Academy of Marketing Science by the Academy of Marketing Science. In the 14 page article, the authors have endeavored to examine how organizations have for a long time sought to offer price discounts and enhanced services as a form of reward to preferred loyal customers.

Also, the article has also examined the increased prevalence of loyalty program across the different sectors of the service industries. In this regard, the authors have provided excellent examples of the companies whereby these programs have been implemented with success, such as the frequent buyer programs, as practiced by the hospitality and transportation industries.

Another excellent example of the application of loyalty programs in the service industry includes the co-branded credit card program that has been launched by General Motors, a program that seeks to allocate 5 percent of the amount of money that a loyal customer spend towards the leasing or purchase of a new car.

Also, the authors have provided the example of how, during a period of 6 months of travel, American Express has endeavored to provide their heavy card users with two airline tickets as a form of reward.

By and large, these programs are aimed at ensuring that the customer retention levels remain quite high in otherwise profitable segments through the provision of enhanced value and satisfaction to specific customers. In other words, it is more of an attempt by the loyalty card providers to ensure that those customers who have already enrolled with their loyalty card membership program continues to do business with them, and not with their competitors.

For instance, the authors indicate how a majority of the preferred shopper programs as implemented by the supermarkets have the heavy users as their main target. In this respect, the authors argue that in undertaking these programs, the management of such establishments contends that increased customer loyalty and satisfaction impacts positively on the long-term financial performance of such business establishments.

In undertaking the study, the researchers intended to answer a number of questions: Is customers’ satisfaction with the company or product/service enhanced by the loyalty programs? Do the loyalty programs improve the product/service usage levels as well as the duration of provider-customer relationships?

In answering these questions, the authors are convinced that the study the service organizations would find it useful in deciding if the revenue that they generate out of these programs exceeds their cost of implementation. In addition, the authors also intend to assess if at all the loyalty card membership programs can ensure that the loyalty card providers realize a higher level of profitability in comparison with such retention strategies as service guarantees.

The authors argue that previous studies in the same field have managed to impact positively on customer satisfaction in as far as their usage behavior and loyalty are concerned.

As a result, there is the likelihood that in the long-run, such loyalty reward programs would also impact positively on the purchase behavior of the customers, on condition that the customers experience a satisfactory purchase behavior. What this means is that the usage levels of customers, along with their evaluation of service experience, acts as a moderator of the rewards programs.

Literature review

In reviewing of the related literature, the authors of this article have made use of previous studies on customer’s repurchase behavior. To do this, the authors have sought to explore the reasons why customers may decide to enhance relationships with those who provide services to them, such as repurchase behavior, customer evaluations, and repatronage intentions.

In an attempt to capture the theme of repurchase behavior, the authors have made use of prior longitudinal studies that have been carried out to determine the repatronage behavior of customers, over time. In this regard, the intention by customers to continue using the services of a given service provider depended on the overall satisfaction that they have had with such a particular service provider.

In addition, when a customer has had an extensive experience with a given service provider, in effect meaning that the existing customer-company relationship is also longer, such a customer is also likely to conduct repeat business with the company in question. In addition, the authors of this article have documented different reasons as to why customers may manifest switching behavior in the service industry.

Some of the reasons given by the authors include core service failures, pricing, unfulfilled service encounters, inconvenience, competition, and ethical problems. In addition, the authors reveal that the decision by customers to utilize services provided to them depended on how they evaluate the payment levels, previous levels of satisfaction, and the prices (for example, (Bolton 1998; Bolton and Lemon 1999; Jones and Sasser 1995).

In addition, the authors have also cited a number of cross-sectional studies whereby repatronage behavior relied heavily on a customer’s previous satisfaction.

On the issue of repurchase intention, the authors have cited a number of longitudinal studies in which the previous repatronage intentions of customers has been seen to impact directly on their successive repatronage plans. With regard to the impact of the loyalty program membership, the article has examined the role played by regret and how the decision context determines the choice made.

In particular, performance information regarding unavoidable options may have a significant effect on post choice evaluation. A competitive marketplace shall have nonmembers and members of a loyalty program that have already familiarized themselves with the competing service providers.

There is a higher likelihood for a majority of the customers to have experience with for instance, multiple financial institutions, multiple airlines, and multiple long-distance firms, among others.

Nonetheless, there is a higher likelihood for loyalty program members to be less-certain and less-knowledgeable regarding the performance of the service alternative in competition, in comparison with nonmembers since they tend to be more experienced with their present service provider.

The repatronage behavior model that has been adopted by the present study entails two vital components regarding the repatronage decision: a decision to either repurchase, or not (that is, cancel/stay credit card membership), and a decision on the usage level of a service (that is, how many transactions a user made in the successive year).

In addition, the authors of the study also came up with the following hypotheses:

  • Hypothesis 1a: There is a positive impact of the repatronage intentions of customers on their successive repatronage decision
  • Hypothesis 1b: Loyalty programs members are more likely to heavily assess repatronage intentions in comparison with nonmembers while executing repatronage decisions.
  • Hypothesis 2a: The decision by customers to evaluate the prevailing experiences less satisfactorily in comparison with the service levels of competition negatively impacts on the apparent inconsistency on their repatronage discrepancy, even as the experiences assessments of customers tend to be more satisfactory in comparison with the service levels of competitors.
  • Hypothesis 2b: members of loyalty programs are more likely to weigh comparisons of services offered by their current providers with those of the competition less heavily when compared with nonmembers as they seek to make repatronage decisions.
  • Hypothesis 3: when the comparison levels of customers’ satisfaction with their service providers with the services of competitors suffer from a negative discrepancy, the ensuing repatronage decision tends to be larger, in comparison with a positive discrepancy.
  • Hypothesis 4: There is the higher likelihood for customer experiencing comparable services to integrate them into their subsequent repatronage decision.

Methods

In an attempt to estimate the model for the study, the researcher made use of time-series, cross-sectional; data obtained from a global financial service organization that provides a loyalty reward program.

In particular, the study stresses on credit card customers of some three European nations. The loyalty program in question is also open to any cardholder, regardless of their level of usage. A fee is normally charged so that one can become a loyalty member, and it differs from one country to another.

When loyalty program members purchase different services, they benefit from an accumulation of points. Later, they have a chance to redeem the points in the form of different goods and services, including air certificates, vacation options, car rental, and retail gifts. A sample of some 405 customers from some three different European countries was identified for this study.

The database entailed usage behavior data and customer survey from November 1995, up to November 1997. The databases entailed information regarding if between March 1996 and November 1997, the customer had decided on canceling services, along with the actual dates of such a cancelation.

A panel design was used to assemble this data, whereby various waves of the usage of service records and survey measures were achieved from related customers. Descriptive statistics were used to calculate and summarize the various variable of the study.

Analysis

The suggestion offered by the study findings pears to indicate that the decision by customers to choose repatronage decisions in as far as the credit card service is concerned largely depends on their earlier repatronage behavior or intentions, as informed by comparison with the satisfaction levels that they have realized from the organizations in question, in comparison with the amount of satisfaction that they have realized from competitors.

Nonetheless, it is essential to note that the comparison of the customers could be somewhat complex, seeing that customers have a tendency to make comparison on the basis of diverse fundamental service dimension. In addition, customers are also more likely to weigh losses far more heavily in comparison with gains.

The fundamental conclusions about the impact of loyalty program that the researchers seem to have arrived as are as follows. By and large, loyalty programs members tend to be far less sensitive to losses within the context of the overall billing aspects and quality rating at a time when they are comparing the firm providing such services with its competitors.

