Building Loyalty For FMCG Brands - Personal Care Products - by Emrah SEYIT

BUILDING LOYALTY FOR FMCG BRANDS - PERSONAL CARE PRODUCTS Master Thesis
submitted by Emrah SEYT

Universit degli studi di Trento Universit de Savoie dAnnecy Universitt Kassel Universidad de Len
Date of Submission 21/05/2010
Building Loyalty For FMCG Brands by Emrah SEYT
Declaration
I declare that the thesis hereby submitted for the Master degree at the European Master in Business Studies run by four different universities in four European countries is my own work and has not been previously submitted by me at another university for any degree, and all the sources used have been well indicated and acknowledged.
Emrah SEYT European Master in Business Studies Universit degli studi di Trento (IT) Universit de Savoie dAnnecy (FR) Universitt Kassel (GER) Universidad de Len (SP) 21/05/2010
Acknowledgements
Sincere gratitude and thanks must go to the following ones:
My parents and relatives for their invaluable and everlasting love and support Dr. Andrea GEILE, from the University of Kassel (GER), for her help in structuring the thesis and her suggestions
Prof. Pablo GUTIERREZ, from the University of Len (SP), for his guidance and kindly providing some useful contacts for the thesis
Mr. Moataz ABDALLA, who is my colleague from the European Master in Business Studies, for his rereading, feedback and brilliant suggestions
Mr. Carlos MILLAN MURCIEGO, who is my class mate at the European Master in Business Studies, for his accompany in the libraries in Kassel and Len
Table of Contents
Declaration__________________________________________________________________ 1 Acknowledgements ___________________________________________________________ 2 Table of figures ______________________________________________________________ 6 Abbreviations________________________________________________________________ 7 1 Introduction _____________________________________________________________ 8 1.1 1.2 1.3 1.4 2 Relevance of the Subject _______________________________________________ 8 Major Terms ________________________________________________________ 9 Focus and Goals of the Thesis __________________________________________ 10 Structure of the Thesis ________________________________________________ 11
Literature review of Brand Loyalty __________________________________________ 13 2.1 2.2 2.3 2.3.1 2.3.2 The Loyalty Factor and the Brand _______________________________________ 14 Loyalty Matrixes ____________________________________________________ 17 The Brand Loyalty Models ____________________________________________ 21 Overview of Brand Loyalty Models _________________________________ 21 Evaluation of Brand Loyalty Models_________________________________ 25
Loyalty for Personal Care Products __________________________________________ 27 3.1 3.1.1 3.1.2 3.1.3 Building Loyalty for Personal Care Products Brands ________________________ 27 Steps to follow __________________________________________________ 27 Motivators and Demotivators ______________________________________ 30 The Benefits of Brand Loyalty _____________________________________ 35
3.2 Analysis of Building Loyalty for Personal Care Products by means of Marketing Mix Elements ________________________________________________________________ 37 3.2.1 3.2.2 3.2.3 Product Strategies _______________________________________________ 38 Price __________________________________________________________ 39 Place__________________________________________________________ 40
Building Loyalty For FMCG Brands by Emrah SEYT 3.2.4 4 Promotion _____________________________________________________ 40
Case Studies____________________________________________________________ 53 4.1 4.1.1 4.1.2 4.1.3 4.1.4 4.1.5 4.2 4.2.1 4.2.2 4.2.3 4.2.4 4.2.5 4.2.6 4.3 4.3.1 4.3.2 4.3.3 4.3.4 4.4 4.4.1 4.4.2 4.4.3 4.4.4 LOral Case - Microsoft CRM Solution _________________________________ 53 Introduction ____________________________________________________ 53 Company background ____________________________________________ 54 Implementation of CRM Solution ___________________________________ 55 Benefits of CRM Solution _________________________________________ 57 Conclusion of LOral Case _______________________________________ 58 Procter & Gamble Case 1 - Pert Plus BC-18 technology _____________________ 59 Introduction ____________________________________________________ 59 Company background ____________________________________________ 59 The Situation in the USA and the introduction of the BC-18 in the US market 61 The Situation in Europe in 1988 and introduction of BC-18 into Europe _____ 63 General Overview and Current Situation in Europe and the USA __________ 65 Conclusion of Pert Plus Case_______________________________________ 68 Procter & Gamble Case 2 Max Factor & Cover Girl _______________________ 69 Introduction ____________________________________________________ 69 Company background ____________________________________________ 69 Implementation of Loyalty Strategies ________________________________ 70 Conclusion of Max Factor & Cover Girl Case _________________________ 74 Procter & Gamble Case 4 Gillette _____________________________________ 75 Introduction ____________________________________________________ 75 Company background ____________________________________________ 76 Evolution of Gillettes loyalty strategy _______________________________ 76 Conclusion of Gillette Case ________________________________________ 78
4.5 4.5.1 4.5.2 4.5.3 4.5.4 5
Henkel Case Schwarzkopf Salon Loyalty Program ________________________ 79 Introduction ____________________________________________________ 79 Company background ____________________________________________ 79 Rules and Regulations of Salon Loyalty Program, and how it works ________ 80 Conclusion of Schwarzkopf Case ___________________________________ 82
Recommended Brand Loyalty Strategies for FMCG companies ___________________ 84 5.1 5.2 5.3 5.4 5.5 5.6 5.7 Product Coaching____________________________________________________ 84 Co-operation with hairdressers and beauty centers __________________________ 86 Games and Tournaments ______________________________________________ 88 Wedding Sponsorship and Rewarding Top Purchasers _______________________ 90 Special editions of products having the pictures of its customers _______________ 91 Reminder of special days______________________________________________ 92 Free Health Care Services _____________________________________________ 94
Conclusion _________________________________________________________________ 95 References _________________________________________________________________ 99
Table of figures
Figure 1: Four Categories of Loyalty (Dick and Basu, 1994)................................................ 17 Figure 2: Loyalty grid based on satisfaction (TO Jones and WE Sasser,(1995),p. 88, ff.) ... 19 Figure 3: Summary of Dick and Basu model (Evans, OMalley, and Patterson, (2004), p.283). .................................................................................................................................... 20 Figure 4: The Hierarchy of Effects (Solomon, Marshall, Stuart, (2008), p.393)..................... 28 Figure 5: Ambivalent loyalty forces (Thurau & Hansen (2000), p.40).................................. 31 Figure 6: Adopted from Possible economic effects of customer loyalty(Thurau&Hansen(2000), p.32)................................................................................... 35 Figure 7: Types of Promotion................................................................................................. 41 Figure 8: Lancome Interactive Beauty App ........................................................................ 46 Figure 9: L'Oreal Paris Skating Game ................................................................................... 47 Figure 10: Reckitt Benckiser - Match the Brand Game ....................................................... 48 Figure 11: Henkel Innovation Challenge - Vision 2050 ........................................................ 49 Figure 12: Gillette's website for US ........................................................................................ 50 Figure 13: Illustration of Microsoft CRM ................................................................................ 56 Figure 14: Microsoft CRM System Benefits............................................................................ 57 Figure 15: Illustration of US shampoo market, 1985-8 (Montana J., (1994), p. 124) ........... 61 Figure 16: Size and shelf prices of shampoo in US market, 1985 (Montana J., (1994), p. 124) ........................................................................................................................................ 62 Figure 17: Market sizes of shampoo/conditioner in Europe, 1988 (Montana J., (1994), p. 126) ........................................................................................................................................ 63 Figure 18: Key Milestones of Innovations in Pert Plus' History............................................... 65 Figure 19: Strong Customer Loyalty - % of Buyers Repeat Purchasing ............................... 66 Figure 20: Pert's Product Range ........................................................................................... 67 Figure 21: Max Factor Friend on Windows Live Messenger ................................................ 71 Figure 22: Illustration of CoverGirl......................................................................................... 72 Figure 23: Gillette Happy 18th Birthday Gift ........................................................................ 75 Figure 24: Reward Chart of Salon Loyalty Program ............................................................ 80 Figure 25: Schwarzkopf Salon Loyalty Program................................................................... 81
Abbreviations
BOT Robot FMCG Fast Moving Consumer Goods J&J Johnson & Johnson PCP Personal Care Products P&G Procter and Gamble PR Public Relations
1 Introduction
1.1 Relevance of the Subject
The concept of brand loyalty has firstly appeared in 1923 when Copeland suggested a phenomenon, which he labeled brand insistence, was related to brand loyalty (see: Theng Lau and Han Lee, (1999), p.342). Afterwards brand loyalty has been investigated by many researchers and there are plenty of studies on this concept. Furthermore, this concept is recognized worthwhile because it is the peak experience that most companies aim for and not many achieve: becoming a brand that customers love and cannot leave without (Durkin (2005), p.77). However, FMCG are the products that all of us use in our daily life, and this sector is the one which holds vital importance in building brand loyalty. Since the first appearance of brand loyalty concept marketers have been interested in it because it is a way to measure the attachment that a customer has to a brand. Brand loyalty brings firms plenty of benefits such as high profitability, competitive advantage for firms, decrease in marketing-operational costs (see: Bowen and Chen, (2001), p. 213,ff.), greater levels of repeat purchase by brand users, greater attitudinal loyalty which leads to greater willingness to sacrifice by paying a premium price for a value brand (see: Chaudhuri and Holbrook, (2001), p.81,ff.), word of mouth leading indirectly to an increase in market share (see: Mittal & Lassare, (1998), p.177, ff.), and higher rates of return on investment through increases in market share (see: Gounaris and Stathakapoulos, (2004), 283,ff.). To sum up it can be told that all the benefits mentioned above and the probable difficulties to overcome on the way of building brand loyalty have taken my attention and have encouraged me to focus my thesis on building loyalty for FMCG (especially on personal care products).
1.2 Major Terms
In this work you will see a lot about the following terms: brand loyalty, FMCG and personal care products. Brand loyalty is characterized by a series of repeat purchases of the same brand, frequently accompanied by a positive attitude towards the brand (Antonides and van Raaij, (1998), p.270). It can be also defined as a pattern of repeat purchases, accompanied by an underlying positive attitude toward the brand that is based on the belief that the brand makes product superior to those of its competition (Solomon, Marshall, Stuart, (2008), p.146). FMCG is the acronym of Fast Moving Consumer Goods which refers the frequently purchased consumer items, such as food, toiletries, cleaning products, personal care products, and soft drinks and so on. Personal care products include diverse types of products such as hair care products including shampoo, hair dye, hair conditioner, hair gel, hair spray, pomades, hair clippers, and oral care products such as toothpaste, toothbrush, and mouthwash, besides these chap stick, lipstick, lip gloss, cleansing pads and wipes, colognes, cotton swabs, deodorant & perfumes, eye liner, facial tissue, lotion, makeup, nail files, personal lubricant, razors, shaving cream & foam, skin cream, toilet paper and so on. After mentioning about brand loyalty, FMCG and personal care products, the major corporations in the personal care industry must be mentioned, because these are the actors which are mostly interested in building customer loyalty for personal care products. They are as follow: Avon Colgate-Palmolive Combe Incorporated
Henkel Johnson & Johnson Kimberley Clark LOreal Lancme Maybelline Procter & Gamble Reckitt Benckiser Remington Products Unilever
1.3 Focus and Goals of the Thesis
The following thesis focuses on examining how to build loyalty for FMCG brands (mainly focus on Personal Care Products), then assess whether nowadays the brand loyalty is floating downward or it is still vital. There are plenty of goals as follow: to define FMCG, personal care products, brand loyalty and how to build brand loyalty and keep it to show the benefits of brand loyalty for companies to assess the steps to follow on the way of success to define the ways to overcome the probable difficulties to overview brand loyalty models and evaluate them to analyze factors contributing to build brand loyalty to analyze real loyalty strategies applied by FMCG companies
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to give some recommendations about different possible methods to pave the way for further researches
To sum up, brand loyalty in fast moving consumer goods categories is vital issue, besides several brands, which invoke price cuts across categories, are present in the market. The reason showing the importance of the issue is that such methods mentioned above havent been enough to sustain customers brand loyalties. Maybe it is possible to attract consumers in the short run, but brands value might float downward in the long run. Therefore, some aspects, which could be useful to build and keep brand loyalty, will be examined in this thesis.
1.4 Structure of the Thesis
The structure of the whole work is divided into two parts: an initial theoretical approach and practical analysis having look at the concrete situations on current examples. After a general literature review of brand loyalty, the relationship between the loyalty factor and the brand will be pointed out. The loyalty segments will be highlighted, and then the benefits of brand loyalty will be mentioned. Besides brand loyalty models will be examined in order to have the knowledge coming from past experiences, and they will be evaluated. Moreover, third chapter is the core of the work, because this will show firstly how the theoretical information given in the previous chapters is applied into practice by FMCG companies. This chapter will also deepen the information for the steps to create brand loyalty including loyalty programs, the ways to overcome possible threats, and the analysis of using marketing mix to build loyalty for personal care products of FMCG companies. Furthermore, it should be noted that the information and examples given in the third chapter will be the base for the practical researches which will be in the fourth chapter, and those researches will try to provide various examples that are present in the FMCG market.
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As mentioned above, the fourth chapter will analyze and provide number of case studies about the loyalty strategies of some strong FMCG companies, and show how they have achieved creating loyalty and keeping customers loyal in the long run. It means that this chapter will enable the ones who read this thesis to observe real examples of loyalty strategies applied by FMCG companies. In the fifth chapter, possible brand loyalty strategies, which either have not been used yet or have been partly used by FMCG companies, will be recommended. Each strategy will be explained in details and will be tried to show how companies could apply them. Moreover, currently used strategies which need some modifications will be highlighted and recommendations for further improvements will be made. In the conclusion part, all the findings will be summarized and will be used to make some comments about the current situation of brand loyalty issue including negative and positive aspects. Moreover, the possible further researches will be highlighted. In addition, the bullet points will be highlighted one more time to summarize the thesis.
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2 Literature review of Brand Loyalty

Brand loyalty has been interested by marketers and has been investigated by researchers for a long time because of the fact that it might bring several advantages to the firms. Based on different perspective of researchers, diverse definitions of brand loyalty have been made. In 1923 Copeland has suggested a phenomenon of brand insistence related to brand loyalty, then Brown and Cunningham in 1950s tried to measure brand purchase patterns and found out that consumers have strong and operative brand loyalty. This phenomenon was also verified by Lipstein, Frank, and Farley (see: Theng Lau & Han Lee, (1999), p.342). The investigations mentioned above were followed by several other researches about how brand loyalty is related to the following variables: loyalty proneness, store loyalty, consumer knowledge about available brands, product categories, consumers risk reduction behavior, perceived quality, consumer characteristics, shopping pattern characteristics, and the possibility of multi-brand loyalty (see: Theng Lau & Han Lee, (1999), p.342). However, several significant problems about the researches, such as an absence of a conceptual framework for viewing brand loyalty, extreme focus on outcome of behavior and simple definitions, have been highlighted by Engel et al., Day, Segger, Jacoby and Kyner in late 1960s and early 1970s (see: Theng Lau & Han Lee, June (1999), p.342). Besides these, brand loyalty has been also viewed as multidimensional frame which includes attitudinal components and as a subset of repeat purchase behavior (see: Jacoby and Kyner, (1973), p.1,ff.). In addition, the terms stochastic and deterministic were used in order to label the alternative views of cognitive and behavioral brand loyalties. Later on, two models were introduced. These models were Dick and Basu Model which conceptualizes loyalty as the relationship between the relative attitude towards a brand
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and patronage behavior, and Jones Loyalty Model which summarizes the relationship between behavioral repeat purchase and affective satisfaction (see: Evans, OMalley, Patterson, (2004) 282,ff.). In 2003, Quester and Lim claimed that there are two alternative approaches to the construct of brand loyalty. They had made this conclusion based on the literature review. According to them a consistent purchase behavior of a specific brand over time is the first approach. On the other hand, the second one is a favorable attitude towards a brand (see: Quester and Lim, (2003), p.22, ff). As a last but not least, it should be noted that the researches and models which are applicable to the construct of brand loyalty for FMCG mainly for personal care products- will be analyzed in the following chapters.
2.1 The Loyalty Factor and the Brand

