Despite an increasing global demand for luxury brands, luxury brand managers and marketers are being forced to combat decreasing customer commitment and loyalty as competition intensifies.
According to new research published in the Journal of Business Research by Glasgow Caledonian University’s (GCU) Professor Paurav Shukla, Dr Jaywant Singh from Kingston University and Dr Madhumita Banerjee from the American University of Sharjah, intensifying competition in the luxury sector means that these brands now need to more closely identify the factors underpinning customers’ commitment to their brands.
Due to the relatively higher cost of luxury brands, customers are expected to show greater commitment for a luxury brand than for a regularly purchased brand.
However, with a plethora of luxury brands to choose from, and the internet as a means to purchase them more easily and switch to another brand, luxury customers are shopping around and are less likely to rely on trusted luxury brand names alone.
While customer commitment to a brand can lead to satisfaction with a purchase and advocacy of the brand, researchers have found various levels of commitment, which do not always have a positive outcome.
One such model is ‘calculative commitment’, which has a negative impact on the satisfaction of buying a brand.
‘Normative commitment’ to a brand also involves a sense of obligation to a brand. However, if a luxury brand is consumed by many customers, the brand can lose its uniqueness and becomes a ‘me-too’ product.
‘Affective commitment’ is usually a consequence of positive experiences of shopping with a luxury brand, resulting in the customer developing a strong relationship with the brand and further advocacy of the brand.
The findings suggest that managers vying for long-term commitment from their customers should work towards amplifying the personal relationships involved in brand loyalty. In this regard, the employee–customer relationship will be crucial.
Professor Shukla said: “Affective commitment builds over a period of time and leads to higher satisfaction and advocacy intention, which suggests its critical importance for luxury brands. However, the results imply that commitment can act as a relationship enhancer if a luxury brand focuses on affective commitment, but can erode relationships if the brand managers concentrate only on calculative commitment.
"Since customers may not consciously distinguish between the three elements of commitment, managers need to be aware of the distinction, and should orient their marketing efforts accordingly. For instance, if a luxury brand campaign focusing on building affective commitment highlights lost benefits costs, a customer may associate the campaign with calculative commitment. Such a phenomenon, in turn, may drive the customer away from the luxury brand.”