On the other hand, loyalty programs customers tend to be far less sensitive to the general price gains that competitors are likely to have in comparison with the company. What this means is that loyalty program members discount or overlook negative assessments of a firm in comparison with the competitors.

Nonetheless, the researchers revealed that customers often tend to reduce these assessments while making their repatronage decisions. This observation has prompted the authors to deduce that the reason why customers react this way is because of harboring a perception that they might, in fact, be getting better services and quality for the price that they pay, that is they are getting a “good value” for their money.

As a result, the authors postulate that a relationship between loyalty program membership and the perception of good value exists. On the basis of the foregoing argument, is it conceivable then to claim that when one belongs to a loyalty program this result in customers perceiving good value? Better still, does the perception of “good value” by customers ensure that they become loyalty program members?

Whereas this could be quiet difficult to infer on the basis of the narrow scale of the survey questionnaire that the researcher of the study has utilized, however, we need to realize that loyalty programs and vale hypotheses perception are complementary and are thus vital in the establishment of long-lasting relationship with one’s customers.

Conclusion

In summary, the researcher of the present study has inferred that the loyalty programs as developed by credit card companies seemingly enhances the perceptions of customers of value proposition, in effect resulting in customers to reduce their assessments of the firm in comparison with competitors as they endeavor to make their repatronage decisions.

The observations by the present study are in agreement with the conventional idea that loyalty rewards programs offer a chance to build stronger, deeper and stronger relationships with customers. The statistical assessments carried out by the researchers reveal that the loyalty programs offered by credit card companies result in enhanced revenue owing to increased service usage levels and fewer cancelations.

Critique

The topic of this article helps to further shed light on the fact that although companies seeking to offer their loyalty customers loyalty reward programs could be convinced that these programs tend to impact positively on customer behaviors and evaluations, in the long-run, on the other hand, in case of increased usage levels and durations by these loyalty reward programs, there is the likelihood that this could, in fact, help to expose the customers in question to a wider range of service experiences, such as would result in the customers switching their service provider.

Since the article has also endeavored to assess the necessary conditions in order that a reward program may have a positive impact on customer behaviors, evaluations, and repeat purchase intentions, this information would be useful in helping to enhance organizational effectiveness in the UAE.

The introduction section of the article starts by exploring the issues of rewarding loyal customers by organizations from a historical context, then narrows down to the current practices regarding the same issue.

The authors have also provided excellent examples of modern-day organizations in which the loyalty reward programs have been implemented with success. Finally, the introduction section provides an outline of what the rest of the article shall entail, in effect giving the reader a preview of the study.

The review of literature by the article is quite elaborate and comprehensive. For example, the authors provide the reader with a perspective on loyalty rewards programs from prior studies, in effect helping to establish a foundation for the study’s modeling effort. In addition, the authors have also made use of diverse and credible cross-sectional and longitudinal studies to further gain an insight into the research.

Moreover, the authors provide an elaborate estimation model of the impact that a loyalty program would have on the decisions by customers to repurchase a given service, in addition to their decision regarding the usage rate of a given service.

This is important because it helps to form an ideal foundation for answering the research questions. The study has also included hypotheses that need to be tested. Besides, the researchers have also endeavored to review the literature on these hypotheses, in effect allowing them to make coherent predictions of them.

Some of the strengths of the article include sufficient and credible reference sources, a coherent definition of the research problem, and an in-depth analysis of the reviewed sources and research findings. On the other hand, the article lacks in the use of definite subtitles, such as an introduction, literature review, and methodology, among others, thereby making it rather hard for the reader to connect the flow of the article without first having to read through it.

The present article contributes to a broader body of knowledge in strategic management by way of examining the need for a company to quantify the influences that a loyalty rewards program has on such future purchase behavior as usage levels.

Since there are only a limited number of studies that have thus far been undertaken on the impact that the loyalty programs have on the purchases of customers or on the financial outcomes of a company for that matter, the present study as reported by the article under review helps to further shed light on the impact that services experiences and loyalty program membership has on customer value and retention.

The study findings further helps to draw a correlation to the conventional idea that loyalty rewards programs act as a chance to establish stronger, deeper and longer relationships with customers.

In terms of readability, the reader does not find it hard to comprehend the ideas. In addition, the authors have not used technical terms and therefore, this makes it possible for readers from diverse educational backgrounds to comprehend the ideas obtained therein.

The article would, therefore, be of enormous benefit to academicians as it could enable them build on their existing body of knowledge regarding the effects that service experiences and loyalty programs membership has on customer value and retention. In addition, the article acts as a credible source of reference for the academicians when they decided to conduct related studies.

On the other hand, the practitioners would find the article valuable in their quest to develop policies that companies offering loyalty reward programs needs to follow while implementing their programs.

Works Cited

Bolton, Ruth. A Dynamic Model of the Duration of the Customer’s Relationship With a Continuous Service Provider: The Role of Satisfaction. Marketing Science, 17.1(1998): 45-65.

Bolton, Ruth and Bramlett, Matthew. Implications of Loyalty Program Membership and Service Experiences for Customer Retention and Value. Journal of the Academy of Marketing Science, 28.1(2000):95-108

Bolton, Ruth and Lemon, Katherine. A Dynamic Model of Customers’ Usage of Services: Usage as an Antecedent and Consequence of Satisfaction.” Journal of Marketing Research, 36. 2(1999): 171-186

Jones, Thomas Sasser, Earl. Why Satisfied Customers Defect. Harvard Business Review 73.6(1995): 89-99.

Loyalty Schemes Effect: Information, Finance, and HR Management

Introduction

Design and introduction of loyalty schemes can be considered one of the last strategies that a company can apply to its operation in case of failures in all other strategies aimed at incensement of revenue. In other words, potential success from implementation of loyalty schemes can be treated as uncertain due to the ratio of number of failures and the number of successfully implemented strategies.

Successful examples can be drawn from the Nectar and Starbucks companies that have succeeded in implementation of loyalty strategies due to the involvement of specific points that can be collected via the cards and spent in the form of special offers. In this respect, it is possible to analyse the effectiveness of loyalty schemes with regard to the influence on business resources such as information management, financial management, and human resources management.

Design and Implementation of Loyalty Schemes

Design and implementation of loyalty schemes should be justified by the company’s economic and financial opportunities and difficulties. As customers’ loyalty principles are not always dependant on the genuine loyalty as the emotional condition, appealing schemes and approaches are used in the form of customer loyalty schemes so that customers can benefit from use of this brand products and services where the company can increase its revenue in this way.

Information management. The information management can be influenced by the implementation of the loyalty schemes as well as be impacted by these schemes. For instance, the Nectar Company expended into Italian market to address a larger audience because their services include franchising in different areas such as online stores and travelling, food and drinks at special offers, insurance and credit cards, as well as other types of companies are engaged into collaboration with the Nectar (Nectar 2010).

However, the actual problem of the information management concerning the loyalty schemes is related to franchising as the approach that does not help to build the customer’s loyalty and brand recognition. The process of expanding the network is aimed at increasing the gross revenue of the company by involving more products and services that can be used to build customer loyalty principles.

The main function of the customer information management is to facilitate the operation of customer segmentation strategies by figuring out the values and preferences of customers via customer loyalty schemes. Thus, the company Starbucks is known for its website construction where a customer can learn about the products available through the stores.

Besides, the Starbucks stores are considered one of the ways to inform the customers about the brand and build loyalty (Starbucks 2009). In addition, if a company fails to use the information management to improve responsiveness to customers’ preferences and expected incomes, the loyalty schemes can be considered ineffective and should not be used.