Plenty of different types of definitions combining the loyalty factor and brand have been made in the previous studies, and some distinctions among the studies exist. In order to understand these differences in the term, we have to examine the usage of the term brand loyalty by various investigators. By doing so, we will be able to see the relationship between the loyalty factor and a brand in depth. The definitions described by various researches include: brand-choice sequences; preferences over time; proportion of purchases; other measures based both on preferences and purchases
Lets start explaining one of the earliest studies defined brand loyalty according to brand-choice sequence; this approach date backs to the 1950s and 1960s and include
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works by Brown and Parfitt and Collins. Brown has studied the behavior of 100 of the panel members during the panel ran by the Chicago Tribune and he noticed that there are some consistencies in the way brands of various products were bought and then he proposed four patterns of loyalty (see: Evans, Jamal and Foxall, (2006), p. 265). These are as follow; undivided loyalty, divided loyalty, unstable loyalty and no loyalty. Now it is time to have a look at the meanings of these patterns. First of all, undivided loyalty refers that the consumer buys just one of the brands within a product category (Evans, Jamal and Foxall, (2006), p. 265), namely its sequence goes as AAAAA. Secondly, divided loyalty means that the consumer buys from a repertoire of alternative brands in a product category on different buying occasions (Evans, Jamal and Foxall, (2006), p. 265), namely its sequence is as ABABAB. Thirdly, unstable loyalty is really brand switching because the consumer switches from undivided loyalty to one brand to a similarly regular pattern for another brand(Evans, Jamal and Foxall, (2006), p. 265). This pattern can be shown as AAABBB. As a last, no loyalty refers the situation that the customer buy randomly from all the brands available, and does not repeat purchasing from the same brand. This sequence is shown as ABCDEF. By means of this definition of brand loyalty, Brown has observed that the degree of households loyalty had varied from 54 to 95%, depending on the product involved, but in fact the percentage of undividedly loyal households had varied from 12 to 73 % across products (see: Brown, (1953), p. 75,f). This approach has shown that there are just few generalizable results. Because of the fact that each consumer buys at different rates, it is not easy way to summarize purchase sequence quantitatively. In other words, it is not easy to aggregate the purchasing behaviors of a consumer with another who purchases more frequently (see: Engel, Blackwell, (1982), p.567).
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As a consequence, it could be said that it is not easy to have some comparisons between consumers, brands, or product fields which could be used to reach at generalizable results. Preference over time is the second definition to examine the usage of the term brand loyalty by various investigators. This definition states that sometimes loyalty has been defined as preference statements over time rather than actual purchase (Engel, Blackwell, (1982), p.567). According to the findings of Guests research in 1941 concerning the brand awareness and preferences of students, and follow-up studies of same students 12 and 20 years later, there was an evidence of high degree of loyalty toward brand names although not to specific brands (see: Guest, (1964), p. 93, ff.). Proportion of Purchases is one of the most frequently used definitions of brand loyalty. This conceptual definition is used both as a conceptual definition and operational measure of brand loyalty in empirical researches. In addition, this is a useful method to be used in mathematical models because of its feature of quantifiability (see: Engel, Blackwell, (1982), p.567). Moreover, Cunningham has introduced the concept of multi-brand loyalty in various forms such as dual-brand loyalty and triple-brand loyalty, based on the definition of brand loyalty above (see: Cunningham, (1961), p.127, ff.). When it comes to talk about Other Measures of Loyalty, we can say that the other measures used by various researchers have applied a combination of two or more of the above mentioned criteria. Some of the researchers and their researches are as follow; Sheths factor analytic approach using the definition based on both frequency and pattern of purchase of a brand (see: Sheth, (1968), p.395,ff.) and Pessemiers approach mentioning about brand switching based on the increase in the price of most preferred brand comparing to the others (see: Pessemier, (1959), p.41, ff). On the other hand, Cunningham has focused his research on evaluating probable behavior in case of absence of ones favorite brand (see: Cunningham, (1967), p.507, ff.).
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2.2 Loyalty Matrixes

After examining the various definitions related to both the loyalty factor and brand, it is time to have a look at the loyalty matrixes in order to observe better different types of loyalty. In this section, we will analyze two different models which are Dick and Basu model (1994) and Jones loyalty model (1996).
Figure 1: Four Categories of Loyalty (Dick and Basu, 1994)
You can see above the illustration of first matrix called as Dick and Basu model. As it is seen this conceptualizes loyalty as the relationship between relative attitude and patronage behavior. Now lets explain the framework in detail. First of all, it should be noted that relative attitude not only focuses on attitude to the entity, but also incorporates comparison to other organizations or brands, on the other hand, patronage behavior in this chart are
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traditional retention measures, share of wallet, purchase sequence etc (Evans, OMalley, Patterson, (2004), p. 282). After mentioning both axes, it is time to focus on four categories in the model. Lets start with no loyalty referring that both consumer relative attitude and patronage behavior are low (see: Evans, OMalley, Patterson, (2004), p.283). For example, customers in this segment are not loyal to any brand. Therefore we may assume that when they need some personal care products such as a tooth paste, they just get whatever brand is present in the shop which is close to their house. Consumers in this segment can be generated into spurious loyal through in-store promotions, loyalty clubs and special offers. The second one is spurious loyalty, which exists when consumers have low relative attitude while having high patronage behavior. This type refers repeat buying of lowvalue, low-involvement and frequently purchased items. This kind of behavior is very similar to the concepts of inertia and habit (see: Evans,Jamal and Foxall, (2006), p.273). The third segment is latent loyalty, which refers that consumer has high relative attitude to a brand but low patronage behavior (see: Evans, OMalley, Patterson, (2004), p.284). For instance, if we take the tooth paste as an example again, we may assume that a consumer might have a preference for a tooth paste brand called A, but if it is more convenient to buy from the brand B, he or she will buy from brand B. Now it is time to mention the last segment which is loyalty. In this segment, there are both high relative attitude and high patronage behavior. However, this signifies the fact that customers in this segment have strong preferences for a brand, and regularly buy from that brand. When loyalty is present, managerial efforts are to strengthen relative attitudes including maintaining a price advantage and/or offering additional services (see: Evans, OMalley, Patterson, (2004), p.284). In the case of toothpaste, these might include giving a toothbrush or a little bottle of mouthwash as a present for each sale. After examining Dick and Basu model, lets analyze the second one; Jones loyalty model. In this model, consumers are grouped into 4 distinct groups on the basis of their satisfaction and loyalty levels (Figure 3).
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Figure 2: Loyalty grid based on satisfaction (TO Jones and WE Sasser,(1995),p. 88, ff.)
As it is also seen in the figure above, there are mercenaries who are satisfied with a current organization but there is a low loyalty, besides they may move to others easily if they see similar or higher satisfaction (see: Evans, OMalley, Patterson, (2004), p.285). On the other hand, there are hostages who show low to medium levels of satisfaction but they have high level of loyalty (see: Evans, Jamal and Foxall, (2006), p.275). In other words, they repeat purchase because of the lack of alternatives. The third segment involves defectors who switch easily because they have low to medium levels of satisfaction and loyalty (see: Evans, Jamal and Foxall, (2006), p.274). Furthermore, some of the defectors can become consumer terrorist. This kind of consumers is positioned at the left of the horizontal axis and anywhere along the vertical axis. This category includes those who cannot wait to tell others about their bad purchase experiences which have dissatisfied their expectations. When the bad word of
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mouth starts spreading, the facts about the real experience become distorted while going through one individual to other (see: Evans, Jamal and Foxall, (2006), p.275). Moreover, these consumer terrorists can spread ill concerning the organization or even play games such as swapping loyalty cards to be awkward or to see what happens to their targeted offers (Evans, Jamal and Foxall, (2006), p.275). Loyalists, who show both high level of satisfaction and loyalty, are the fourth segment in this model. They dont switch to any other brand, because they are totally satisfied with the organization or brand concerned, besides some of these can even turn into advocates (see: Evans, Jamal and Foxall, (2006), p.274). As a result, you can have a look at the table below in order have an overview of both models which were previously mentioned.
Figure 3: Summary of Dick and Basu model (Evans, OMalley, and Patterson, (2004), p.283).
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2.3 The Brand Loyalty Models

Over time plenty of models have been designed in order to observe and understand brand loyalty behavior. Firstly, stochastic models, which use probability theory in order to predict which brand will be purchased next after whatever sequence of brands was previously bought, have been mainly emphasized (Evans, Jamal and Foxall, (2006), p.265). In other words, the perception of these models is that response of consumers in the market place occurs as a result of some probabilistic process. On one hand, stochastic models are relatively mechanistic and based on probabilities of repeat purchasing behavior; on the other hand there is another type of model called deterministic models that are based on cognitive process. This model assumes that repeat purchase loyalty includes commitment and a stronger motivator. According to this model, the consumer would continue to buy the first brand that he or she has commitment and/or trust even if there is a cheaper alternative. After summarizing both models, now it is time to analyze them more in depth. In the following parts, you will see the overview of brand loyalty models and their evaluation.
2.3.1
Overview of Brand Loyalty Models
As mentioned above there are two different types of brand loyalty models and each model combines some sub-models in itself. We will firstly analyze the stochastic models depending on the assumptions made concerning the effects of experience on behavior. However, the stochastic models have two basic philosophies. The first philosophy states that the outcome of behavior are determined by plenty of actors even though most of these actors are not measured nor explicitly included in the model of market response (Engel, Blackwell, (1982), p.579, f.). Above mentioned factors might be both individual consumer variables such as personality, attitudes, income and so forth, and
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exogenous variables such as advertising, price, and competitive activity (see: Engel, Blackwell, (1982), p.579). Furthermore, the second philosophy of stochastic models highlights that not only the model of market response, but also the actual consumer process is stochastic. As an alternative this one, it was stated that consumer choices are random because there is a stochastic element in the brain that influences choice. Thus, it is less possible even in principle to provide an explanation for the stochastic component than it is to provide an explanation for the outcome of the toss of a coin (see: Frank, (1974), p.1, ff.). There are plenty of stochastic models which are as follow; Bernoulli Model, Probability Diffusion Model, New Trier Model, Markov, Linear Learning Models, Entropy Loyalty Model, and Cognitive Brand Loyalty Model. A Bernoulli Model assumes that previous purchases do not have any effect on present purchasing. Each brand switching probability remains constant from one purchasing period to the next (see: Wheeler, D.B.A, (1974), p.654). The second model called Probability Diffusion Model has been proposed by Montgomery as a zero-order model. This model does not consider purchase-event feedback. The model can be called as heterogeneous because of the fact that different respondents may have different response probabilities, even though the same response probability change process holds for all respondents (see: Engel, Blackwell, (1982), pg.581,f). The third model is called as New Trier Model. This model, which has been developed by Aaker, is also a zero-order model as Probability Diffusion Model. It was developed especially for a consumer who has purchased a brand that was previously unfamiliar. Actually, the brand does not have to be a new in the marketplace, it is just necessary not to be used by that consumer or one used so long ago that the consumer does not even remember it (see: Aaker, (1971), p.435-ff.). It is assumed by New Trier Model that there is a trial period after the initial purchase which means the probability of purchasing the brand for the family remains constant during this period. However, consumer is assumed to reach a decision and depending on
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this to have also a new probability of purchasing the brand after some trial-period purchases. Moreover, it should be noted that this assumption varies from consumer to consumer (see: Engel, Blackwell, (1982), p.584). Besides these, Markov model, which is the fourth one, takes into account the influence of past purchases on the probability of current purchases. However, this model aims in general to deal with repeat-buying and brand-switching behavior primarily for frequently brought nondurable consumer goods. Consumer purchasing of different brands within a single product field is usually analyzed for successive equal periods of time such as months or quarters (Ehrberg, (1965), p.347). It should be noted that Markov model is not applicable to our case, because personal care products are mostly durable products. The fifth stochastic model, which has been used to explain brand switching, is the Linear Learning Model. The idea, which refers that there is a linear relationship between pre- and post purchase probabilities, lies in the core of this model. However, it also signifies that past brand choices affect future behavior (see: Engel, Blackwell, (1982), p.590). Moreover, linear learning models have not been preferred as much as its counterparts, Markov models. Especially Markov models have been more popular among practitioners, and this may be due to the fact that it is more difficult to estimate the parameters of the learning model, besides these it is also hard to estimate the limitations imposed by the need to treat brand choice in dichotomous fashion (see: Engel, Blackwell, (1982), p.592). To sum up, a consumers behavior is affected by his/her previous brand choices. The act of purchasing and using a particular brand is assumed to affect the probability that this brand will be selected the next time the product class is to be purchased (Massy, William, Montgomery, David, Morrison, Donald, (1970), p.141). There is one other interesting model to be developed is the Entropy Model. This model had been firstly discussed by Carman and Stromberg (see: Carman and Stromberg,
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(1967), p.26), then was more fully developed by Herniter (see: Herniter, (1973), p.361, ff). The Entropy model, which is borrowed from the study of thermodynamics, is a measure of uncertainty in a probabilistic system. Moreover, the model is based upon a multi nominal distribution to account for changes in response probabilities. Under the light of this information, a measure of loyalty can be determined that it is defined by for all values of the parameters of the underlying multi nominal model (see: Engel, Blackwell, (1982), p.593). The entropy model is considered valuable to marketers because this model relies on market share data which are more readily available than many other kinds of data based on the characteristics of individual consumers. The results of the empirical tests of this model were mostly good although the model as originally proposed by Herniter as somewhat limited in applications, because it was difficult to apply it to a market with more than a few brands (see: Bass, (1974), p.1,ff.). The seventh model called as the Cognitive Brand Loyalty Model. In this methodology, subjects were asked to place the brands in order to see their awareness of the present brands. Besides these, subjects were also asked to place each product of the brands into three affective regions according to their acceptability for the next purchase event. These three regions were acceptable, not acceptable, and uncertain (Engel, Blackwell, (1982), p.593). After this classification, proportion of brands of which an individual was aware is observed. After mentioning about the stochastic models, it is time to analyze the deterministic models. Such kind of models view consumer purchasing as being caused by some factor, namely it is said that purchasing does not occur by chance. The term loyalty has been used to name the commonly observed phenomenon that consumers do not distribute their choices randomly within a given product area (Hansen, (1972), p.332). Jacoby and Kyner had tried to find a unified explanation of brand loyalty, because there was the dichotomy between theories. Later on, they found empirical support for a conceptual definition of brand loyalty. Their definition refers that brand loyalty is a form
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of a repeat purchasing. However, their conceptual definition includes the following conditions: purchasing that is nonrandom, behavioral responses, temporal responses, availability of alternatives, and behavior that is a result of a decision-making process. By means of their definition, they contributed to tie together two views of brand loyalty: repeat purchases (behavioral) to underlying processes (cognitive) (see: Jacoby and Kyner, (1973), p.1,ff.).
2.3.2
Evaluation of Brand Loyalty Models
In an attempt to understand and predict brand-loyalty behavior plenty of models have been used. As it is known brand choice is very complex, therefore many different models have been developed. Each model tries to solve specific problems because it is not possible to solve the problems that vary between product categories and buying situations just by using one of these models. Naturally many assumptions are introduced by researchers in order to make the models manageable, and those assumptions often create artificialities. The zero-order assumption, inability of cooperating the influences of external factors, heterogeneity in population are some of the problems occurred through the models (see: Engel, Blackwell, (1982), p.594). It must be highlighted that there is a need to develop methods discriminating among competing models in order to determine the appropriate model for a specific product category, market structure and timing or buying situation (see: Engel, Blackwell, (1982), p.594). It is true that same model cannot be applied to different products. For instance, a stochastic model, which is applied to a shampoo brand, may not be applicable to a detergent brand. Therefore, this situation could be taken into account as a problem of stochastic models. Moreover, there is also a need to develop methods assuming only short-run stationarity, because the stochastic process which generates the response of probabilities may also itself change (see: Engel, Blackwell, (1982), p.594).
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Furthermore, most of loyalty models ignore the issue of multibrand loyalty (see: Engel, Blackwell, (1982), p.594). It is possible that, for example, a person may have a loyalty both for tooth pastes of brands such as Colgate and Signal. The common mistake is that researchers generally avoid the possibility of having loyalty to several brands of a specific product. In addition, preference and purchase probabilities are assumed as equivalent, and this causes artificiality in the models. Moreover, it can be said that the deterministic models have not been successful in accounting for the variance in the dependent variable. Therefore, many stochastic models seem to predict consumer behavior more accurately than the deterministic ones. Actually the stochastic models suffer from a lack of a consideration of why loyalty exists (see: Wheeler, D.B.A, (1974), p.656). As a result, it must be highlighted that sometimes one of the deterministic and stochastic models cannot be enough to explain brand loyalty, therefore we might need to use both for better and clear explanations according to a product and conditions.
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3 Loyalty for Personal Care Products

