Final answer:
Brand loyal customers contribute to a firm's success by exhibiting less price sensitivity, implying they are willing to pay higher prices for products they trust, which increases profitability and helps the firm establish a good reputation.
Step-by-step explanation:
Brand loyal customers are an important contributor to a firm's long-term success and profitability because they typically exhibit less price sensitivity. This means that they are willing to pay a higher price for a product that they trust, which contributes to the firm's profitability. The rationale behind firms desiring repeat customers is that these customers are more likely to recommend the business to others, which helps in establishing a good reputation.
A firm with a good reputation can command higher prices because customers have less worry about the quality of their product as opposed to a firm with unknown quality. For instance, a grocery store with an established reputation can charge more than a temporary stand at a local farmer's market because customers trust the consistent quality and experience the store offers. Repeat customers and positive recommendations lead to a virtuous cycle of brand loyalty and profitability.