Financial management. The issue of financial management should be considered while analysing the ways this business factor can influence the loyalty scheme and vice versa. In this respect, it is necessary to assess the ways loyalty schemes are incorporated in terms of financial management in Starbucks and in Nectar.

So, the loyalty schemes should be adequately incorporated by means of implementation of a common accounting system. However, this strategy is sure to increase expenses making the loyalty scheme implementation and design ineffective. In other words, the design of the loyalty scheme should be aimed at effective operation of costs within the organisation including franchisees and other partners involved into the loyalty scheme.

The research on customers’ loyalty should be conducted as a part of the loyalty scheme with regard to financial management strategies. This research can be conducted by the company. Assessment of responses received from customers on the quality of services and goods can be used to provide customers with higher quality products though this should be included into mission of financial management team.

In other words, the customer loyalty scheme would operate effectively in a short period of time because specific financial management can be too cost-inefficient in terms of its design and implementation for a company. Different ways of spending collected points can be used to encourage customers buy more and collect more points as a part of the financial management that would increase the gross revenue of the company (Nectar 2010; Starbucks 2009).

Human resources management. The main strategy that concerns the human resource management should include proper training and consulting of employees so that they were able to meet the customers’ expectations and built up relations based on loyalty schemes.

In other words, the most effective way of involving human resource management into loyalty schemes is to make sure that all customers are treated at the highest and the most adequate level. Loyalty schemes would not work until customers feel their value and approach including special offers and specific attitude from the company’s representatives including franchisees.

The Starbucks Company uses special training to ensure that all employees are qualified in terms of preferences and needs of customers including those customers that are already loyal to the brand and potential ones.

The same can be told about the Nectar Company that deals in the area of multiple categories of goods and services provided to consumers. Both companies under consideration succeeded in the implementation of customer loyalty schemes; one of the factors that contributed greatly to their success is the appropriate human resource management.

In this respect, strategies aimed at improvement of customer’s responsiveness on changes implemented into operation and employees’ ability to built trust relations with customers should be highly beneficial for the overall loyalty scheme. Besides, the human resource management should be an integral part of the design of every loyalty scheme. Training and encouragement should be implemented into human resource management as a part of the loyalty building scheme.

Conclusion

To conclude, customer loyalty scheme is usually considered to be ineffective or time- and cost-consuming because a number of factors are influential for its successful operation.

In this respect, it is possible to view the examples of successful design and implementation of customer loyalty schemes into practice with regard to Starbucks and Nectar who have managed to build trust relations with customers through a chain of loyalty-building strategies. These strategies include information management, financial management, and human resource management.

In other words, incorporation of adequate training for employees is a part of effective human resource management for both companies; a number of stores and access to information about accounts, activities, and opportunities is a part of effective information management exercised by both companies. However, the financial management requires more costs on its implementation which does not prove to be effective for further operation of loyalty scheme.

Reference List

Nectar, 2010. Nectar. [online] Web.

Starbucks, 2009. Starbucks Coffee Company. [online] Available at: <>

Ways of Screening Employees for Security and Loyalty

Introduction

Tris Coffin wrote the article in 1995. He wanted to address one of the industry’s goals, which is to conduct an employee loyalty check. The government realized that there was a recurring problem in the American business world. This problem was finding an efficient employee loyalty and security check.

The security system had improved over some years and the loyalty check recorded that one out of every 10 adult Americans are loyal. This number included persons from all fields including schools, the armed forces, government, industry and the business world (Coffin, 1955).

The persons employed in industries or organizations that are involved in producing secret machines and weapons (defense contract) were constantly checked for loyalty and security.

This involved checking for their sobriety, inquiring about their beliefs in politics and other related issues. These checks had also been used in various other fields including the private businesses including the breweries, distilling plants, pharmaceuticals and the automobile industries.

The security system was initiated after the government understood that a group of federal employees was threatening to overthrow the government. The FBI was used to investigate on the issue.

These services extended to other military contracted companies where the military intelligence and FBI were used. Four years after initiation, four thousand loyalty complaints had been recorded. However, one thousand three hundred of the cases were disregarded since they were said to be baseless.

The pentagon provided certain standards that the staff had to attain. Attempts of espionage and sabotage were condemned. Standards against treason and sedition also existed. The defense production personnel were not expected to advocate for violence and force in order to attempt to change the government’s constitution.

Those who were suffering from emotional and mental instability were regarded as habitual offenders. They were not thought to posses the integrity and responsibility necessary for the security of classified information. The Chief Justice was worried about the security system since it disregarded some human rights.

Theoretical issues identified

It can be seen that the need for security of the American industry, businesses and government, a security system was developed. According to some observations, this system had no regard for the Bill of Rights. Despite being the world’s strongest nation, America was demanding for more strength and security from itself.

This sacrificed the citizens’ ancient liberties. Chief Justice Warren suggested that the temptation to imitate the totalitarian security methodologies should be resisted as much as possible. This was because it would not fade away.

The Industry Advisory Committee on Security was tasked with the role of researching on some of the issues faced as a result of the current security system and to provide tangible results, conclude and criticize the system. The committee was also to propose some changes that should be implemented in the future industrial security. The committee came up with several conclusions.

For example, one of the conclusions touched on an aspect of the human rights. They proposed that the employees holding jobs in the defense industry had important property rights. They are entitled to all considerations towards retaining that right. The public, industry and the labor industry criticized the present method of ensuring security.

They argued that there were points of weakness. However, Dickerman was quick to react to this by claiming that such accusations were irresponsible. He was a corporation lawyer and a former general counsel in the commerce department. He argued that those comments were made by employees who did not understand what communism was.

Due to the effects of the security system on the public’s attitudes and perceptions, the public have tended to believe that a security risk implies an act of espionage or communism. In this case, and individual who is considered a security risk is treated as an outcast.

However, observations made by Joseph Amann pointed out disparities in this misconception. He argued that most of the issues regarded as security risks were actually not security threats (neither subversive nor disloyal). He suggested that they were only normal human weaknesses such as being boastful or having the tendency of talking too much. This means that the judgment was very unfair and unnecessary.

Most of the leading aviation companies did not take cases of security threats lightly. Individuals who were suspected of being security risks were discharged immediately. The Republic Aviation Security Director of the time bluntly told associates that firing the employees was the answer to the security issue.

This attitude was common in many such industries. This was a great concern because many of the potential and useful engineers and scientists feared working. This is because they feared being rated as security risks.

This security system also implicated some costs that were regarded as excessive. This cost or financial loss may apply when a person who has had his or her security clearance revoked appeals (Coffin, 1955). The cost of making an appeal at the time exceeded as much as $3000.

This cost was not recoverable even if the individual won reinstatement after an appeal. The Industry Advisory Committee on Security argued that this amount could be reduced through the use of a more efficient system.

The security system also placed many companies at risk of being charged of unfair labor practices. This could apply as the companies try to comply with the security regulations.

They could also be charged for not being in sympathy with the basic civil liberties. Some companies argued that they were supposed to be compensated by the government in the event that they suffered loss after being charged for such cases and other related charges such as suits for libel.

The jobs of the defense workers were not secure since they could lose their jobs easily. They were prone to multiple jeopardy and a security clearance could be reviewed at any moment. This could have led to the worker being revoked. Therefore, security of tenure was not guaranteed.

Analysis of article in light of learning

According to the article, there are various aspects in the management of the industries, businesses and government bodies that work against employee loyalty. Some of the issues that have been identified include issues to do with lack of employee trust and lack of security of tenure.