3.1 Building Loyalty for Personal Care Products Brands
In the previous sections, we had a look at the brand loyalty as a general, analyzed the brand loyalty models which are helpful to understand brand loyalty behaviors, and then evaluated them. In other words, we drew general framework of the thesis as an initial step, now it is time to examine the steps on the way of building loyalty for personal care products. We will firstly observe the steps to follow by means of hierarchy of effects, and of course will have a look at the motivators and demotivators which might be confronted in the next steps. 3.1.1 Steps to follow
Hierarchy of effects is a series of steps prospective customers move through, from initial awareness of a product to brand loyalty (see: Solomon, Marshall, Stuart, (2008), p.392). In other words, we can call this process as the steps to follow on the way of building loyalty. As it is seen in the figure below, the task becomes harder at each step, therefore the possibility to drop out some potential customers increase from one step to another one along the way. Each step has different communication objectives; on the other hand the only thing that they have as a common is to push people to the next step. Furthermore, it should be noted that this hierarchy of effects is highly applicable to the building loyalty for personal care products.
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Figure 4: The Hierarchy of Effects (Solomon, Marshall, Stuart, (2008), p.393).
In order to understand better, lets examine the hierarchy of effects step by step. The initial step is about creating awareness which refers to making the target potential customers aware that there is a new brand on the market (see: Solomon, Marshall, Stuart, (2008), p. 392). Generally marketers achieve this through simple, repetitive advertising campaigns in magazines, newspapers, on television, and radio. Besides these, they also try to find some slogans and jingles which easily get the attention, so it might make people keep the brand name in their minds. For example, Signal, which is a toothpaste brand produced by Unilever, had developed a toothpaste with a slogan which is also its name; White now. This helped the brand to develop the White Now product concept Like Make-Up for my smile. Nowadays it is seen that this repetitive advertising and jingle were extremely successful to create awareness. So we can appreciate the brand as successful for the initial step on the way of building loyalty.
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In the second step, prospective users should be informed about the benefits the new product has and also be told about its features (see: Solomon, Marshall, Stuart, (2008), p. 392). For this second task, descriptive copy, brochures, informecials, public relations, personal selling and website are used as tools to inform the market. Lets take cologne of LOreal as an example, and think what could be done. For example, it could have a strong, but slightly mentholated scent with a hint of a liniment smell to remind the wearer of how he feels after a good workout (Solomon, Marshall, Stuart, (2008), p. 392). These features of the product should be emphasized on communication ways. Besides these, Signal White Now can be taken as an example again. In this case, the features of creating an immediate and noticeable whitening effect of this tooth paste with a blue dye should highly be mentioned. The next step is to create desire or favorable feelings toward the product and convince some portion of this group that a brand of a product is preferred more than the other brands. Advertising spreads in magazines are used as a communication method at this stage, in addition a celebrity might be used as an ambassador to get more attention (see: Solomon, Marshall, Stuart, (2008), p. 393). Before advertising companies should take into account that there is a need for a good understanding of media opportunities, namely marketers should initially realize which magazines or sources more editorial space has devoted for the product (see: Caywood, (1997), p.348). For example, if the product is related with hair and skin care for women, magazines, such as Redbook, Mc CAlls, Womans Day, Cosmopolitan, Glamour, Elle which are devoted to such products, should be chosen as a source. However, celebrity endorsements are very common way to create desire for personal care products, because this is assumed as a proof of a products effectiveness by target audience which is appealed by companies. For example, Cybill Shepard take part as an ambassador in the advertisements for LOreals Ultress hair coloring and supermodel Niki Taylor did it for Pantene Pro V hair care products. To sum up, trusted celebrities are really helpful to create a great image in the eyes of the target audience, and this automatically helps to create desire (see: Caywood, (1997), p.349).
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The fourth step of hierarchy of effects is about encouraging purchase and trial. This is extremely important because if people dont try a product, there is no possibility for being interested in it. Therefore, companies need to get people try their products. There are plenty of ways to encourage purchase and trial. One of the ways intends to encourage trial by mailing samples of a product to members of the target market (see: Solomon, Marshall, Stuart, (2008), p. 393). For instance, some brands such as Maybelline, Lancme insert some samples in magazines; some others place elaborate displays in stores dispensing money-saving coupons. In addition to these, sponsoring a contest, in which the winner has a chance to meet the ambassador of the brand, might be good way to encourage purchase. The last step of the hierarchy is called as building loyalty which refers convincing customers to stay with the brand. Promotion efforts must maintain ongoing communication with current users to reinforce the bond they feel with the product. As before, they will accomplish this with some mix of strategies, perhaps including directmail advertising to current users, product placements in popular television programs or movies, and maybe even the development of a workout clothing line bearing logo of the brand (Solomon, Marshall, Stuart, (2008), p. 393).
3.1.2
Motivators and Demotivators
The figure below presents a proposed model of loyalty motivators and demotivators. It has not yet been fully tested using empirical studies; although a lot of evidence exist suggesting that the model is valid (see: Thurau & Hansen (2000), p.39). The background theory stems from consumer motivation research (Engel, Blackwell & Miniard (1995), p.403, ff.; Kroeber-Riel &Weinberg (1996), p. 141, ff.) and is well known, for example, in price awareness/interest theory (see: Diller (1991), p.86).
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Figure 5: Ambivalent loyalty forces (Thurau & Hansen (2000), p.40).
In order to observe the various possibilities for strengthening or weakening the impacts of the factors it is necessary to have a look at each of the factors in detail. The first and strongest negative factor for loyalty is opportunism which refers to the willingness of customers to get any opportunity in order to get more value for money. In other words, customers want to be fully flexible while shopping and to only be interested in their own personal benefit. This motivation is generally connected with pride and selfesteem related to the customers own shopping skills and cunning (see: Thurau & Hansen (2000), p.40). This type of customers is often called the smart shopper who tries to optimize shopping by looking for the best ratio between price and performance and adopt flexible shopping strategies (see: Schmalen, (1996), p.50, ff.). To some extent everyone could be seen as smart shopper, but everyone is also tired of only looking for price advantages. Thereby opportunism is sometimes weakened by the need for relief. To this motivation, consumers need more freedom which refers not to
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be highly effected by economic pressures and tasks. Depending on this, they are aware of alternative human values, such as humanity, solidarity or personal loyalty. Under the light of the information given above, I can suggest that marketers may use this kind of particular ambivalence and offer some incentives in order to weaken opportunism. However, some incentives might be offered to strengthen factors which address the need for relief. Guarantees of quality, performance or price competitiveness can be taken into account as some ways of weakening opportunism (see: Spremann, (1988), p.613, ff.). However, it is not logical to expect too much from smart shoppers in any one step, because they are the ones who are not willing to depend on only one supplier. Namely, they may not want to lose their flexibility. Therefore marketers should always give the smart shoppers the opportunity to withdraw from relationship in case they are not satisfied. It should be noted that there are some other ways to weaken opportunism. One of the simple methods is selecting the type of customers who are not very opportunistic, or the customers who have a strong need for relied or like the advantages of a cooperative business relationship (see: Thurau & Hansen (2000), p.41). Another method might be to build up personal relationships which build ethical barriers to a change of supplier (see: Belz, (1993), p.23, ff.). Furthermore, contact with other customers, who are loyal and prefer the supplier, should be encouraged, because this way might also be a good way. It should be noted that companies, suppliers should avoid fully monopolizing all their customers in all above mentioned cases (see: Thurau & Hansen (2000), p.41). The second ambivalent loyalty forces are variety seeking and continuity seeking. As human beings on one hand we always search for variety, on the other hand we are the creatures of habit who love the well-known and familiar. For example, when it comes to talk about personal care products we do not always choose the same product even if all of us have our favorites for each category of products, and buy them again and again. Moreover, we are curious creatures, but we also have habits and like to know exactly what we will get for our money. As it is seen, the needs are various whereas importance
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of the needs change depending on the respective product category and the marketing policies of the suppliers (see: Thurau & Hansen (2000), p.41). Some manufacturers of a product offer relatively few varieties, so habits are dominant and loyalty is high. In contrast, other manufacturers of another product offer a range of new and different innovations and products each year; this encourages a high degree of variety seeking and therefore loyalty is low in the specific market. Furthermore, marketers have to create some incentives in order to strengthen the need for continuity and weaken the need for supplier variety (Thurau & Hansen (2000), p.41). When it comes to talk about personal care products, the second approach mentioned above is more highly applicable, because in many markets such as personal care products markets product variation and differentiation offers variety and prevents customers from changing their brand preferences. On the other hand, there are other markets in which variety is introduced by means of different services such as offering mobility, financial services, organizing entertainment events. These kinds of services might be applied by car manufacturers, namely these cannot be easily applied by manufacturers, marketers in personal care products sector in order to motivate customers to stay in contact with them (see: Thurau & Hansen (2000), p.42). Moreover, some temporary discounts and price stimuli such as bonus programs can be offered to customers looking for varieties, but it should be taken into account that these kinds of offers might have harmful effects in long term. Motivational forces might be exploited by supporting the desire for continuity, but this approach might be appropriate in the markets where there is a lack of attractive competitors. However, loyalty can therefore be increased by maintaining or developing market position of the company. In addition to these, there is one more way to increase loyalty rates is to make ordering routine or automated via e-commerce or electronic data exchange. It is known that ease of purchase is vital for the customers purchasing goods or services from mail order companies (see: Thurau & Hansen (2000), p.42).
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The third ambivalent loyalty forces autonomy against social integration. Now lets firstly explain what autonomy means. It refers to the freedom from others and decisionmaking interdependence. This motivation increases its importance day by day in all the markets involving customers who have high self-esteem. However, customers are very sensitive to any attempts restricting their freedom. Actually those kinds of attempts may create exactly the opposite of the intended effect on consumers behavior, because they cannot stand any restrictions to their freedom (see: Thurau & Hansen (2000), p.42). Furthermore, it should be noted that the contrary force of autonomy, which is social integration, remains a widespread need even in times of individual isolation, because many customers want to have a sense of social security, a sense of affiliation or social esteem within different relationships or groups. As it is seen this is very important from marketing point of view, marketers, therefore, should take this ambivalence into account to be successful and should try to support the desire for autonomy and/or emphasize social integration when customers are bound to the supplier (see: Thurau & Hansen (2000), p.42). Individualization of services, products and communication activities might be the starting point of the approaches. If the customer is offered a genuinely individual and unique package, then this satisfies his or her desire for autonomy, but is still a means of increasing loyalty (Berry & Gresham, (1986), p.43, ff.;Gilmore & Pine, (1994), p.91. ff. ). There is one more possibility called graduated customer bonding which increases customer loyalty stepwise. It achieves this by rewarding the customers for each step forward (see: Thurau & Hansen (2000), p.43). Apart from this, social integration aspects of customer loyalty can be also highlighted. For example, loyal customers can be brought together in customer clubs where they might satisfy their needs for affiliation. A supplier can also arrange some events or facilities which are not related with business itself, customers and staff or customers among them can meet informally there and they can develop private relationships. Group events such as sightseeing activities, courses, parties, trips might be really useful
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instruments in this respect. Such kind of activities is vital tools to emphasize customers links to a company. After analyzing all three ambivalence fields, we can summarize that managing these forces is very tough task, because this does not only rely on intuition, but it also uses analytical approach on the way developing relationships and planning and controlling the success of those marketing initiatives (see: Thurau & Hansen (2000), p.43). 3.1.3 The Benefits of Brand Loyalty
There are three main benefits of brand loyalty such as more certainty, more growth and more profitability; of course these are the ones which can be seen through the eyes of the companies. We can observe the summary of the illustration of the benefits in the table below.
Figure 6: Adopted from Possible economic effects of customer loyalty(Thurau&Hansen(2000), p.32)
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First of all, lets explain what more certainty means; it actually refers that loyal customers might bring more certainty into the business. However, certainty purports more stability within the customer relationship (see: Thurau & Hansen (2000), p.31). For example, this stability may be expressed in habitual purchase decisions, apparent customer immunity to competitors activities (a failure to even perceive these activities), and also a higher tolerance of mistakes made by the supplier (Diller, (1994), p.201,ff.). Moreover, more certainty might be achieved through more intensive customer feedback, but the feedback has to be received by loyal customers in order to have an accurate one. Otherwise, the feedback received from opportunistic customer might be misleading. It should be noted that loyal customers are more prepared to complain, to answer questionnaires, besides they might even work together with the supplier of a brand in building customer satisfaction programs which is a great tool to build up brand loyalty (Status & Seidel, (1998), p.18). When companies have more feedback and more frequent contact with customers, this helps them to have more scope in terms of marketing (see: Thurau & Hansen (2000), p.31,f.). In other words, companies might have the opportunity to address to their loyal customers on a personal basis, namely if their names, social demographics features, consumption habits are known by the suppliers of the brands, building brand loyalty will be easier for them, because getting in touch with them will be easier and more intensive. To sum up, it can be said that agreements between suppliers and customers are more reliable when loyal customers are involved in relationship between them. A second important benefit of brand loyalty called as the growth of the company. Many activities should be arranged in order to retain existing customers, besides this growth can only be achieved by examining the potential of these customers and also by gaining new customers. The first one mentioned above can be done through deeper customer penetration and the latter by encouraging and convincing the existing customers to recommend the brand to others. It is an obvious fact that positive word of mouth is the best and cheapest way to get the attention of other customers (see: Thurau & Hansen (2000), p.32,f.).
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The third benefit of loyalty leads to more profitability through cost savings and revenue increases (see: Reicheld & Sasser, (1990), p.105,ff.). Furthermore, it may indeed be true that loyal customers cost less to serve because they are more familiar with the company and its operations. In other words, it is cheaper to deal with them because they require less hand-holding (Evans, OMalley, and Patterson,(2004), p.287). There is an argument, which has been defended by Diller, highlights that loyal customers might be less sensitive to price and accept higher prices (see: Diller, (1997), p.749,ff.). In contrast, it is also possible that loyal customers demand better process as a reward for their loyalty. Actually, such kind of attitudes may vary depending on the type of goods or services. According to me, it is more highly possible especially in the sector of personal care products that loyal customers expect such rewards. However, this kind of rewarding may cost to the companies in the sector, because this kind of activities require allocation of budget in order to run a customer club or maintain customer database. As a result of such rewarding, customers will then feel more committed to the brands, and may bring additional revenues through their cross-buying activities from different products of the same brands. Depending on what we have described so far, I can say in summary that building loyalty is a vital thing to be considered by the companies because as we have observed the loyalty brings companies some extremely important benefits.
3.2 Analysis of Building Loyalty for Personal Care Products by means of Marketing Mix Elements
Almost everybody uses personal care products now. However, this market is also open for newcomers, in other words it is obvious that there is a huge scope for them because FMCG companies do their best to attract the attention of new users and create loyalty in them. This situation has increased the intensity of the competition in the market. However, strong brands try to make huge profits; therefore they fight with each other to capture the market.
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In order to survive in the market or capture it, companies try to do their best by means of some methods. Moreover, as seen brand loyalty in fast moving consumer goods categories is an interesting issue because it has been observed many times that plenty of brands having cut prices across the categories, but price cuts or sales promotions were not successful enough in terms of sustaining their brands loyalty. In other words, companies may attract consumers in the short run, they may keep using their products for some time and companies may also get some new customers, but a brands value might lose its importance in the eyes of the customers over a period of time, unless brand loyalty is built. Under the light of the information given above, it can be summarized that brand loyalty has vital importance for FMCG companies. It should be noted that there are some factors contributing to brand loyalty in cases they are used efficiently and effectively by FMCG companies. The factors contributing to brand loyalty can be analyzed through marketing mix elements, namely 4Ps. 3.2.1 Product Strategies
Product strategies may vary depending on the type of good and the customer profile. For example, some products can be manufactured and sold by using the same strategies in different countries, however some other products need to be modified or adapted and sold by using a specially designed strategy (see: Rugman and Collinson, (2006), p.315). In order to build brand loyalty, some factors such as culture, product life cycle should be seriously taken into account before deciding on product strategies. The first factor which is cultural factors has an impact on consumers purchasing decisions on the basis of aesthetics or style. As personal care products; cosmetics and other beauty aids could be given as examples related to culture factor. For instance, many products such as shampoos and deodorants sell well in the United States might have limited market appeal elsewhere. On the other hand, perfumes that sell well in Europe might have some difficulties to gain market share in the US if products do not appeal to consumers there. There might be two different reasons for this situation; either people may not use these products or may not see any difference from local offerings. Gillette might be given as
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an example of a brand which had difficulty to gain the target market share in selling toiletries because many people do not see any difference among such kind of products (see: Rugman and Collinson, (2006), p.317). Besides these, color and language are vital factors related to product modifications as well. For example, consumers in Oriental countries prefer dark-colored shampoo, whereas most of the Americans prefer light-colored ones. In addition, language is important both for conveying the right image for the product via slogan and saying and for carrying instructions about contents or use of products (see: Rugman and Collinson, (2006), p.317,f.). After mentioning about most important cultural factors concerning product strategies, product life cycle, that is another reason for modifying a product, should be also highlighted. The most effective strategy for this would be to shorten the PLC by offering new goods or modifying the existing ones (see: Rugman and Collinson, (2006), p.318). It should be noted that only the ones which are related with building brand loyalty have been mentioned above; of course the others were disregarded.
3.2.2
Price
The pricing of goods in the international marketplace is determined by various factors present in home market such as product identity in the market, the customers perceived value of the product, market diversity, competition and so on. Based on these factors, FMCG companies may increase or decrease the price of the product in order to retain new customers and keep their own customers loyal (see: Rugman and Collinson, (2006), p.324). Now lets take pampers, which is a type of nappy for babies, as an example; of course all the parents care so much about their parents, therefore they attach importance to the stuff such as pampers they use for their babies. In some countries where consumers correlate high quality with high price, FMCG companies which produce such things might lose market share if they set low price for them. Companies might even lose their loyal
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customers, because they might think that the reason why a company sets lower prices is that it starts to provide goods with lower quality. As it is seen, this is just a matter of perception by consumers, so it may change from country to country. Similar example might be given for make-up stuff; women in Middle-East generally perceive high value for these goods, therefore companies need to take this fact into account and set their prices in accordance with womens perceptions. 3.2.3 Place
Place means the location where products can be bought or it is sometimes called as the distribution channel. It should be noted that it is really difficult to standardize a distribution system which can be used for every country. In other words, it might not be possible to reach all the customers around the world by using the same distribution channel because there are many individual differences to be considered. Nowadays FMCG companies are aware of this fact; therefore they started to use multiple channel distribution systems, namely they either try to reach customers via physical stores or virtual stores on the Internet. 3.2.4 Promotion
As a core framework, promotion efforts of a company attempt to tell consumers the companys products or services, but in fact these are modified in order to grab attention, create considerable interest among customers, create desire and encourage people to take action. Whereas these are not enough to meet the expectations of the companies, they could be satisfied when the customers become loyal to their brands indeed. Furthermore, there are plenty of ways for promotions which are illustrated in the below graph;
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Figure 7: Types of Promotion
After having a look at the illustration of the types of promotion, now it is time to analyze them more in details. One of the types of promotion is advertising which vary from ads in magazines and newspapers to mobile advertising. For example, many companies selling personal care products advertise in magazines such as Womans Day, Cosmopolitan, Glamour, Elle and so on. Besides these, twitter and facebook are used by many FMCG companies in order to build brand awareness, awareness of promotions and incentives, listen and understand the customers, build strong relationships with customers through dialogue, personal connection, generate positive word of mouth and so on. Moreover, mobile advertising, which helps FMCG companies to be closer to their customers, is a rising method of advertising. Nowadays many FMCG companies perceive mobile advertising as a tool enabling them to have two-way communication
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with their customers, and as a unique way enabling them to reach a target audience and generate information about them while fulfilling promotional activities easier and more cost effective. Moreover, it is a great tool allowing FMCG companies to know whether the message sent is received by customers within some seconds. However, there is also high possibility to receive a response in a short time if the consumer is interested in the offer. Some of the wide range possibilities that mobile advertising offer are as follow: Sending frequent updates on products, new launches, and promotional offers; Allowing consumers to request catalogues, brochures and product samples; Providing access to information which is easy to find, easy to use, and time and location sensitive; Developing interactive click-to-action campaigns, enabling customers to interact with the brand; Promoting mobile clubs to offer loyal members information alerts, discounts, and rewards; Creating appealing mobile internet sites featuring graphical ads, links to news and top stories and search capability. (Velti, (2010), Velti.com) Now lets give an example of mobile advertising which is conducted by Johnson & Johnson. This is partnership between Velti and J & J is an extension of its popular Baby Center en Espanol website to the mobile. (see: Velti, (2010), Velti.com) The second type of promotion way is conducted through direct mailing. This way is a well-known way because almost every internet user has received these kinds of mails such as junk mail. However, it should be noted that this way is not so influential because many people delete these mails before reading.
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The third type of promotion is packaging which has vital importance because it promotes brand image at the first sight. Therefore, it should be designed in accordance with the brand image that is wanted to be created by FMCG companies. Moreover, packages generally carry the information about the personal care product. This is also very important because there are quite number of consumer caring too much about this information, so the companies may lose the chance of making potential customers to be loyal forever if this kind of information is not written on the packages. Furthermore, packages should have eye-catching and inducing features. In fact, this is the most important feature that packages should have in order to capture new customers and also keep existing customers loyal to brand. Moreover, colors should be also taken into account while deciding on package color, because a color might have different meanings in different countries. For example, lets say that you want to introduce a new shampoo with orange color to the market in a country. This color, which means playfulness, might give positive signs to consumers in some countries, but it should not be accepted by some countries such as Ukraine because of the meaning of the color in the political scene in the country. The fourth type of promotion is called personal selling which is a direct form of promotion. It is used in order to persuade customers to a point of view which is wanted by the companies. Although it is a quite old method, it is still conducted successfully by some companies. When it comes to talk about personal selling, the first brand comes to the minds is always Avon, because it has been very successful in conducting this approach. Avon was even so successful in countries such as Mexico where people are not accustomed to buying cosmetics from a door-to-door salesperson. For example; Avon has arranged massive advertising campaign introducing the idea of personal selling in the mentioned country, and informed public that the Avon salesperson was not a common door-to-door vendor, in fact they were professionally trained people who help clients look beautiful. As a result of this, Avon has gained acceptance and fame in the market, and many housewives become loyal to the brand (see: Rugman and Collinson, (2006), p.323).
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Furthermore, one of the most influential types of promotion is public relations. This could be conducted through some tactical approaches to personal care products. It could be seen that the PR tactics for personal care products are very similar to those for any packaged goods or products, however there are some different attributes and applications which are as follow (see: Caywood, (1997), p.349): Cause-related Marketing Celebrity Endorsements Expert Advice Sports Marketing Contests Surveys and Research
Lets start from the first one; cause-related marketing. It is really trendy among marketers to use consumer interest in a cause in order to attract their attention to a product. Cause-related marketing could be done in many ways, for example; the company may make donation each time the product is sold or may foster a long /short term cooperation with a project or group. However, it should be noted that the most important thing here is to know whether causes are relevant to the target audience (see: Caywood, (1997), p.349). Besides these, there is one more fact showing that consumers will not buy the products whatever the causes are if it does not offer any tangible benefits. Hence, this kind of marketing should be supported intensively by public relations in order to increase the potential for media coverage. For example, attracting celebrities or other VIPs to the companies efforts may increase interest (see: Caywood, (1997), p.349). In addition to these, celebrity endorsements are very common for personal care products, but this could just be successful if celebrities really appeal to the target audience. However, it is known that retaining a celebrity costs too much therefore PR
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programs for personal care products may use celebrities for limited engagements such as judges for contests, emcees for events and so on (see: Caywood, (1997), p.349). The other way of PR is the use of experts which is less expensive than celebrities. A hair care brand may hire a well-known salon stylist to speak to beauty media, a toothpaste brand might retain an advisory board of dentists and hygienists, or a baby care brand may use a child psychologist as a spokesperson (Caywood, (1997), p.349,f.). In short, these kinds of experts may give really useful information about brands attributes, and this makes a brand more credible, then consumers might be easily loyal to that brand. The other type of PR as a promotion method is sports marketing that is highly correlated with sports equipment, drinks, and tournaments (see: Caywood, (1997), p.350). For instance, Henkel sponsors a beach volley tournament in order to raise awareness, besides these Unilever may also sponsor such tournaments for its antiperspirant and deodorant brand called Rexona in order to demonstrate its benefits of keeping consumers dry. Contests might be used as well to generate interest and awareness, and reward customers for using the product. Such kinds of activities are useful to increase involvement of users and they can also experience how the product performs. For example, a hair care brand could hold a contest for then girls in a mall by asking them to style their hair using the product. This would provide rewards for the participants; create a good visual for the media, and build awareness with other mall shoppers (Caywood, (1997), p.350). Surveys and research might be a useful tool to have worthiness in the media if these are carefully executed and crafted. Therefore, such methods are sometimes used by companies (see: Caywood, (1997), p.351). The sixth type of promotion method is entertaining extra services in which consumers are involved. In order to analyze this method, there is a need to give some real examples existing in the market. For instance, interactive beauty app of Lancome is a great tool to build brand loyalty. As it is known, marketing for a make-up producer means
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establishing a personal connection between the brand and the consumer. Therefore, French cosmetic company, Lancome has made cooperation with mobile agency, Phonevalley in order to launch iPhone app. This app enables women try out the new color combinations, get some make-up tips from experts, and share their creations with their friends (N.N.,(2009), Mobiadnews.com). As it is seen, this app is really useful to build strong connections between Lancome and the consumers. It seems like Lancome will keep developing the content of applications soon. Moreover, Lancome had also launched the Make-up Blog where women could get plenty of tips from the experts. In addition to this, the company also intends to create an opportunity to enable consumers to have a dialogue with the brands National MakeUp Artists (N.N.,(2009), Mobiadnews.com). In order to observe in details how the app works, lets have a look at the illustration of it below.
Figure 8: Lancome Interactive Beauty App
(N.N.,(2009), Mobiadnews.com)
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The second example of a brand, which offers an entertaining extra service to involve current customers or potential customers in a promotion method, is LOreal Paris. It is obvious that such kind of promotion is an amazing way to capture customers, namely make them become loyal to a brand. Besides these, LOreal Paris skating game, which has been launched in 2008, has a good impact on especially young generation, because they really love such kind of games and while playing this game, they might unconsciously become loyal to the brand. As you can see in the illustration in the following page, the boy in the game has a stylish hair style, so many children playing this game might be willing to have similar style, and hence they might probably start or keep using LOreal hair gel.
Figure 9: L'Oreal Paris Skating Game
(Rollernews, (2008), RollerNews.com)
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Figure 10: Reckitt Benckiser - Match the Brand Game
(ReckittBenckiser, (2010),ReckittBenckiser.jobs) The third example which is conducted by a FMCG company, Reckitt Benckiser is Match the Brand Game that tries to measure the awareness of consumers about the brands of the mentioned company (see: Figure 10). According to me, this is not such a promotion method which is as successful as previous examples, but at least it might be an initial approach to create awareness about the brands. The fourth example is not the one which has been exactly planned as a promotion method that can be used as a loyalty strategy. This example is Henkel Innovation Challenge, which is a game requiring team of two or three students to create their innovative product idea for a Henkel brand which can satisfy peoples needs in 2050, namely taking a Henkel brand into the future.
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Figure 11: Henkel Innovation Challenge - Vision 2050
(Henkel, (2010), Henkel.com) During this game, many students will have the chance to compete against international students, build up their own Henkel network, get business experience and have a lot of fun. Moreover, their task is to explain what future trends they expect and what consumers will need in 2050 according to their vision, describe their innovative product idea for a Henkel brand in 2050 and they should also state their motivation (see: Henkel, (2010), Henkel.com) Now lets mention why this innovation challenge game was given as an example of a promotion method; it is obvious that the students, who take part in this game, will be so involved in this challenging game and unconsciously will become loyal to the brand, and also they will influence the people around them. Depending on this, we can say that this game can be seen as a promotion method trying to create loyalty among consumers. Much more examples might be given for the promotion methods of companies to create loyalty or attract consumer to repeat their purchase behaviors. Now it is time to give an example from a company combining several promotion tools such as entertaining
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services/games, expert advice, sports marketing, celebrity endorsement, videos teaching how to use the products and telling the features of the products in its website. The above mentioned company is Gillette.
Figure 12: Gillette's website for US
(Gillette, (2010), Gillette.com) As you can see in the figure above illustrating some examples, there are plenty of entertaining activities in the U.S. website of Gillette. Now lets try to explain some of those activities. The first one is about getting feedback about how you look. In this application, there are five girls from different countries, consumer choose the one that they want to impress, state their preference of hair style and how they are going to shave, and they also mention the place they will go such as the graduation, job interview, meet the parents, wedding, concert, camping, beach, sports events, coffee shop, night club, gym, and cinema. And then, they ask her to get feedback on their look, and after some seconds they receive the suggestion (see: Gillette, (2010), Gillette.com)
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The second one is product coach telling you which products of Gillette are better for consumers after they customize their look by using the application in the website. For example, this helps to find a suitable shampoo and conditioner according to your hair style, to find the right razor and best shave care products, the right body wash, deodorants and antiperspirants (see: Gillette, (2010), Gillette.com) Moreover, there are some games that can be played online by consumers, and another application in which celebrities successful and famous sports players such as Tiger Woods, Federer explain the features of the products in details. Besides these, there are also some videos about the consumer experiences and so on. As it is seen, the U.S. website of Gillette combines many methods in its website in order to attract the attention of American consumers. After mentioning about entertaining extra services, now it is to analyze one of the most important type of promotions which sales promotions. Classically free gifts, special offers and such things can be taken into account as sales promotions. In addition to these, loyalty programs can be seen as a way of sales promotions although they are seen as being more sophisticated than sales promotions. Loyalty programs are more sophisticated for customers because these programs directly target individuals by the help of the database companies have. Moreover, it should be noted that such programs are used both to acquire new customers and to retain existing customers. Such programs are generally perceived as an extension of traditional sales promotion discounting programs, because these do not only give customers an opportunity to have cheaper shopping, but also provide the sponsoring organization with a great deal of information about individual customers (see: Evans, OMalley, Patterson, (2004), p.288). Furthermore, loyalty programs are developed for various reasons as follow: to generate information; to reward loyal customers;
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to manipulate consumer behavior; to increase switching costs (Evans, OMalley, Patterson, (2004), p.288).
As it is seen above, there are some advantages of loyalty programs. One of them is that a loyalty program could provide information about the customers if it is used appropriately. The information, that could be get via a loyalty program, are frequency of purchase, previous purchases, age, date of birth, geo-demographic, lifestyle, credit history of the customers and so on. By means of these, companies could build new strategies in order to appeal to each consumer in a better and more influential way (see: Evans, OMalley, Patterson, (2004), p.288,f.). However, most programs offer a direct discount as traditional sales promotions doing. This kind of discounts are mostly based on the amount of purchases, or these programs give some points that can be collected and then those might be used for the next purchases. As it is seen, these programs try to encourage consumers to be frequent shoppers, namely loyal customers. Moreover, such a sophisticated program, including wide range database about customers, might be used to encourage customers to buy the products they havent tried yet, and might be used to encourage them to pay premium prices. Actually companies firstly try to understand their customer well, and then respond by continually enhancing value. Under the light of these, it could be concluded that loyalty programs are conducted in order to prevent customers switching to competing brands and to increase the amount spent by each customer (see: Evans, OMalley, Patterson, (2004), p.290). After mentioning about the benefits and use of loyalty programs, now it is time to criticize them. Some critics about them might be as follow: No huge difference between loyalty programs and traditional sales promotions Huge possibility to achieve loyalty towards a program instead of a brand In case of existence of loyalty card for each company or brand, there might be confusion among consumers, and this might decrease the willingness of consumers to own such cards.
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4 Case Studies
4.1 LOral Case - Microsoft CRM Solution
(Adopted from the case done by Microsoft (2006), Microsoft.com) 4.1.1 Introduction
LOral, one of the largest personal care products companies, has a huge customer portfolio for skin care and cosmetic products. As it is known, strengthening brand loyalty is as much vital as building that, because once you build it, you should achieve to keep it for forever otherwise it will be not so profitable. Therefore LOral has decided to implement a company-wide customer relationship management system which starts with a pilot project in South Korea. In order to implement this CRM system, it started working with Siebel and advised on architecture by Microsoft Services. By doing so, LOral has standardized on Siebel CRM and Analytic software that is run on Windows Server 2003 and a Microsoft SQL Server 2005 database (see: Microsoft (2006), Microsoft.com). It should be noted that the CRM solution has helped LOral to increase customer loyalty and reduce the fluctuations, namely it enabled LOral to have more consistent view of customers across all marketing channels. Let me give some information briefly about the situation before mentioning why LOral implemented the CRM and what kind of benefits it provided. LOral is the worlds leading cosmetics and skin care producer with 18 global brands including Ralph Lauren, Lancome and Garnier. Moreover, it distributes to 130 countries on five continents and it is obvious that keeping its customer loyal to its brands is a very hard task. Therefore, it wanted to sustain its high performance in the industry by sharpening its knowledge of customers by having a wide customer relationship management system. In other words, its high performance in the industry could just be maintained by strengthening brand loyalty (see: Microsoft (2006), Microsoft.com). We wanted a consistent, integrated view of our customers across various marketing channels, including the Internet, point of sale, and customer call centers. We also needed
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to find a new business driver and combine the product-centric marketing approach with a greater focus on the customer. We were only too aware that, as competition increases, business growth can be stunted by customer churn. We wanted a CRM capability that would provide us with more opportunities for building customer relationships has been said by Head Customer Strategy Officer of LOral, Daniela Giacchetti (Microsoft (2006), Microsoft.com). As it can be understood from the speech of Giachetti, LOral was keen on implementing a CRM which might enable to have closer contacts with their customers because they thought it was an influential way to strengthen brand loyalty and it would bring some other opportunities. However, it seems like the prediction of Giachetti was right because a data-mining study on customer behavior for Lancome France, for example, has shown strong cross-selling potential to market beauty products for lips and other products such as products for nails. Moreover, there was a need to create a single in-house database with its entire customer data, which had been hosted by several different agencies in order to cross-sell effectively according to Head Customer Strategy Officer of LOral, Daniela Giacchetti(see: Microsoft (2006), Microsoft.com). In addition to these, Giacchetti has said that this kind of standardization on one database solution might improve their flexibility to respond quickly with new marketing campaigns and promotions. However, it is obvious that this flexibility is useful to keep customers be aware of new campaigns and promotions, and there is no doubt that being aware of those will keep customers loyal to the brand (see: Microsoft (2006), Microsoft.com). 4.1.2 Company background
LOral Group, which celebrated its centenary in 2009, is the worlds largest cosmetic and beauty company. However, it has pursued its adventure in the beauty industry to keep its position as the worlds leading company in its sector.
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There is an important fact behind its success which is an endless quest such as a quest for innovation that begun a century ago by scientist and inventor Eugene Schueller, a quest for excellence through increasingly safe, imaginative and effective products, a quest for diversity and a range of cultures to meet needs globally, and a quest for purpose that is combining economic growth, ethics, social and environmental responsibility (see: LOral (2010), Loreal.com).
4.1.3
Implementation of CRM Solution
After explaining the situation, now it is time to mention the implementation process of the CRM Solution conducted by LOral. It should be noted that LOral had already worked with Microsoft for IT services worldwide, but the company has decided to ask Accenture for consultancy before implementing a CRM solution. As a result, Siebel Consumer Goods 7.7 software running on Windows Server 2003, in addition to Siebel business Analytics, was chosen by the company. Moreover, LOral is also using HP Storage Works for its storage area network (see: Microsoft (2006), Microsoft.com). It has been stated by Laurent Fontaine, Customer Manager of Siebel that marketing, sales, and customer service are fully integrated in Siebel Consumer Goods 7.7. and this gives companies a chance to improve their brand management, increase trade and customer marketing return on investment, decrease their customer service costs, and build customer loyalty and demand.
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Figure 13: Illustration of Microsoft CRM
(Microsof, (2005), Costkiller.net) In addition to that, Daniel Giachetti had stated that LOral achieved a 57 per cent decrease in the volume of direct mail on one promotion by the means of the Siebel solution running on Windows Server. Furthermore, a joint venture between Microsoft and Accenture, which specializes in solutions implemented in a Microsoft environment, has been made. However, this team designed and implemented a pilot CRM solution in South Korea. This has been chosen because of its sophisticated multi-channel marketing which includes point of sale, Web, e-mail, and wireless messaging (see: Microsoft (2006), Microsoft.com). In December 2005, LOral extended the solution to support the mass-market domain in France following the success of the pilot CRM project launched in South Korea. This
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solution has already increased the knowledge segment of the database for direct-mail promotions (see: Microsoft (2006), Microsoft.com). 4.1.4 Benefits of CRM Solution
By the means of Siebel CRM Solution, LOral started having significantly improved response rate and lower cost of direct mail and 360-degree view of its customers, and all of these enabled the company to improve customer brand loyalty. It is a clear fact that customer satisfaction always strengthens loyalty. In other words, customers keep being loyal if they are satisfied by the brands. The market, where LOral operates, is a highly competitive one for luxury beauty products. In this kind of markets, the key performance indicator is to retain existing customers.
Figure 14: Microsoft CRM System Benefits
(Microsoft, (2005), Costkiller.net) Daniela Giacchetti , Head Customer Strategy Officer of LOral believes that the most significant benefit of Siebel CRM Solution is that LOral improved brand loyalty. We can now classify value customers more easily and aggressively retain them, and there
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is less risk of customers switching to other brands because of their disappointment at random treatment. Previously, we targeted customers based on their age, but now we consider past purchasing history and other benchmarks, which makes targeting much more effective she says (see: Microsoft (2006), Microsoft.com). After giving an introduction, now it is time to mention about the benefits of CRM Solution in detail. The first one is called as 360-Degree View of the Customer. As mentioned above, the CRM system built by LOral, provides a complete view of the customer. This system spans all available brands across multiple channels which include LOrals 200 Web sites and thousands of offline point-of-sale terminals and call centers (see: Microsoft (2006), Microsoft.com). 360-Degree View of the Customers provides knowledge about the customer, so LOral can now integrate data from different channels and segment customers according to value and behavior. However, it should not be forgotten that the reason why in the past all the campaigns were used to be project based is that LOral did not have a possibility to retain a history for each customer. 4.1.5 Conclusion of LOral Case
This case provides a clear general overview of a cooperation aiming at creating closer contact with consumers that leads to create brand loyalty. It could be said that the CRM solution of LOral was a good tool to manage an end-toend process from consumer analysis and segmentation to creation, execution, and measurement of the success of marketing campaigns. The other benefit the CRM system provided for LOral was that product campaigns started to be generated faster. To sum up, LOral has improved time to market for its product campaigns by implementing a single CRM system and a powerful in-house database solution. In other words, this CRM system has enabled LOral to keep its customers loyal to its brands.
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4.2 Procter & Gamble Case 1 - Pert Plus BC-18 technology

