A framework for assessment of brand loyalty score for commodities

Abstract

Commodity product marketers are increasingly resorting to branding in response to growing competition. Despite this commodity branding issues have not been adequately addressed. In this article we propose an Analytical Hierarchy Process (AHP) based model to assess customer loyalty scores for commodity brands. We also propose a methodology using Structural Equation Modeling to systematically collect data from customers and suitably incorporate it into AHP for computing the loyalty scores. The scores of the constructs in the model could be used by the commodity marketers to ascertain customers brand preference pattern and the relative importance of the factors in the purchase decision. From such an understanding, the commodity marketers could adjust the elements of the marketing and delivery process and incentivize the customer to be loyal to their brand. The developed model could be used for any commodity. We demonstrate the usefulness of the model with a numerical illustration from the cement industry. On the basis of the data we observe that the commodity brand, which has the highest loyalty score, is able to provide better perception of offerings in those constructs considered important by the customers. On the other hand, the weakest brand has been unnecessarily concentrating on price worthiness factors like lower price, higher discounts and long credit period. As per this study this construct is viewed relatively less important by the customers. Perhaps, customers perceive it as a lower quality product owing to this over focus on this construct.