The working environment has also been determined to be not conducive for working. These are among the things that are required for the success of an organization.

The loyalty and security checks instill a lack of trust in the employees and this is likely to affect the performance of the employees (Jukka, Anna-Maija, & Lipsanen, 2012). Those workers who feel a trusted have a greater sense of responsibility. They also give better performance at the workplace.

Research has suggested that those employees who feel trusted are more likely to rise to the expectation of the manager (Salamon & Robinson, 2008). They have been determined to perform better when it comes to sales and customer service.

According to Salamon and Robinson (2008), there was a difference between employee’s trust in the management system and the feeling by employees that they were trusted by management. Elements in the work design were studied. These elements included surveillance and training.

These shaped the perceptions of the employees concerning being trusted by the managers. According to the study, the behaviors and decisions of the managers significantly influenced the perceptions.

The authors suggested that it was important for the managers to communicate trust to their employees. They could do this by giving the workers the benefit of the doubt. They could also encourage them to use their own judgment when there is no procedure to follow.

This would invoke to the employee a sense of being trusted. However, in the article, surveillance of the employees was meant to look for loopholes in order to brand them as security risks. This meant that the employees were not trusted and the employees knew this very well.

Some of the potential and qualified personnel avoided being recruited in the organizations because they were too afraid to be branded the name. This would have compromised their future operations since they would be blackballed.

In the article, a lack of security of tenure has been demonstrated as the employees are fired from the workplace without proper reasons. Some of the cases provided show that some individuals who are regarded as security risks have been accused falsely.

This meant that the individuals could easily lose their jobs and be branded as security risks. Upon appealing for a reinstatement, one has to pay through the nose and the amount is nonrefundable even if one wins the reinstatement.

Security of tenure is important in the workplace. This ensures the protection of a person’s job and ensures that the employee does not suffer victimization for performing their duties or functions (Black, 1998).

This ensures that the employee only loses his job in the most extreme cases. Security of tenure ensures that there is no dismissal from work in an unjust manner and those that lose their jobs unfairly are reinstated. As they are reinstated, they lose no seniority rights or other privileges that come with it.

This includes their allowances. This is unlike the situation presented in the article since the individuals may lose their jobs without proper cause. The money lost during the appeal for reinstatement is not refunded either.

The existence of the security of tenure in the workplace also acts as a motivating factor for the employees since they are assured of keeping their jobs as long as they abide by the rules and regulations of the industry or organization. This also ensures that the employees work without fear.

The employees presented in the article have been shown to have great fears in the workplace since they may be dismissed at any time in the event of slight suspicions by management. They would actually lose jobs for mere suspicions and not facts.

The working environment presented in the article was an unhealthy one. This explains why the employees and public complained about the security system. However, the management was quick to dismiss their allegations.

A good working environment is important for the productivity of the workers and the efficiency and productivity of the entire organization. This ensures that the employees feel a sense of well-being and satisfaction at the workplace (Loveman, 1998).

Identified gaps

One of the identified gaps in the article is the need for employee loyalty in the industry. It only talks of a way of screening for their loyalty. In the absence of employee loyalty in the organization, the remedy for the organizations is to dismiss the employees.

The organizations do not realize the importance of employee loyalty to the well-being of the organizations. Some of the activities actually tend to reduce employee loyalty. For example, without the security of tenure, the employees do not feel safe in the workplace. Their employment is not guaranteed. This is because they would easily lose their jobs due to suspicions of being security threats or risks.

Since the individuals are screened and surveillance of their activities conducted, the employees feel that they are not trusted by authority. This does not help improve employee loyalty and those with an option of going to work elsewhere would do this without a second thought.

In the article, it has been noted that some of the qualified engineers and scientists avoided the defense work. This was because of the exaggerated fear of being referred to as a security threat. The employees lacked trust in the management and (at the same time) felt that the management did not trust.

Conceptual differences and similarities when applied to context

One of the similarities between the concepts brought about in the article and those related to readings is that the security of certain aspects of the organization is critical. Certain organizations dealing with the country’s security matters need to keep some information confidential.

When such information is exposed to the public or to other undeserving individuals, this might lead to a breach of internal security. This explains the importance of the screening procedures. The employee loyalty would be vital to ensure this information is kept within the organization.

However, threatening employees is not a way of ensuring their loyalty and guaranteeing the security of confidential information. This is where the differences come. Every employee (even those doing defense work) need to have a sense of pride in the place of work.

They need to be able to derive satisfaction in their work. This can only be realized if they are comfortable enough at the workplace (conducive environment). They need to be certain that they would not lose their job due to unfair reasons (security of tenure). They also need to have trust for the management and feel trusted by the managers. They are not an exception from other employees working in fields not related to security.

Summary

The article by Tris Coffin seeks to find a proper way of screening employees for security and loyalty. The article looks at the security checks performed to employees working in the field of defense but also suggests that the procedures are in use in other fields not related to defense.

The workplace in the industry and businesses is displayed as one that lacks security of tenure and lacks motivation. Despite the need for security and loyalty checks by the management, it is vital to ensure that the employees are motivated through ensuring their security of tenure and ensuring trust in the workplace (Jukka, Anna-Maija, & Lipsanen, 2012).

References

Black, C. (1998). Impeachment: A handbook. London: Yale University Press.

Coffin, T. (1955). Industry goal: Simple employee loyalty check. Nation’s Business, 43(12).

Jukka, S., Anna-Maija, L., & Lipsanen, B. (2012). A trust-focused model of leaders’ fairness enactment. Journal of Personnel Psychology, 11(1), 20-30.

Loveman, G. (1998). Employee satisfaction, customer loyalty and financial performance. Journal of Service Research, 1(1), 18-31.

Salamon, S., & Robinson, S. (2008). Trust that binds: The impact of collective felt trust on organizational performance. Applied Psychology, 93(3), 596-601.

Behavioural Brand Loyalty Requires Deep Attitudinal Attachment to the Brand

Every company would like to develop and maintain a strong brand. A strong brand name is a marketing tool whose benefits accrues for a lengthy period; these benefits include customer loyalty, positive responses to changes in prices, minimization of marketing risks and offers a chance for brand-extension (Ehrenberg. and Scriven, 1996).

Behavioural brand loyalty is conscious or unconscious brand identity by a consumer; it requires deep attitudinal attachment to the brand (Keller, Aperia and Georgson, 2010).

This paper defends the motion, “Behavioural brand loyalty requires deep attitudinal attachment to the brand”; it will use Coca-Cola and Mercedes Benz as sample brands.

Brand identity

To attain brand loyalty, a company must ensure its products are differentiable in the market; this call for high quality good and making brand salience, the brand should be on top of a consumers mind so that they are willing to decide without much of consideration on the brand (Delgado-Ballester and Munuera-Aleman, 2005).

It involves having a psychological attachment where a mention of certain industry products creates a stimulus in a consumers mind. For example, by the mention of soft beverages, Coca-Cola Company has ensured that customers will think of the company first, in a rather unconscious way.

The mention of a soda is sometimes associated with Coke- the most sold brand by Coca-Cola Company. It has created the need for emotional attachment with the brand (Scriven and Ehrenberg, 1994).

Consumers’ attitude and behaviour

Consumer attitude goes a long way in influencing the choice of brand; attitudes are created by experiences with the brand, information from other people who have had an experience and it is subject to marketing and advertising tools implemented by a company (Fournier and Yao, 1997).