(Adopted by the Cases by Breuer W., and Khler R., Montana J. (1994), p. 121, ff. and SawayaSegalas (2010), SawayaSegalas.com) 4.2.1 Introduction
This case mentions about the importance of innovation for brand loyalty, however it is concerned with a vital issue for international suppliers of consumer goods that of the relationship between global or regional approaches and those which pay attention to the local cultural issues and consumption patterns in order to keep current customers loyal. The case focuses on the introduction of a new hair care technology, which has already been launched in the US hair care market, into the European market by the US manufacturer Procter & Gamble. The technology, which is called BC-18, enables a combination of a shampoo and conditioner in one product, in other words this new product has the same effect as a shampoo and conditioner used separately. However, the case also focuses on the issue how existing American customers are kept loyal, and new customers are made loyal. The case signifies the phases on the way of building loyalty and keeping customers loyal. The key issue of this case is whether the launch of BC-18 product into Europe should be on the basis of pan-European brand or through the adoption of more than one brand name in order to reflect local market needs, and by doing so, P&G enables itself to have the opportunity to build loyalty and keep the customers loyal.
4.2.2
Company background
Procter & Gamble, which was founded in the USA in 1837, is the worlds biggest manufacturer of packaged consumer goods and a global leader in health and beauty products and so on. Moreover, its international operations, that are the fastest growing part of total business, have crucial importance because it is more than one-third of total
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profit of the company. Procter & Gamble has bought in 1985 the Richardson-Vicks Company - with brands like Head & Shoulders, Vidal Sassoon, Pantene - and in 1987 the German Blendax Group dental-care products in order to strengthen its Health and Beauty Care Division. Those acquisitions strengthened P&Gs leading position in health and beauty care products in Europe. As it is seen, Procter & Gamble has broad industry experience and business knowledge; in addition to that it has formalized and institutionalized some principles and policies. One of them is that P&Gs products should provide superior total value and should meet basic consumer needs. Furthermore, P&G has always strong commitment to research to create products better than the others. The reason why P&G is keen on doing so is that it wants to keep its customers loyal. P&G believes that through innovative products and/or continual product development customers could keep being loyal to the brands. Besides these, it is known that P&G has a legendary brand management system that is a group of usually three or four people assuming general responsibility for its brand. These legendary teams plan, develop and direct their brands in its market and develop business objectives, strategies and marketing plans. However, they also select advertising copy and media, develop sales promotion activities, manage package design and product improvement projects and initiate cost savings. To sum up, it might be said that they are the ones who know about their products more than anyone else, and they feel a real sense of ownership. In other words, these legendary brand management teams are the first people who have strong commitment to the brands, namely loyalty to the brands. Therefore, it is also easy for them to develop some strategies in order to keep customers loyal for the brands, but of course some exceptions might arise sometimes. In the beginning of the 1980s, competitors had been able to imitate P&Gs innovative products and marketing strategies, therefore P&G had to have closer co-ordination especially for new brands or modified products in order to ensure they reached the market-place first and existing customers were not captured by competitors.
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4.2.3
The Situation in the USA and the introduction of the BC-18 in the US market
The hair market is comprised of plenty of sub-markets; however shampoo and conditioners are the relevant markets for BC-18 product. Between 1985 and 1988 the US shampoo market was highly shared by many suppliers and brands. In addition to that, noticeable signs of movement have been shown by the relatively small market shares (see: Figure 15).
Figure 15: Illustration of US shampoo market, 1985-8 (Montana J., (1994), p. 124)
Furthermore, the most important P&G shampoo brands have started losing their market share; it means that their customers were not loyal to those brands anymore. Therefore, Procter and Gamble had to find a solution to make the consumers loyal again and decided to introduce the BC-18 technology that could be recognized as an innovation in the US market.
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At the beginning of 1986 the brand Pert has been replaced with Pert Plus, namely the BC-18 has been introduced to the US market. The long-term marketing goal of Pert Plus was to keep customers loyal, increase the intensity of loyalty year-by-year and as a result naturally to take over the leading position in the US shampoo market with a market share of at least 10 %. Moreover, its specific target for the first year was a market share value of 5%. In order to achieve the targets of this revolutionary 2-in-1 shampoo and conditioner technology, Pert Plus was positioned as the shampoo that offers unique formula and offers attractive hair in a convenient way. Furthermore, P&G did not have any specific target group, in other words all the people were in the target group of Pert Plus. However, it should be noted that strategy of Pert Plus was to keep customers, who used Pert before, loyal and make other people, who did not use Pert or a conditioner before, become loyal to Pert Plus. Moreover, Pert Plus was introduced with a price of US $3.20 into US market (see: Figure 16). It should be highlighted that Pert Plus could not reach its target of 5% of market share value for the first year (see: Figure 15), but later on Pert Plus with new innovations has reached its targets. This data will be provided in the following parts.
Figure 16: Size and shelf prices of shampoo in US market, 1985 (Montana J., (1994), p. 124)
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4.2.4
The Situation in Europe in 1988 and introduction of BC-18 into Europe
Following the success of Pert Plus keeping existing customers loyal and making new customers become loyal in the US market, P&G has decided to introduce BC-18 into the European market. Marketing goals and strategies such as 5% of market value share, target group, pricing - were the same applied in the US market. In Europe there was evidence of increased hair-washing which implies a growth of the shampoo market and the conditioner. Actually this was a very good sign for Pert Plus, but the conditioner market was relatively underdeveloped compared with the USA.
Figure 17: Market sizes of shampoo/conditioner in Europe, 1988 (Montana J., (1994), p. 126)
Moreover, there were a quite huge number of suppliers and brands in the European market, however Unilever, Colgate, LOreal were the most important competitors for Procter and Gamble. As it is seen, the competition was higher compared with the US market. In addition, some brands were present in all countries, others only in their
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domestic markets. On the other hand, the share of consumers, who use both shampoo and conditioner, was still below the 44 %, and this was especially true for Southern European countries. Therefore, P&G initially focused on countries like West Germany, Great Britain, France, Scandinavia and Benelux. It must be mentioned that Great Britain, with 42 % has shown the strongest user share among the chosen European countries (see: Figure 17). After all those data was analyzed by P&G, they started to build a marketing strategy in order to get the attention of Europeans and then make them loyal. It was obvious that the easy, time-saving, everyday used of the product was essential when it came to talk about positioning the product. Moreover, it has been decided to place the new product in the premium-priced segment. This was necessary to be consistent with high quality product concept which is claimed by Pert Plus. The price of existing P&G shampoo brands in Europe was taken into account as the criterion for cost planning for the BC-18 introduction in individual European countries. This might be one of the deciding factors in the choice of an introductory brand name for BC-18. After all, plenty of consumer researches have been undertaken by P&G in order to test all possible product concepts with respect to brand names, positioning alternatives, pack sizes, pack designs and prices alternatives for all European countries. As a result, it has been decided to use the existing US bottle for Pert Plus in order to avoid any lead time. In addition, Wash & Go has been chosen as the brand name after careful considerations of the consumer researches, and finally the brand has been launched into European market in 1989.
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4.2.5
General Overview and Current Situation in Europe and the USA
After careful analysis of consumer researches, BC-18 technology has been introduced in European market as well with the brand name Vidal Sassoon Wash & Go in 1989. However, the brand wanted to give the idea that it provides great hair with no fuss. In addition, the brands 1980s advert was asking: Take two bottles into the shower? Not me I just Wash & Go (Baker R., (2010), MarketingWeek.com). However, it should be highlighted that the product was rebranded for Asian market, and it has launched with the name of Rejoice or Rejoy and the brand has scored impressive gains there as well. It must be highlighted that P&G achieved one more time a great success as it had been planned; four years after launching the product, Vidal Sassoon Wash & Go 2-in-1 shampoos have captured 27 per cent of the UK shampoo market (see: N.N., (2010), Encyclopedia.com)
Figure 18: Key Milestones of Innovations in Pert Plus' History
(Sawayasegalas, (2010), SawayaSegalas.com)
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Moreover, Procter and Gamble has met with great success both at home and abroad after it re-launched Pert as Pert Plus, and it has captured a 14.3 per cent share of the U.S. shampoo market which is much more that what P&G planned (see: N.N. (2010), FindArticles.com). Of course there was a secret behind the success of BC-18 technology launched by P&G. The key factor for this success was continuous innovation which has been made by the company. Almost every 3 years company modified the product and those innovations enabled P&G to keep their customer loyal, and also to have new customers. In order to see the key milestones of innovations in Pert Plus history, please have a look at the figure above.
Figure 19: Strong Customer Loyalty - % of Buyers Repeat Purchasing
(Adopted by Sawayasegalas, (2010), SawayaSegalas.com)
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As Pert Plus is an innovative brand, it is not surprising that its customers have strong loyalty, namely huge percentage of repeat purchasing by buyers. According to a
research made by IRI FDMX channel, the customers of Pert Plus have 37 % of repeat purchasing, which is quite high number (see: Figure 19).
Figure 20: Pert's Product Range
(Pert Plus (2010), Pert.com) It is obvious that P&G is aware of the fact that continuous loyalty of customers can only be achieved via continuous innovations, therefore they skill keep launching new products that have innovative futures. For instance, the last version of Pert Plus, which was launched in Ferbruary,1, 2010, was uniquely positioned to expand the 3-in-1 category. This category combines shampoo, conditioner and body wash and this make body moisturizing uniquely intuitive. In addition to that, new version of Pert Plus for Men having 3-in-1 was also launched by P&G (see: pertplus.com).
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4.2.6
Conclusion of Pert Plus Case
In this case, we have seen the introduction of a product into different markets, and the strategies that were applied by P&G in order to build brand loyalty among new users and make existing customers repeat their purchasing behavior. As mentioned, the same product has been launched with some modifications such as brand name, but the only unique thing was innovative feature of the brand. This was the key factor which enables Pert Plus/ Wash & Go/ Rejoice to have success and high customer loyalty in all markets it was launched. As a result, it could be told that this was a great success story of a product in terms of brand loyalty issue.
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4.3 Procter & Gamble Case 2 Max Factor & Cover Girl
4.3.1 Introduction
This case analyzes in detail the methods used by Procter and Gamble in order to keep its customers loyal to its brands Max Factor and Cover Girl. While reading the case, you will have a chance to see examples of critic decisions made by P&G such as keeping two distinct brands. Moreover, you will also see how P&G has implemented its loyalty strategies for both brands. The co-operations made with another companies to have closer contact with its customers and the way P&G creates an easy and personalized experience for its customers in order to make them feel closer to the brand will be deeply mentioned in the following parts. 4.3.2 Company background
Max Factor is a cosmetic company which was founded by Maximilian Factorowicz in 1909. As it is seen, the name of the company comes from the name of the founder who was a Polish Jewish cosmetician. Apart from that, Max Factor, who is the pioneer of the cosmetic industry, was born in 1872, besides he was wig master and make-up artist to the Imperial Theatres of Czarist Russia (see: uk.pg.com). His business has started arising when he immigrated to the US in 1904 and opened a store in Los Angeles. Initially, he was selling perfume, make-up and hair accessories. Later on, he founded the company, Max Factor and Company in 1909 as mentioned above. In fact, he was the first person producing make-up especially for the American film industry. In 1914, Max Factor innovated a grease-paint in cream format which was thinnest and most flexible one at that time. After that, this revolutionary product has started to be used by film starts such as Lucille Ball, Jean Harlow, and Charlie Chaplin, and this has given rise to the growth of Max Factor. Finally, he started exporting to 81 countries worldwide by 1930 (see: uk.pg.com).
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After a while, the company kept producing innovative stuff and launching them to the markets all around the world. It must be highlighted that Max Factor has a wide range of products that are as followings; Products for lips lip gloss, lip liner, lip plumper Products for face concealer, foundation, face powder, rouge, bindi, thanaka, tilaka, cleanser, toner, moisturizer Products for eyes eye linear, eye shadow, kohl, mascara Others shampoo, conditioner, styling cream, nail polish, anti-aging cream, body powder, cold cream, sindoor (see: maxfactor.co.uk) It must be mentioned that the Max Factor name is currently a popular brand of Procter and Gamble, which acquired the company in 1991 (see: uk.pg.com) 4.3.3 Implementation of Loyalty Strategies
Although the Max Factor has various innovative products, it attaches importance to the loyalty strategies; therefore it has been implementing several strategies in order to build loyalty for its products among consumers. The most impressive methods, which enable the Max Factor to have closer contact with its customers, are as follow; Cooperation with Microsoft Advertising Creating an easy, breezy, personalized experience on CoverGirl.com
Now it is time to explain the methods mentioned above in details. The first method was implemented by the means of cooperation with Microsoft Advertising. It is well-known fact that the Christmas period is a key time for the FMCG and Beauty sectors, however this time is also vital for the companies selling in those sectors to get their advertising messages across to consumers to create engagement and brand loyalty. Furthermore, the online market for FMCG companies is a vital touch-point in the
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consumer brand relationship. It can be said that the amount of time being spent online has increased so much as the PC moved out of the office and into the living room, and this gave a rise to the total amount spent in buying-online. Actually, this was the reason why many FMCG companies started integrating their approaches to online planning as it became part of the media mix. In other words, it is obvious that if an online advertising campaign is used correctly, it might create strong relationships between a company and customers, and encourage deep consumer loyalty that cannot be achieved via traditional media (see: Microsoft (2009), advertising.microsoft.com).
Figure 21: Max Factor Friend on Windows Live Messenger
(Max Factor, (2010), pgmaxfactor.com/landing) As there has been a number of really exciting creative executions in the FMCG sector, companies have recognized the creative potential for engagement. Max Factor has also decided to work with Microsoft Advertising to create a Beauty BOT within Instant
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Messenger. As it is seen in the figure above, you can add the Max Factor Friend on Windows Live Messenger offering make-up advice, hints, tips, and links out to their own site and the Max Factor Facebook page. Furthermore, consumers also have a chance to watch the videos with make-up tips, advices and products of experts such as Caroline Barnes, who is a celebrity make-up artist (see: Microsoft (2009), advertising.microsoft.com). Those are great means of creating dialogue between companies and the consumer, and lead to great engagement. In other words, this engagement naturally leads to the brand loyalty. After mentioning about the first impressive method co-operation with Microsoft Advertising applied by the Max Factor to have closer contact with its customers, now it is time to explain the second one, which is made by the means of the website called CoverGirl.com, was introduced in the U.S. market.
Figure 22: Illustration of CoverGirl
(CoverGirl, (2010), CoverGirl.com)
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Procter & Gamble has rightly decided to pull Max Factor from the U.S. market, however it will continue with it in other markets. In the website of Max Factor, there is note for its customer, thanking them for their loyal business through the years and adding that Max Factor will no longer be available in U.S. retail stores but in order to ensure all their make-up needs are met in its absence. Besides these it is also written that the company knows that the customers will love the top quality products of CoverGirl, that is the sister brand of Max Factor (see: MaxFactor.com). In the U.S. market, company decided to focus on its Cover Girl brand, which offers the girl-next-door image, is much preferred by American women. On the other hand, Max Factor brand is characterized by deep and bright colors, which do not appeal to the cosmetic tastes of American women. Briefly it could be said that Procter & Gamble aimed at satisfying the expectations and needs of two different types of customers by keeping Cover Girl for the U.S. and the Max Factor for the rest of the world (see: Mohiuddin O., (2009) EuroMonitor.com). By doing so the company has planned to keep both markets loyal to its products. In the U.S. market, the Max Factor is perceived as an age-old brand that dates back to 1904. On one hand, the brands products have stuck to its original form; therefore it has started to fall out of favor with U.S. consumers. On the other hand, Cover Girl has developed a trendy, sporty image and preferred more natural looking fashion icons who appeal to American style. Besides these, take off the mask was used as one the brands mottos that targets American womens casual attitude towards beauty (see: Mohiuddin O., (2009) EuroMonitor.com). As mentioned above, the strategy was great in terms of appealing to the American consumers, but of course brand was aware of the fact that it should have found a method that enables them to have closer contact with the customers. As the Max Factor Friend on Windows Live Messenger, Cover Girl also offers a possibility of a chat love with a Cover Girl beauty consultancy where consumers could get customized make up tips and product recommendations. Lets briefly explain how this website works; firstly consumer register in the website and log in, then use the Color Match by telling their hair color, eyes, and their skin tone in order to get some
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recommendations about which shades flatter them best. After those things, consumers will see their shade and product recommendations, however once they register in the website, they can click on the options asking whether they want to receive Cover Girl Emails every month with personalized step-by-step looks, new product information, and special offers and they can even ask to receive tips via sms (see: CoverGirl.com). As it is seen, the brand creates an easy, breezy, personalized experience on CoverGirl.com. This enables them to be in closer touch with the customers, and that is the key issue for loyalty strategies. 4.3.4 Conclusion of Max Factor & Cover Girl Case
This case demonstrated two successful loyalty strategies applied by P&G for its two brands, Max Factor and Cover Girl. Even if both strategies have some similarities, there were also some sharp differences in the way P&G conducted the strategies. For instance, the radical decision pulling Max Factor from the U.S. market and focusing on Cover Girl brand for this market, was extremely good example showing how a company could sacrifice one of its brands for the sake of another brands loyalty strategy. To sum up, it must be said that this case provided us a wide general view of P&Gs loyalty strategies that had reached success.
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4.4 Procter & Gamble Case 4 Gillette

4.4.1 Introduction
This case firstly mentions about the historical background of Gillette and its purchase by Procter and Gamble. Secondly, it analyzes how Gillette introduced its new brand called Gillette Fusion and what kind of loyalty strategies applied by the company in order to reach its target. Moreover, the process and impact of the loyalty strategy will be mentioned in detail in the case and you will see the importance of word of mouth in creating brand loyalty.
Figure 23: Gillette Happy 18th Birthday Gift
(Consumerist (2006), Consumerist.com)
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4.4.2
Company background
Gillette, which has been originally founded by King Camp Gillette in 1985, is currently one of the most successful and profitable brands of Procter & Gamble. After P&G had finalized its purchase of The Gillette Company, this merger created the worlds far best and largest personal care company. Apart from that, the Gillette brand is the world leader in the mens grooming product category, however it is the leader for some certain womens grooming products. The company is well-known because of its high-quality and innovative products. Besides it also has impressive marketing strategies that help the brand to reach success. 4.4.3 Evolution of Gillettes loyalty strategy
In April 2008, Procter & Gamble was about to launch new line of Gillette called Gillette Fusion that later on achieved delivering more than US $1 billion in annual sales. Now we will see how Gillette achieved this growth in a short timeframe and what kind of loyalty strategies it used (see: N.N. (2010), ResearchandMarkets.com). As it is known, P&G regularly updates the range of its products and it also does it for Gillette razors in order to stay ahead of the competition, but of course updated versions alone are not enough to keep this success. Therefore those kinds of efforts must be supported by some successful loyalty strategies enabling the company to keep present customers loyal and create loyalty in new users. However, P&G was also aware of this fact, and they were planning such strategies. Apart from that, Gillette Fusion was expected to be P&Gs fastest ever brand reaching a US $ 1 billion in sales. The product included some modifications over its predecessor launch in 2005, in other words there were some improvements aiming to make shaving more effective, smoother, and quicker (see: N.N. (2010), ResearchandMarkets.com). Furthermore, consumers were really skeptic for the launch of the Fusion brand, because the brand has not launched new Gillette razor brand that offers two different versions since 1998. In other words, it was the first time for Gillette to roll out two versions of a
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razor at once a manual and battery powered model (see: N.N. (2010), ResearchandMarkets.com). As mentioned above, this new brand offered some improvements over its predecessor, for example the Fusion Power handle contains a microchip which improves the system performance, and the Fusion contains a trimmer blade, flexible comfort and five blades that are closer together than Mach 3 (see: N.N. (2010), ResearchandMarkets.com).. It is obvious that Gillette made a huge effort to offer modifications and innovative features for its new brand in order to create brand loyalty. Initially P&G has launched an ambitious promotional campaigns and their marketing strategy was having a sports theme to attract male attention. Especially they designed sports-themed website and sports stars started to be used as ambassador of the brand. Besides these, it must be noted that the budget for advertising was the highest in the history of Gillette, but it could be seen worthwhile as the UK Fusion received 30,000 hits a day in its first month of launch (see: N.N. (2010), ResearchandMarkets.com).. After mentioning about promotional and advertising efforts of Gillette, now it is to focus on the key of its loyalty strategy; Gillette was aiming to reach new generation and to create brand loyalty in new users. After careful consideration and analysis, the company has decided to offer 18th birthday program to the youths turning 18 (see: N.N. (2010), ResearchandMarkets.com). As soon as Gillette launched this loyalty program, thousands of consumers started discussing how the company finds information about their date of birth, trying to remember whether they filled any form, and chatting about what this gift is, what kind of products they have received and so on. Furthermore, plenty of blogs, forums, and such internet communication tools started to open a discussion page for this issue. There were both positive and negative comments, for example on one hand there are some telling that they are loyal to the Gillette Fusion since they received this 18th birthday gift and if one day Gillette stops producing Gillette Fusion, they will stop shaving until it starts to be produced again, on the other hand, there are some others saying that this loyalty program is completely useless.
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Even if there are also negative feedbacks about the program, it is obvious that this program was quite successful. Because many people have started to talk about the new product of Gillette, namely word of mouth, so consumers were actually taking part in the advertisements efforts of Gillette. As a result of all this process, it could be said that many people have unconsciously become loyal to the Gillette Fusion. In addition to that, it is a psychological fact that human beings like getting a gift, and adolescents are the ones who could be easily amazed by such gifts. As a last, it is known that Gillette Fusion has reached to its target of being a brand having US $1 billion in annual sales and its customers keep continuously buying the brands products. To sum up, it can be said that the success of Gillette was not by chance, it achieved as a result of clever strategies. 4.4.4 Conclusion of Gillette Case
The case clearly showed the strategies applied by Gillette in order create brand loyalty for its new product called Gillette Fusion. The impact of this loyalty program tried to be illustrated by giving examples from the consumers. For example, some consumers, who tell that they cannot think a shave experience without Gillette Fusion, can be seen as the ambassadors of the brand who spreads positive word of mouth around. However, it should be noted that word of mouth has vital importance for a brand loyalty strategy. To sum up, it can be told that this case showed us all the steps of a successful loyalty strategy applied by Procter and Gamble.
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4.5 Henkel Case Schwarzkopf Salon Loyalty Program