Consumer behaviour keeps changing, they are persuadable though a company with a strong marketing team can correctly predict consumer behaviour and implemented appropriate strategies.

Having a strong brand awareness campaigns that ensures customers can recall involves creating mental attachments like brand names, logos and symbols.

When this has been effected, then customers will be willing to buy a company’s products without much consideration (Fennis and Pruyn, 2007).

Mercedes Benz manufacturing company has invested in creating mental pictures about the brand; it is believed that the model is classic, expensive and has status. It is seen to have a “niche” products kind of approach because of its uniqueness and division of the market between those people who want their social status respected in the society.

Customers who have purchased the brand in the past are operant conditioned to believe they have made it to a higher class than their counterparts who have other models like Toyota.

For such a customer to buy another model, his mental picture as moulded by the company will show him or her that he is losing status, something that consumers will always fight against, the end result is brand loyalty and attachment (Reast,2005).

The longevity that Coca-Cola Company product has had in the market has favoured the company in creating positive attitude towards its products (Odin, 2001). For a larger population in modern world, they are younger than the brand. Since childhood, the brand name has been triggering in the mind of a person.

He grows believing that a soft drink in a soda from the company. The positive attitude created by the company has made it easy to have effective brand extension with the latest as Coke Light a brand extension of Coke brand. Believes of the people which run down generations is that the company has unique products and is superior.

The company has invested in understanding consumer behaviour; consumers keep changing with economic, social and age changes, the company keeps evolving with the needs of the customer.

For example, with modern busy world where people are busy hopping from one place to another, it is rather difficult for someone to sit back and enjoy a bottle of a soft drink, realizing this, the company came up with disposable bottles soft drinks, the response has been positive (Dall’Olmo Riley, 1997).

Brand depth and breath

Brand depth and breadth refers to how well a customer can recall, recognise and differentiate a company’s brand. Human memory can be conditioned to recall certain commodities that are of value to the human beings, having a brand that lingers in the mind of the people assists in developing behavioural brand loyalty (Jacoby and Kyner, 1973).

People aims at minimizing their sorrow and maximizing their utilities, they thus are likely to remember of two major situations, a situation where they had a pleasant experience and one that they suffered. With the two in mind attitude towards a certain product is formed and reinforced (Wanke, 2007).

What a company should aim at is having good customer experiences where it ensures they get higher utility from its products than they get form competitors. They will have positive attitude from the customer.

Pleasant experience with consumers can be created by a combination of different elements like brand quality, corporate social responsibilities and company moving with the moods of a customer (East, Wright and Vanhuele, 2008).

During festive seasons, people are willing to spend and rejoice Coca-Cola Company recognises itself with the season, with the aim of leaving a pleasant experience in the mind of the people during and after the period.

In most cases, it is around this time that the company embraces competition campaigns as it reads the behaviour and moods of the people. At the end of the day since people are rejoicing, when they latter count for the joy they had, Coca-cola products are mentioned.

This creates a positive attitude towards the product. This is a brand imaginary approach where the company builds on extrinsic properties of a product (Dick and Basu, 1994).

Brand responses and meaning

It is apparent that rational people are likely to develop a liking to brands they can attach some meaning and value to them (Vanden, 1987). They will respond positively to such brands than those brands that are in the market but are silent in the way they interact with communities.

In this sense the need for corporate responsibilities, activities by a company are important since they create a close link between consumers and a company.

With appropriate measures, consumers are likely to perceive a company with strong social corporate team as “their” company and increase their loyalty unconsciously. Their attitudes towards such a brand will be positive working for the benefit of the brand (Baldinger and Rubinson ,1996).

Conclusion

Attitude affects the behaviour of customers; developing and maintaining a strong brand loyalty involves a reinforcement of positive attitude towards a company’s products in target market (Reast,2005).

Consumers acts consciously and unconsciously when making a decision on the products they will buy; their psychological predispositions, attitudes, beliefs and mental pictures influence their decision.

It is paramount for a company to invest in developing a positive attitude of customers toward its products not only for short-term sales but also for continued customer loyalty; it should aim at leaving a memorable experience that will trigger brand identity and loyalty.

Rational consumers develop emotional and attitudinal attachment to those products that meets their needs and offers a higher utility (East, Wright and Vanhuele, 2008). Attitude is final product of a number of mental attributes, like behaviour, socialization and operant conditioning.

It is hard to change somebody’s attitude thus when customers have strong attachment with a certain brand, changing persuading them buy other products is not easy, thus the statement “Behavioural brand loyalty requires deep attitudinal attachment to the brand” (Wanke, 2007).

Coca-Cola and Mercedes Benz brands have remained as market leaders because of their reinforcement of positive attitude reinforcement with their target market.

References

Baldinger, A. L. and Rubinson, N.,1996. Brand loyalty: the link between attitude and behaviour. Journal of Advertising Research, 36 (6), pp.22-34

Dall’Olmo, F. et al.,1997. The variability of attitudinal repeat-rates. International. Journal of Research in Marketing, 14 (5), pp.437-450.

Delgado-Ballester, E. and Munuera-Aleman, J.,2005. Does brand trust matter to brand equity?. Journal of product and brand management, 14 (3),pp.187-196.

Dick, A.S. and Basu, K.,1994. Customer loyalty: toward an integrated conceptual framework. Journal of the Academy of Marketing Science, 22 (2), p.99-113

East, R.., Wright, M. and Vanhuele, M.,2008. Customer loyalty’, Consumer Behaviour. Applications in Marketing. London: Sage Publications. p.27-47

Ehrenberg, A.S.C. and Scriven, J.,1996. Brand loyalty under the microscope. Economics and Business Education,. 4(16), pp.155-160.

Fennis, B.M. and Pruyn, A.T.H., 2007. You are what you wear: brand personality influences on consumer impression formation. Journal of Business Research, 60 (6), pp.634-639

Fournier, S. and Yao, J.,1997. Reviving brand loyalty : a re-conceptualization within the framework of consumer-brand relationships. International Journal of Research in Marketing. 14(5), p.451

Jacoby, J. and Kyner, D.B.,1973. Brand loyalty vs. repeat purchase behaviour. Journal of Marketing Research. 10 (1) ,pp.1-9.

Keller, K. L., Aperia, T. and Georgson, M., 2010. Strategic Brand Management, A European Perspective. Harlow: Prentice Hall

Odin, Y. et al.,2001. Conceptual and operational aspects of brand loyalty: an empirical investigation. Journal of Business Research, 53, (2), pp.75-84.

Reast, J.D.,2005. Brand trust and brand extension acceptance: the relationship. Journal of Product and Brand Management, 14 (1), pp.4-13.

Scriven, J. and Ehrenberg, A.S.C.,1994. Brand loyalty: now you see it and now you don’t. Marketing and Research Today. 22(2), pp.99-106.

Vanden, B. G. et al.,1987. Linguistic distinction among top brand names. Journal of Advertising Research, 27(4), pp.39-44.

Wanke, M. et al.,2007. Brand name influence on brand perception. Psychology and Marketing, 24 (1), pp.1-24

The Challenges Facing Marketing Managers Who Have the Strategic Intent to Increase Customer Satisfaction, Trust, and Loyalty

Abstract

It is difficult to achieve something in this world, a world they called a global village. There are computers and high technology tools available for us to make like easy.

But life has always been difficult, more so with marketers and people who have the intent of introducing or selling a product to the world. You may be successful today, tomorrow might be for another person’s triumph.

That is because of the stiff competition in the world of business, in the world of selling whatever there is to sell.

In the age of intense globalization, changes and innovations are not a rarity. The world of business is constantly facing new innovations and applications, thus marketers have to cope with constant change.

Managing change should be one of the priorities of the new global organization; change is an opportunity for improvement. The marketer has to adopt and continuously train and improve because of these changes.

Adoption and improvement are significant here because outsourcing companies (or those who provide outsourcing services) are a source of competition. This means there is a strong competition when it comes to talents and capabilities and output.

Organizations have to introduce various changes in their marketing strategies, product orientation, employee management, and other organizational strategies. Cultural diversity is a trend in the age of globalization.

Marketers have to choose between adaptation and standardization in their products and marketing strategies in order to gain an edge in the competition. The demand for localized products is also growing.

Adaptation is one innovation that marketing organizations have to apply in their marketing strategies to adjust to cultural differences.

Introduction

In the age of globalization, knowledge is both a product and resource. Organizations are now focused on knowledge-based economies, and are more concerned with the knowledge people possess; this is termed ‘people-embodied knowhow’.

Firms take care of their workforce because of the knowledge they possess. They have invested much on their workforce.

Organizations aim for talents and customer’s focus and loyalty. This is the job of the marketing manager. But firms also see the importance of focusing on their employees because they see the relation between contented employees and contented customers. Satisfied employees result in satisfied customers.

Meeting the customer’s needs and wants is a business trend in the age of globalization. Organizations now aim for customer loyalty while keeping cost of production low.

This is shooting two birds in one shot but difficult to achieve; difficult because meeting the customer’s needs and wants at the same time minimizing cost of production do not ensure quality product or service.

Customer satisfaction must be an important strategic part of marketing. Products and services must be geared towards customer focus, and customer satisfaction is a goal in a value added supply chain.

The main body

Supply chain management excellence is crucial to customer satisfaction; consequently, customer satisfaction is critical to customer loyalty, and loyalty critical to profitability.

In order to address the problem of customer loyalty, firms apply product and service innovations. Supply chain learning should be a part of the firms’ strategies to address customer satisfaction and loyalty.

This is also the main objective of market orientation – customer satisfaction through superior performance of products and services.

Companies attain competitive edge through constant innovation. Organizations keep constant contact with customers, looking for ways to satisfy their needs and wants. Good customer relation is an important aspect of business.

Identifying and working out to strengthen customer satisfaction, supply chains can help in having a good relationship with customers, but supply chains have two attributes which are cost and service.

Service is itself responsiveness to the customer’s demand, but demand can also increase cost. Putting on a lot of innovations on the products means adding cost on production.

Customer relationship marketing (CRM) creates value for the customer1. Kotler et al. includes the idea of value in the definition of marketing, which is “the relationship between what is paid and what is received, and can be increased or reduced by marketing activities.”2

Marketing involves a lot of issues to include the marketing mix, and these can be about selling and product development. A business organization must sell products to survive and to grow.

The marketing concept looks at the depth of selling which is searching for ways to satisfy the needs and wants of the customer. The organization has to find out what will satisfy customers, and create satisfying products.

The marketer must continue to apply innovations in marketing, selling and answering the complaints of customers. This is what they call continual improvement in the company’s product.32

New trends in supply chain include seeing to it that the customer longs and wants for a ‘remake’ of the product. In other words, it aims for the customer’s coming back to want for more.

That is customer loyalty. But customer satisfaction does not necessarily mean loyalty on the part of the customer. Many authors suggest that having a continuous communication with the customer is one step to loyalty. Customers have to be asked to rate the importance of particular attributes and performance levels of the product/s.

They have to be asked about their willingness to repurchase and to recommend the products bought. These steps can lead us to a thinking of customer loyalty.

As consumers, people make decisions and ultimately adopt products for use and consumption. Companies endeavor to educate their target customers. This is done through promotional activity which explains product usage, presents an image for the product and convinces customers that they have a reason to purchase.

Supply chain goes with the demand chain in order to see to it that complexities in the market are properly addressed. Demand chain points to a network of trading partners which include manufacturers and end users.

It is also linked to the customers who have to be consulted on the product quality. It starts with the manufacturer, goes to the customer or end user but has to link back to the manufacturer because the customers’ ideas and opinion regarding the product are significant.

In a research conducted by Edward Morash and Daniel Lynch4 , which involved surveys on global capabilities and performance measurement practices, they found that customer closeness is important in demand-oriented capabilities and performance.

Customer closeness is supported by responsiveness to customers and customization. The research also found that some supply chains are also experimenting with mass customization, which is a strategy that combines operational excellence with customer closeness.

Companies have to be flexible in dealing with customers, and should have the ability to change and react. Flexibility is defined as “the ability to change or react with little penalty in time, effort, cost or performance”.

A flexible organization should respond to rapid changes in product mix, delivery, or volumes demanded by the customer. Flexibility can also mean financial performance.

Customer interaction is now enhanced by technology and the internet or the World Wide Web. Customers can ask questions or complain through company websites which have many features.

Modern information technology used in supply chain includes Electronic Data Interchange (EDI) which is the information transmission backbone of manufacturing companies and supply interfaces. The popularity of the Internet has led to the introduction of Internet-based EDI.

Supply chain management is traditionally focused on least-cost transaction, but the new trend in business-to-business transaction is long-term relationship. It is almost similar with customers and consumers. The question that is always in the mind of the marketing manager is: “will the customer come back?”

One significant strategy in meeting the needs and wants of customers is introducing an approach to supply chain that aims back at the customer. Satisfying their needs and wants is always a challenge to marketers. Knowing the customers’ needs have become a foundation for which a company is founded.

For a firm to be marketing orientated requires that a number of changes take place in organization, in practices and in attitudes. Implementing the marketing concept requires more than paying lip service to the ideas inherent in the concept.

Behavioral sciences can lead to an understanding of buyer behavior; another example is the development of quantitative and qualitative techniques of marketing research for analyzing and appraising markets.

Marketers have to be open to the customer and be customer focused.

A customer can be defined in several ways. For an airline company, a customer can be a travel agent, corporation, or consumer. For a pharmaceutical company, a customer might be a physician or a patient.

In other words, marketers have to manage and collate their interactions with different kinds of customers. Gathering the information for the company requires a lot of job to include networking with different organizations within the industry.

By having a database of customer information, firms can have a program of activities for innovations, or to change what are lacking in the supply chain.

From analyzing the customers’ information, companies can shift focus to analyzing what the future holds for the customer and the company. This may include determining if the customer may still want to deal with the company, or buy products from the company or shift to other competitors.

The information on the customer satisfaction is vital in the improvement and enhancement of the product. This information and data can be linked back to the manufacturer for further quality enhancement.

Customer focus is vital to the supply chain. The customer wants to be understood, and the marketer can interpret this by answering what he/she wants of the product.

The information can be inputted back to the customer for enhancement of the product. If it is service-oriented, the company has to modify the service.

Conclusion

A number of subjects have been emphasized in this essay – customer satisfaction, focus, loyalty and supply chain. Supply chain has to be always improved in order to attain customer satisfaction and loyalty, while customer focus can reflect satisfaction and loyalty.

An excellent supply chain management can attain customer satisfaction; at the same time, customer satisfaction may lead to loyalty, although satisfaction does not necessarily lead to loyalty.

Before loyalty can be attained, customer closeness is crucial; meaning some activities have to be geared towards contacting the customer in order to acquire more data and information about the product, and how the customer reacts to the product, including suggestions for improvement.

Acquiring more profits, which is one of the major goals of companies, seems to be not a sure goal. It is also one of the difficult objectives to achieve.