4.5.1 Introduction
This case mainly focuses on one of loyalty strategies of Schwarzkopf that is Salon Loyalty Program. The company is dedicated to the development of innovative product technology and has more than 7,600 patents pending. It is obvious that the success of 111 years lie on the innovations of the brand, but as building brand loyalty is a hard task, the brand conducts some loyalty strategies, and this case will enable you to see each step of this salon loyalty program. 4.5.2 Company background
Henkels history dates back to 1876 when Fritz Henkel, who was a 28 year-old merchant interested in science, and his two partners founded the company Henkel & Cie in Aachen and marketed his first product that was a universal detergent based on silicate (see: Henkel.com). During the following years, this German family of entrepreneurs and thousands of employees contributed to the growth of this global company. On the way of becoming a global brand, acquisitions also took very important part in the history of Henkel. The most important example is the acquisition of Schwarzkopf in 1995 (see: Henkel.com). After mentioning briefly about the history of Henkel, now it is time to give an overview of 111 years of Schwarzkopf. Initially, the chemist Hans Schwarzkopf used to run his small drugstores in Berlin, and later on it became a world-wide known brand. As it is known, Schwarzkopf is one of the strongest brands of parent-company Henkel, and it handles with all products in the categories such as coloration, hair care and styling (see: Henkel.com).
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4.5.3
Rules and Regulations of Salon Loyalty Program, and how it works
The Salon Loyalty Program run by Schwarzkopf called clubSKP, and this program initially ask the owners of the Salons to fill a form which includes numerous questions such as number of full-time employees, chair renters of the salon, top three finishing lines in salon, top three care lines in salon, Schwarzkopf Professional lines that are presently used, average price of a cut-dry, and average price of a color service (see: clubSKP.com). By doing so, the company gets the opportunity to have a general overview of both Salons and its customers portfolio, and this enables it to keep closer contact with consumers. Now lets mention about the criteria for joining clubSKP; there are three reward levels, and salons are supposed to determine for their reward level.
Figure 24: Reward Chart of Salon Loyalty Program
(see: clubSKP.com) The quarterly purchases of a salon might include any combination of SKP products purchased within a quarterly period including color, care, finish and accessory products. Moreover, the reward level of a salon determines the reward points that the salon will receive on a quarterly basis. The chart above illustrates the reward points a salon can
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earn. However, reward level and respective reward points may fluctuate from quarter-toquarter depending on the total purchases made quarterly by a company (see: clubSKP.com). For instance, if a company chooses S as a reward level and purchases $2,500 in SKP products, this company will receive 1,250 points - $2,500/$100 X 50 points. As mentioned above, this method allows a salon the advantage of fluctuating earning between earning 50, 70 or 100 reward points for every $100 in SKP purchase. In other words, if above mentioned company purchases $4,000 in the second quarter, it will earn 70 reward points for every $100 in SKP purchases. After mentioning about the rules and regulations of the system, lets mention about what to do after filling the enrollment form; firstly, the form must be submitted via the distributor sales consultant or mailed directly to clubSKP. Later on, the enrollment form will be verified by the distributor house and SKP, and a welcome pack including a letter confirming the salon enrollment will be sent to the address of the salon within 6 weeks of enrollment (see: clubSKP.com).
Figure 25: Schwarzkopf Salon Loyalty Program
(ClubSKP, (2010), ClubSKP.com)
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It must be stated that clubSKP, that is illustrated above, work in co-operation with distributor houses in order to calculate quarterly SKP purchases of salons, and clubSKP track their purchases and provide a statement of the purchases with an update on the number of reward points. Moreover, all statements are mailed on the first days of the following months May, August, November and February (see: clubSKP.com). Apart from that, it should be forgotten that salons must maintain the minimum purchases as mentioned in the S reward level. If a salon does not meet the quarterly minimum purchase for two consecutive quarters, this salon will automatically will automatically be excluded from this system and will receive a disqualification letter within six weeks (see: clubSKP.com). After explaining the rules, regulations and the way the system works, now it is time to focus on the most important part explaining how to redeem the reward points; as mentioned, a salon receives a welcome pack within six weeks of enrollment, besides it receives a redemption catalogue illustrating all of the unique salon tools, merchandise, accessories and salon products that can be get by using reward points. Another good thing for redemption system is that a salon can carry its reward points over to the next quarter to redeem them, but all reward points earned in a calendar year must be used by March 31 of that year, namely reward points cannot carried to the next year. As a last but not least, reward are received within 6-8 week-time (see: clubSKP.com). 4.5.4 Conclusion of Schwarzkopf Case
This case provided an overview of the Schwarzkopfs Salon Loyalty Program by which enrolled salons receive reward points that can be redeemed to get several saloon tools and Schwarzkopf products. It might be briefly said that this loyalty program is the one rewarding the loyal customers in order to encourage them to repeat their purchases. Furthermore, this program enables the brand to have a general overview of the consumers of those salons. Having a general view of consumers will help the brand to try to set some strategies specifically appealing to the target consumer.
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As a last, it can be told that this loyalty program is extremely clever one not only targeting to keep saloons be loyal, but also to have closer contacts with customers of those salons. Because if the number of enrolled salons increase, Schwarzkopf products will reach to more and more consumers, and this close contact will enhance the loyalty among consumers.
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5 Recommended Brand Loyalty Strategies for FMCG companies