There are more and more products being manufactured everyday, but there are less customers who buy these products. Companies, or global business and organizations, have to find their segments and customers because they have more products to sell. There is a surplus of products and less customers.

In other words, organizations around the world compete to gain more customers, and one way of gaining more customers is to win their trust, answer and meet their needs and wants, and make sure that they come back.

It is not enough that they buy the company’s products; it is important that they come back. Customer satisfaction should be able to gain customer loyalty. A lifelong partnership between the company and the customer can make the company last a lifetime.

Supply chain is an important factor to consider in attaining customer satisfaction. When a product is being bought by a customer, it must be delivered quickly, with ease and comfort of delivery, and must have the desired quality that the customer asks for.

Bibliography

Blythe, Jim. Principles & Practice of Marketing. London: Thomson Learning, 2006).

Chan, John. Toward a unified view of customer relationship management. The Journal of American Academy of Business, Cambridge [e-journal], Available through: Staffordshire University Library, 2005.

Jobber, David and George Lancaster. Selling and Sales Management, Sixth Edition. England: Pearson Education Limited, 2003.

Footnotes

1 John Chan, Toward a unified view of customer relationship management, The Journal of American Academy of Business, Cambridge [e-journal], Available through: Staffordshire University Library, 2005.

2 Jim Blythe, Principles & Practice of Marketing (London: Thomson Learning, 2006), 5.

3 David Jobber and George Lancaster, Selling and Sales Management, Sixth Edition (England: Pearson Education Limited, 2003), 15.

4 David Jobber and George Lancaster, 15.

“Value, Satisfaction, Loyalty and Retention in Professional Services” by Trasorras, Weinstein, and Abratt

The relationship between the value and customer retention, loyalty, and satisfaction is the question which is discussed by many researchers in the field of relationship and retention marketing (Hirschey, 2008, p. 112).

In their article, Trasorras, Weinstein, and Abratt focus on the problem of keeping customers in association with the concepts of value, satisfaction, retention, and loyalty (Trasorras, Weinstein, & Abratt, 2009, p. 615). Thus, the purpose of the research is to state the absence or presence of the relationship between the value and customer retention, loyalty, and satisfaction in the context of professional services.

The expanded literature review was used to provide the theoretical background for such concepts as customer value, satisfaction, loyalty, and retention. To support the hypotheses, the authors used the survey involving 149 participants from the Tampa Bay located in Florida (Trasorras et al., 2009, p. 621). The participants were the professional service providers.

The provided answers to questionnaires were analyzed with the help of the multiple regression statistical method. The main focus was made on analyzing the relationship between the value components and customer loyalty and retention. It was found that the quality and character of services, the image of the provider, and the price influenced the customer satisfaction, loyalty, and retention significantly.

The authors concluded that the value components affected the customer retention directly (Trasorras et al., 2009, p. 624). Furthermore, quality, image, and price can also influence the customer loyalty and satisfaction directly because of affecting the customers’ vision of the service.

Referring to the managerial application, it is possible to note that the researchers’ findings can be easily used in the sphere of relationship and retention marketing not only to develop marketing strategies but also to improve the managerial approaches.

Practitioners and mangers in the field of professional services should pay more attention to improving the service, quality, price, and image in order to keep the customers because there is the direct connection between the value and customer loyalty and retention. The results are important to revise the approaches to retaining the clients in order to avoid the customers’ choice of the alternatives in the market because of the value factor.

Discussing the extension of the work, it is important to focus on the research’s limitations. Trasorras, Weinstein, and Abratt chose to focus on the experience of specific providers of professional services in Florida.

The limitations of the research are associated with using the convenience sampling method and involvement of only physicians, attorneys, financial professionals and other practitioners working in the Tampa Bay (Trasorras et al., 2009, p. 621). As a result, the findings and conclusions cannot be generalized, but they can be used to discuss the marketing tendencies.

The further research in the field of relationship and retention marketing is necessary to state the correlation between the concepts of value, customer loyalty, and retention.

The extension of the work is possible in relation to discussing the role of the value components in many other industries and environments (Fraering & Minor, 2013, p. 334). More attention should be paid to the value factor which influences the customer retention significantly and to determining the specific separate role of price, quality, and image.

The main strength of Trasorras, Weinstein, and Abratt’s research is in discussing the question of customer loyalty and retention in the specific field of professional services. Such limitations as the choice of the small and specific sample can be addressed in the further researches.

References

Fraering, M., & Minor, M. (2013). Beyond loyalty: customer satisfaction, loyalty, and fortitude. The Journal of Services Marketing, 27(4), 334-344.

Hirschey, M. (2008). Managerial economics. New York, NY: Cengage Learning.

Trasorras, R., Weinstein, A., & Abratt, R. (2009). Value, satisfaction, loyalty and retention in professional services. Marketing Intelligence & Planning, 27(5), 615-632.

Various Internal and External Stakeholders and the Duty of Loyalty to Them, on the Example of the Hospital

Different categories of stakeholders can be identified in the case study. Ideally, organizations must have both internal and external stakeholders (Coombs & Holladay, 2012). The five thousand employees in the hospital are the first important internal stakeholders. The president of the hospital must recognize their importance.

Basically, the management must adequately consider their welfare. As indicated, the hospital also has two thousand admitted patients. All the patients admitted within the medical facility are external stakeholders. This is because they form part of the community of the facility. They depend on the services of the facility. Apart from this, they also reside within the facility. The various unit managers within the facility also form part of the internal stakeholders.

Notably, the doctors and nurses are also internal stakeholders of the medical facility. The board of trustees has an important role in guiding the internal affairs of the facility. Therefore, they are internal stakeholders. There are other notable external stakeholder groups. These include the Regional Director, Compliance Manager and Executive Committee. These groups act as external oversight on the operations of the medical facility.

Other important external stakeholders include the community organizations and corporations. As the president of the facility, the doctor has important obligations to all the stakeholders. This is regardless of whether they are external or internal. The president has to ensure that all the employee welfare issues are effectively met. He also has the obligation to provide a secure and hospitable working environment for these employees.

The president must ensure all systems operate to guard the health and wellbeing of the patients. As external stakeholders, the patients and all customers have the right to access quality care. The president must endeavor to ensure effective treatment procedures are adhered to.

The patients and customers are important stakeholders because they are the source of revenue for the facility. Therefore, they are legally entitled to quality service (Halbert & Ingulli, 2011). This is the role of the president. The president has the responsibility to present progress reports and attend to the demands of the board of trustees.

As internal stakeholders, the board must be informed on the general welfare of the facility. It is important to present compliance reports and evaluation results to the regional compliance committee. This is another obligation that must be undertaken by Dr. DoRight. Lastly, the doctor has a crucial responsibility to be answerable to the community organizations and corporations.

These external stakeholders are also important and must be attended to. As indicated, they also have reasons to indulge in business with the hospital. Generally, all stakeholders have significant roles to any organization. It is important for the management to sufficiently address the needs of all these stakeholders. This ensures an effective flow of operations and business processes (Halbert & Ingulli, 2011). Leaders have basic duties that must be undertaken to ensure the satisfaction of all the stakeholders.

The Potential Conflicts in the Duties of Loyalty Owed To Internal Stakeholder Vs. An external Stakeholder

Adequate stakeholder satisfaction is important. This is regardless of the kind of stakeholder. Most organizations presently face challenges in balancing their stakeholder satisfaction. Indeed, trouble must ensue when there is lack of proper stakeholder management strategies. The importance of balancing the interests of all stakeholders is eminent. This is because diverse stakeholder groups possess varied priorities (Halbert & Ingulli, 2011).

There are a number of external and internal stakeholders identified from the case study. Patients and customers may demand improved quality health care services. On the other hand, the employees may have interests in pushing the management to increase their remuneration rates.

From this scenario, it can be noticed that different stakeholder interests might lead to a standoff in work processes. Several times, there have been cases of employee strike and rebellion due to internal factors. These might include poor remuneration and working environment.

Several employees have complained about poor quality work life within organizations. The different interests emanating from the stakeholders might cause uncertainties for the management. The intrusion of external bodies such as regulatory institutions into an organization’s operations might be destructive. There are instances where these external stakeholders might intervene to champion for the welfare of the internal stakeholders (Jennings, 2012).

For instance, the labor unions normally lobby for adequate employee welfare within organizations. In the case study, the regional compliance organization might also intervene. The basic aim might be to ensure improvement of quality care. This initiative might be beneficial to external stakeholders such as patients and other customers. Due to their demand, the management might decide to increase the employees’ salaries. Consequently, this is bound to have negative financial implications on other external stakeholders.

As indicated in the case study, the patients and other customers might be financially affected. There are instances where the demands of a given stakeholder override the demands of others. These are important considerations to be given priority by the management. In order to obtain high dividends, some external stakeholders might expect the organization to gains huge revenues.

On the other hand, there are stakeholders that may insist on quality of service. As internal stakeholders, workers may demand appropriate working environment and pay. This is in order to deliver high quality services. Other external stakeholders such as community organizations and corporations might also present unique demands.

For instance, they might require knowing how the organization responds to emergent issues. These might include environmental issues and matters concerning compliance to various standards of operations (Jennings, 2012). Indeed, there might be conflict of interest emanating from the management’s obligations to different stakeholder groups.

Comments on the Doctor’s Fulfillment of Ethical Duty

All employees are ethically bound to fulfill the basic duties delegated upon them (Kanniyakonil, 2007). Overseeing the basic operations within diverse departments within the hospital include some of the doctor’s duties. In the case study, this is inclusive of legal and patient advocacy issues. Patients as external stakeholders deserve the right to enjoy quality treatment and care. The basic duty of the doctor was to guard the interests of the patients.

Therefore, in reporting the issue of illegal procedure, the doctor adequately fulfilled his ethical duty. It is critical to note that failure to report this incidence could amount to negligence. This is because patient advocacy and legal concerns include some of the roles outlined in the doctor’s responsibility schedule.

The patients and other external customers have the right to access quality care. This is because they pay for these services. Therefore, an employees’ negligence that may cause loss of life remains culpable. Consequently, the management must also fulfill their important responsibilities.

Monitoring and reporting progress to relevant committees must be executed adequately. Clearly, it is observable that Dr. DoRight acted within his ethical duties by forwarding the report. Robust measures must be adopted to minimize patient harm. Additionally, the sustainability of these measures should also be ensured.

This helps to enhance patient safety and quality care even in the future. Strengthening the role of the middle level and departmental supervisors is important. These middle level managers must be encouraged to upscale their monitoring systems for patient safety (Kanniyakonil, 2007). All staff must undergo capacity building on patient quality care and teamwork.

The hospital’s managment must also draft a safety procedure and standard policy document. This must be communicated to all staff engaged in patient quality care. Inclusion of all stakeholders in decision making processes is critical. This provides vital resources including monetary or alternative policy options. It is crucial to conduct an opinion survey amongst the medical staff. This is to enable the managment to identify the basic reasons for the ineffective procedures.

Generally, it will be necessary for the facility to adopt strategic management processes. Particularly, quality management is important. This is because it provides the relevant monitoring and quality assurance tools required for effective processes. Other management processes such as culture transformation and performance contracting remain applicable (Coombs & Holladay, 2012). These processes are crucial.

This is because they will enhance the level of responsibility and accountability amongst staff delivering quality medical care. Engagement of quality control measures is critical in preventing illegal procedures within the hospital. Other practices including medical injection safety and patient satisfaction surveys are critical. Lastly, there must be adequate systems, facilities and infrastructure necessary for high quality medical service provision.

The Deontology Principle and the Ethical Dilemma Faced by Dr. DoRight

The deontological principles stress on an individual’s fidelity to basic duties. All individuals charged with specific responsibilities must learn to understand these obligations (Kanniyakonil, 2007). The practice of personal duties must be done to the latter. This is irrespective of a person’s cadre or ole within an organization.

The comprehension of all the basic regulations surrounding a person’s obligations is important. Individuals should also recognize that there is moral achievement in complying with the basic duty requirements. Immorality is eminent within individuals who fail to comply with the principles and procedures of their duties. Therefore, it is important for all persons to be aware of their duty requirements. The linkage of the principle of deontology with God is eminent.

Basically, there is a perception that God describes individual obligations for all persons. This illustrates the core of this principle. Consequently, those who follow their duties and obligations to the latter are obedient to God. According to this principle, this is the essence of morality (Coombs & Holladay, 2012).

The case study can be analyzed through deontological principles. Notably, Dr. DoRight performs in regard to the respect of his outlined duties. Therefore, he is morally right. His act of reporting the illegal procedures also indicates that he is obedient to God.

The doctor obeys the moral principles as dictated by the requirements of his duty. Although he fails to receive the report, his initial intervention into the crisis is vital. The basic reason for his action is to fulfill the moral obligations attached to his duty. The deontological moral approach emphasize on the need to understand the reason behind certain actions.

Principally, appropriate motivations must accompany moral actions within all human environments (Kanniyakonil, 2007). The principles of deontology do not provide room for subjective feelings within individuals. The determination of roles in an objective and subjective manner is critical. Therefore, application of these principles in the case study is appropriate. The doctor loses the aspect of objectivity when he fails to insist on the reception of reports.

The utilitarianism principle and the Ethical Dilemma Faced by Dr. DoRight

Utilitarianism principle assumes a normative approach to ethics. In this principle, the consequences of an individual’s actions are vital (Sheng, 2004). The principle may be applicable to policies within organizations. The consequences of any decision are deemed to have greater implications to external parties. In this consideration, the impacts of actions on individuals are less regarded. The interests of the larger population must be considered before any action.

The principle was developed by two economists, John Stuart and Jeremy Bentham (Sheng, 2004). Generally, the principle underscores the fact that individuals mostly prefer actions that favor their happiness and well being. It may also relate to groups. Individuals tend to initiate actions or make decisions that satisfy many people.

As indicated in the case study, Dr. DoRight is reluctant to push for the report from the compliance managers. This is because the number of employees surpasses that of the suffering patients. Notably, his complacent attitude creates an appropriate platform for the benefit of employees. They continue with their illegal procedures that increase the susceptibility of the patients. This is a pure illustration of the utilitarian principle.

References

Coombs, W. T., & Holladay, S. J. (2012). Managing corporate social responsibility: A communication approach. Malden, MA: Wiley-Blackwell.

Halbert, T., & Ingulli, E. (2011). Law and ethics in the business environment. Mason OH: South Western Educational Publ.

Jennings, M. (2012). Business: Its legal, ethical, and global environment. Mason, OH: South-Western Cengage Learning.

Kanniyakonil, S. (2007). The fundamentals of bioethics: Legal perspectives and ethical approaches. Kottayam: Oriental Institute of Religious Studies, India, Dept. of Publications.

Sheng, Q. (2004). A defense of utilitarianism. Lanham, MD: University Press of America.