After analyzing the strategies used by FMCG companies in order to create brand loyalty and keep it, there are still some other strategies which have not been used until now or partially done by the companies. In this chapter, those two kinds of strategies will be highlighted and recommended. After that it will be tried to explain how to make them work. The recommended strategies are as follow; Product coaching Co-operation with hairdressers and beauty centers Games and Tournaments Wedding sponsorships and rewarding top purchasers Special editions of products having the pictures of its customers Reminder of special days Free healthcare services
5.1 Product Coaching

As it was analyzed in the third chapter, Gillette has a virtual product coach giving some information about the features of the products and how to use them and also giving suggestions about which brands are better matched with the type skin of consumers, hair and so on. It seems like this method is quite impressive and useful as a brand loyalty strategy, but it should be noted that there are not so many people clicking on the website of the brands and getting information about the products. Moreover, FMCG companies must be aware of the fact that they must try to create brand loyalty among youths and even children for some of their products. For example, dental care products such as toothpastes, mouth wash products, tooth brushes and feminine care products such as pads and other type of products such as condoms are some of those kinds of products mentioned above.
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Now it is time to explain in details how to apply strategies for those products. Firstly lets mention about dental care products. In order to build brand loyalty for dental care products among children, FMCG companies must have closer contact with them and try to impress them by the means of some methods. The best place to achieve this would take place where they are all together. In other words, schools are the best place where FMCG companies could meet plenty of children there at the same time. It is clear that many of us have been loyal for some brands since our childhood, therefore personal care products producers must be awake to this fact and take action. Lets clarify the method which could be used in order to reach young consumers and make them loyal. The FMCG companies either must make co-operation with the Ministries of Health and Education of a country where they want to build loyalty or do the same with some private hospitals in order to assign some dentists to visit some primary schools to give information about the benefits of dental care products and how to use them and tell them what might happen if they do not use such products, of course while dentists doing this, the representatives of the brand must hand out some free samples of their products to the ones who fill the form asking some questions about their date of birth, address, phone number and e-mail address. None of human beings can deny the fact that most of us like receiving a gift or free samples. In other words, if a FMCG company does the above mentioned things, they will most probably get the sympathy of children. Moreover, the reason why the companies should ask them to fill such forms is that these kinds of information might enable them to be in touch with them for a long time; however this will be helpful to keep them loyal. Besides these they might even send some birthday gifts like small samples and brochure mentioning the new products or send them greetings cards or email for their birthday. Secondly, the producers of feminine care products such as pads and condom producers may also apply similar strategies. In this case, they might arrange similar organizations in middle and high schools in order to inform youth about such products and give some free samples. By doing so, both youth are informed about these products and also
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companies promote their products and take the first step on the way of building brand loyalty. Furthermore, producers of such products might also give some samples just in case the students agree to fill similar forms asking questions about their demographic variables. This kind of forms is vital for FMCG companies in order to keep consumer loyal once they build it. To sum up, it could be told that FMCG companies might create brand loyalty easily and keep it for a long time via product coaching with the help of doctors, dentists and some other experts. If such organizations are well designed and applied by the companies, the success in creating loyalty among students is inevitable.
5.2 Co-operation with hairdressers and beauty centers

As we know some FMCG companies have some agreements with hairdressers and beauty centers in order to sell and use their products in their shops; however it must be highlighted that if this kind of co-operation is developed and extended to a higher level, it might be a key tool for those companies to build brand loyalty. The extension of co-operation can be done in several ways; for example, the Henkel Salon Loyalty program, which has been mentioned in the previous chapter, could be improved. Even if the company is quite successful in building salon loyalty, there is still a lot to improve. Now let me explain in details; the well - known companies in cosmetic industry, such as P&G, Henkel, Estee Lauder, LOreal, Kimberley Clark, Colgate-Palmolive, Clorox, Avon and J&J, might advance this kind of co-operations. For instance, these companies, on one hand, can make co-operation with hair dressers and beauty centers as Henkel does, namely they can develop a loyalty program to enable its customers to collect some points then redeem them and also to reward its customers. On the other hand, these companies can make a further agreement with the salons and
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beauty centers in order to redesign their salon. All the expenses for these changes must be covered by the FMCG Company. Lets take LOreal as an example and try to define what it might be done; firstly it must be stated in the agreement that LOreal is the one taking decision about the interior design. For instance, they can design all the salons that have agreement with them in a unique frame. The predominant colors of the tools, chairs, walls, and the frame of the mirrors and so on would be black and some white letters, figures or stripes as it is in the logo of LOreal in order to put the brand in minds of the customers of that salon. Moreover, LOreal must also design clothes with same colors for all the workers in the salon and of course those clothes must be trendy and classy. However, the logo of the company could be also set on the display case or panel of the salon. Apart from that, all the workers must be trained to inform about the features and benefits of the products, and after this session all of them will somehow become the ambassadors of the brand because they will suggest the products and give information to their customers. Even if this kind of training activities already exists, companies like LOreal keep doing that more intensively, periodically and continuously in order to update the information about new products. Moreover, the workers must be asked to encourage customers to try new products of the brand. For instance, if a woman just comes to have her hair dyed, the hairdresser should explain the new products and ask her whether she wants to try a new one, and also make her try other products such as make-up, colorations, lipstick, nail polish, perfumes and so on. By doing so, new products will be tried by customers. It must be noted that this kind of strategy could work better in Mediterranean countries considering that the majority of women in these countries like socializing in places such as hair dressers and beauty centers, chatting and sharing their experiences with each other there, so if they are satisfied with the service and products there, the customers of salons will become loyal to this brand and will maybe unconsciously become kind of representatives of the brand as well.
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As many hairdressers and beauty centers have a customer portfolio including demographic information of its customers, the salons, which have co-operation with brands like LOreal, should also have this portfolio and send them e-mails telling about new products. Besides these, they should send their customers an e-mail one day before their special days such as wedding anniversary and birthday and inform that if they come to the salon that day, they will have a service free of charge. As it is seen, there is a win-win situation that is designed in a way that all the participants could benefit from it. As a result of these activities, both the salons and the brands will be happy because it is really good for both when customers become loyal. In summary, it could be said that even if similar strategies applied by FMCG companies in a similar context, these activities and co-operations should be developed in order to get better results. In other words, FMCG companies should try to make some salons be their franchisee and try to build a huge chain of salons and beauty centers.
5.3 Games and Tournaments

As we have already seen in the third chapter that companies like LOreal and Gillette had launched some games in the internet in order to create strong connections with their customers, of course there are some other examples. However, it cannot be denied that these games could not reach yet to a bigger number of consumers even if they have potential to do it. Now lets mention why these games are not so successful or what it could be done to enhance them. The first reason is that these games are only launched in the internet and people are not informed well about them. The best way to widen the portfolio of the people playing these games would be to arrange some tournaments in a public place. The reason why it should take place in a public place is to get the attention of others. Moreover, the winners of those games should be awarded with the products of the organizer brand.
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For instance, this could be easily conducted by LOreal for its game called skating game. Especially, young generation may like this game so much if it is promoted in a better way. Apart from that, hair gel producers can also launch a game in which players are supposed to create an attractive and creative hair style, however the products which they can use in the game must be the products of that producer. Moreover, the company can also turn this game into a competition and rank the players according to their creativity. To decide about creativeness of the players, of course there must be some rules. Besides these, the brand launching such games can make co-operation with Sony Play Station or other companies. By doing so, company could increase its profits and also grab the attention of millions. Another version of such game could be conducted in a real life instead of a virtual one. It means that the same hair gel producers could arrange some activities or tournaments in which consumers can compete among each other. In other words, the consumers can try to create their creative hair styles by using the products of sponsoring brands in a tournament and be the winner of it. In the final, the winner must be awarded with a big box which is full of products of the sponsoring company. Moreover, the requirement to attend this tournament could be to bring a number of covers of the latest products with themselves or bring the serial numbers of the products they have bought. The reason for asking that is to make people try their latest products. As it is known, consumers cannot be loyal to products that they never try. To sum up, as creating closer contact is the key issue to create brand loyalty, it could be said that these kinds of games and tournaments are good tools to achieve that.
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5.4 Wedding Sponsorship and Rewarding Top Purchasers

The above mentioned strategies have been partially tried by some FMCG companies, but the one, which will be mentioned in the following paragraphs, have not been done until now. This is a method which can be done by sponsoring weddings. In order to clarify this possible strategy, lets try to give some examples. For instance, a company could launch a new campaign that invites their customers, who plan to get married soon, to contact the company and ask them to sponsor their weddings. Within the framework of this campaign, the FMCG Company will sponsor the wedding of its customers to a certain extent. However, the company and the customers will sign an agreement about the conditions requiring that the company is allowed to distribute some samples of its products and arrange a lottery. At the end of the lottery, the winners will get some packets prepared by the sponsoring company. Moreover, the company might also prepare and distribute some forms to get the contact information of the participants. Considering that this kind of sponsorship may require a huge budget, companies could add a condition into the agreement telling that the company only sponsor weddings of the ones who are among top purchasers. In other words, this strategy might be a rewarding system for loyal customers, and this clause might encourage them to buy more and more. Now lets mention how to evaluate the top purchasers; this evaluation could be made via a classical method which is a membership card. This card could include a chip which collects and keeps the information about purchases made. In addition to this, the website of the company must have a section where there is a list of purchasers, so consumers could see their rankings in the list. It is obvious that a very had competition might arise among customers, because as human beings we always like competing among each other, this method might lead to such competition. However, we compete more efficiently if there is a gift or reward to get at the end.
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On the other hand, it should be highlighted that the top purchasers, who are already married or are not going to get married in a near future, can be rewarded in another way. For instance, these loyal customers could be remunerated by giving some gift box including the latest products. If they keep being still loyal or take part among the top purchasers in the next session, the reward must be better than the previous one. This is crucial point of rewarding system, because the customers must be curious about the next reward. If they know that they will get a similar gift, this will not encourage them to keep competing with other customers in order to take part among the top customers. As a result, it must be said that the rewarding system must be encouraging and have continuous improvement and newness in order to keep customers loyal and encourage others to take part in this competition and eventually become loyal.
5.5 Special editions of products having the pictures of its customers

In this section, a strategy, which has already been used by some other FMCG companies such as Pepsi, will be recommended to the personal care products producers, because this method has a big potential to succeed in creating brand loyalty. Now lets give some details about this method; first of all, this strategy requires launching a special edition of some products such as shampoo, perfumes, and deodorants. On the cover of these special editions there must be the pictures of customers. Even if those pictures will be really tiny and small, it is possible to attract the consumers. For example, once a customer has his or her picture on the cover, he or she might call her relatives and friends to tell that her picture is on the cover of a shampoo or perfume, and then those people will be curious to see it. At the end, they will probably go to a shop to buy this product just because of their curiosity. It is highly possible that this kind of methods might cause positive word of mouth or at least grab the attention for the products.
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It must be noted that if this kind of strategies are structured well, it will definitely be successful. For instance, if the companies make an announcement saying that if the customers collect five or ten serial number of the products which are situated under the cover of the products and send them and their pictures to the e-mail address of the brand, their pictures will be on the special editions of their products. Maybe this kind of things will not be so successful among old people, but it is highly possible that young generation will love this. Thats why it is better to launch such special editions for the products that appeal to young generation. In addition to that, it should be kept in mind that some people might not like this and this strategy might even annoy them, therefore companies should avoid launching the products with this kind of cover. Because companies might even lose their existing loyal customers as a result of this change, thereby they should launch the two types existing one and the new one- at the same time. Besides these, companies can even choose around ten customers among the ones whose pictures are on the special editions and ask them to play in their next ads. If a company informs their customers before launching such editions, the strategy will be catchier and will be more efficient. As a result of these activities, attractive promotions and positive word of mouth, customers probably will be unconsciously loyal to the brands, because these strategies are good at creating strong ties between brands and customers.
5.6 Reminder of special days

The present brand loyalty strategy can only be conducted on condition that the consumers fill a form including several questions in advance. This strategy can especially appeal to male consumers. Now lets give some details about the strategy. As it is known, most of the men in the world have some difficulties to remember special days, and these days are so important for most of the women.
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Therefore, this strategy aims at doing a favor for men and at the same time impress the women. In other words, companies, which will use this strategy, will kill two birds with one stone. Lets clarify the strategy a bit more; male consumers are asked to fill a form including questions like the date of wedding anniversary, anniversary of first meeting, the birthday of girlfriend and so on. It is very normal that many of the male consumers do not remember these dates by heart at that moment; therefore they might be asked to send an e-mail or text to the contact number and e-mail address of the company when they remember them or they might be called later on via mobile phone in order to ask them again. The reason why the companies should ask this kind of questions is that they will contact and remind the male customers these dates in advance and offer them discounts for the products which can be given as a gift. Besides these, the male customers must be informed that if they come to buy gifts for their girlfriends or wives, they will be informed about new products and the ones which are demanded more by women, and also they will get a free for themselves. As you can see, this strategy both do favor to its customers by reminding the special days and giving a discount and also reward them because of their loyalty. It is highly possible that this strategy will be admired by male customers because they will not have to think about gifts for special days. Moreover, male customers will be assisted by women in the shops, and as women can easily predict the expectations of other woman, they will be able to give good suggestions to them. As a result of this service, most probably both the male customers and their wives and girlfriends will be satisfied and this situation will give the companies a chance to keep their customers loyal.
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5.7 Free Health Care Services

This seventh recommended loyalty strategy is also kind of program which rewards their customers because of their loyalty, namely there is a mutual benefit. In order to evaluate the level of its customers, companies should find a way or a tool. For instance, the traditional way, which is coupon, would be a good tool to do it. Each package of a product can include a coupon, and these coupons must be collected by the customers in order to get free health care services from the doctors who have a cooperation with the company. For instance, this loyalty strategy could be applied for napkins. If the parents of a baby keep buying for a period of time and collect the coupons, they can be rewarded with free health care service for their baby. Besides these, companies could set up a reward chart of loyalty where the consumers can see which kind of services they might get according to the number of coupons they already collected. This kind of rewards can be highly appreciated by the people coming from countries where state hospitals are not so good. As private doctor services cost too much and many people are not able to pay those amounts, this kind of strategy could be really efficient to make customers loyal. Of course, this method can also be applied to different products such hair care products, female care products, make-up, mouth care products and so on. For instance, if this strategy was applied to hair care products or make-up, the customers would be rewarded with free services in beauty centers and hair dressers working under an agreement with the company. To sum up, it can be said that the above mentioned strategy has a potential to be appreciated by consumer because of its rewarding feature.
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Conclusion
In this study the issue of brand loyalty for personal care products was studied through various steps. As it had been initially planned, the followings were analyzed and written down: General review of brand loyalty Analysis of the relationship between loyalty factor and brand Analysis of loyalty segments Overview and evaluation of the brand loyalty models Examination of steps, motivators and demotivators on the way of building brand loyalty Analysis of the benefits of brand loyalty Analysis of building brand loyalty for personal care products by the means of four Ps Observation of real brand loyalty strategies applied by FMCG companies through case studies Depending on what has been done in this study, it can be told that it has been observed one more time how hard loyalty building for brands of personal care products is. Therefore, the present study has tried to analyze previous researches in order to benefit from the past, to examine real examples in the market, and to give suggestions for further development of new strategies and to pave the way for further studies and analysis. Based on previous research and literature, which were analyzed in the second chapter, it can be concluded that even if there were plenty of different definitions about brand loyalty, there was a common point that all of the researchers and scholars agreed upon.
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This was the fact that brand loyalty is a unique experience that all of the FMCG companies want to achieve, but not all of them can do it. Furthermore, the reason to examine all of these definitions was to benefit from previous ideas in order not to repeat same ideas and to develop new ideas under the light of those points of views. In addition, Dick and Basu model, and Jones loyalty model, which are the loyalty segments, were highlighted in this study in order to explain which kinds of strategies can be applied to the consumers in different segments. In other words, possible strategies for each segment were mentioned. The brand loyalty models, which are stochastic and deterministic ones, were also analyzed. As the key issue for brand loyalty is to predict consumer behavior, the aim was to show the features of these models and to see which one is more applicable to personal care products. As a result, it was decided that stochastic models were better for those kinds of products because these models seem to predict consumer behavior more accurately than deterministic models. However, it was suggested to use both methods according to the conditions and the product in order to get better results. In addition, the aim of the third chapter was to analyze the steps customers go through from initial awareness to brand loyalty, namely the tasks of the companies in order to create brand loyalty. The difficulties that FMCG companies face with on the way of building brand loyalty and the solutions to overcome each difficulty were also mentioned. After mentioning about the loyalty path and probable difficulties, the benefits, which could be got by the companies if above mentioned phases are passed successfully, were also highlighted. Apart from that, building brand loyalty by the means of marketing mix was analyzed in details and FMCG companies strategies for each of the 4Ps to grab the attention of new consumers and create loyalty in them were examined and examples were given for each of them. Especially, promotional efforts, which are the key tool for brand loyalty, were illustrated by several examples.
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In the fourth chapter, the task was to analyze the loyalty strategies of famous FMCG companies, therefore case studies for brands such as LOreal, P&G brands like Pert Plus (Wash & Go in Europe), Gillette, Max Factor and Cover Girl, and Schwarzkopf which is one of the most successful brands of Henkel were developed in order to enable readers to observe real loyalty strategies. Another reason for developing such cases was to discover the lacking features of the mentioned loyalty strategies and then give some recommendations to improve those strategies and also to recommend new strategies which can be applied as loyalty strategies by FMCG companies. Therefore, some modifications for existing loyalty strategies or new strategies were provided in the fifth chapter. As all the researches have some limitations, this thesis also had some restrictions. Especially with respect to the practical part of this study scrutinizing existing studies, the limitation was to find some books related to the loyalty for personal care product. Thereby, the information collected from different articles, the websites of FMCG companies, magazines were combined to provide some case studies for personal care products. Furthermore, the lack of wide empirical evaluation providing numerical information can be regarded as a limitation of this study, because this kind of evaluations would enable the researcher to see how successful the loyalty strategies of the FMCG companies are and whether they could keep their customers loyal in the long run. We just had a possibility to observe such evaluation in the case of Pert Plus BC-18 technology (see: page 65). Besides it should be noted that the evaluations for other companies loyalty strategies discussed in the case studies were based on the interpretation of information collected via several different sources mentioned above. During the last phases of this study, some marketing people working at well-known FMCG companies were got into touch in order to get some more information about the brand loyalty strategies of these companies, but they either did not want to talk about their strategies at all or said some general things which were not concrete examples, therefore those speeches were not stated in the thesis. This can also be taken into account as a limitation of this thesis.
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Considering the fact that all of the studies in the world can be developed, it can be said that there is still a need for further researches. The bullet points of possible further practical research are as follow: Conducting a comprehensive consumer behavior survey in order to find out different expectations and needs of them which might be useful to develop new loyalty strategies or modify the existing ones Developing another survey, which examine the buyers repeat purchasing behavior which is a sign of customer loyalty, in order to observe which loyalty strategies are more efficient As a result, the main conclusion that we can draw from this study is that brand loyalty for FMCG companies is a vital issue because it is an experience all the companies want to achieve but few of them can do, and this is also a proof that brand loyalty is not floating downward as it is claimed by some people. Moreover, even if there are several types of strategies to create brand loyalty among consumers, there is a unique feature which all of the brand loyalty strategies must have: a brand loyalty strategy must appeal to the emotions of the customers in order to create strong ties between the company and the customers, because this is the only way for FMCG companies to make the customers repeat their purchase behaviors for their personal care products and keep them loyal.
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Building Loyalty For FMCG Brands - Personal Care Products - by Emrah SEYIT

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BUILDING LOYALTY FOR FMCG BRANDS - PERSONAL CARE PRODUCTS Master Thesis

submitted by Emrah SEYT

Date of Submission 21/05/2010

Building Loyalty For FMCG Brands by Emrah SEYT

Building Loyalty For FMCG Brands by Emrah SEYT

Building Loyalty For FMCG Brands by Emrah SEYT

Building Loyalty For FMCG Brands by Emrah SEYT

4.5 4.5.1 4.5.2 4.5.3 4.5.4 5

Conclusion _________________________________________________________________ 95 References _________________________________________________________________ 99

Building Loyalty For FMCG Brands by Emrah SEYT

Building Loyalty For FMCG Brands by Emrah SEYT

Building Loyalty For FMCG Brands by Emrah SEYT

Building Loyalty For FMCG Brands by Emrah SEYT

1.2 Major Terms

Building Loyalty For FMCG Brands by Emrah SEYT

1.3 Focus and Goals of the Thesis

Building Loyalty For FMCG Brands by Emrah SEYT

1.4 Structure of the Thesis

Building Loyalty For FMCG Brands by Emrah SEYT

Building Loyalty For FMCG Brands by Emrah SEYT

2 Literature review of Brand Loyalty

Building Loyalty For FMCG Brands by Emrah SEYT

2.1 The Loyalty Factor and the Brand

Building Loyalty For FMCG Brands by Emrah SEYT

Building Loyalty For FMCG Brands by Emrah SEYT

Building Loyalty For FMCG Brands by Emrah SEYT

2.2 Loyalty Matrixes

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

Building Loyalty For FMCG Brands by Emrah SEYT

Building Loyalty For FMCG Brands by Emrah SEYT

Building Loyalty For FMCG Brands by Emrah SEYT

Building Loyalty For FMCG Brands by Emrah SEYT

2.3 The Brand Loyalty Models

Overview of Brand Loyalty Models

Building Loyalty For FMCG Brands by Emrah SEYT

Building Loyalty For FMCG Brands by Emrah SEYT

Building Loyalty For FMCG Brands by Emrah SEYT

Building Loyalty For FMCG Brands by Emrah SEYT

Evaluation of Brand Loyalty Models

Building Loyalty For FMCG Brands by Emrah SEYT

Building Loyalty For FMCG Brands by Emrah SEYT

3 Loyalty for Personal Care Products

Building Loyalty For FMCG Brands by Emrah SEYT

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

Building Loyalty For FMCG Brands by Emrah SEYT

Building Loyalty For FMCG Brands by Emrah SEYT

Motivators and Demotivators

Building Loyalty For FMCG Brands by Emrah SEYT

Figure 5: Ambivalent loyalty forces (Thurau & Hansen (2000), p.40).

Building Loyalty For FMCG Brands by Emrah SEYT

Building Loyalty For FMCG Brands by Emrah SEYT

Building Loyalty For FMCG Brands by Emrah SEYT

Building Loyalty For FMCG Brands by Emrah SEYT

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

Building Loyalty For FMCG Brands by Emrah SEYT

Building Loyalty For FMCG Brands by Emrah SEYT

Building Loyalty For FMCG Brands by Emrah SEYT

Building Loyalty For FMCG Brands by Emrah SEYT

Building Loyalty For FMCG Brands by Emrah SEYT

Building Loyalty For FMCG Brands by Emrah SEYT

Figure 7: Types of Promotion

Building Loyalty For FMCG Brands by Emrah SEYT

Conclusion _ 95 References _ 99