Question

According to your text, why are brand loyal customers an important contributor to a firm's long-term success and profitability?

A. Brand loyal customers typically exhibit more price sensitivity.

B. Brand loyal customers write positive reviews of the firm.

C. Brand loyal customers write negative reviews of the competition.

D. Brand loyal customers typically don't use coupons to reduce the price of the product.

E. Brand loyal customers typically exhibit less price sensitivity.

Answer 1

Brand loyal customers contribute to firm profitability due to their less price sensitivity and stable revenue stream, coupled with the benefit of positive word-of-mouth marketing.

Step-by-step explanation:

Brand loyal customers play a vital role in a firm's sustained success and profitability due to their reduced price sensitivity. These customers, committed to a particular brand, are less likely to shift to competitors solely based on minor price variations. This loyalty contributes to a stable revenue stream, providing a foundation for long-term financial viability. Additionally, brand loyal customers often become brand advocates, generating positive word-of-mouth that attracts new customers at a lower marketing cost.

Conversely, customers lacking brand loyalty may be more prone to switching brands in pursuit of better prices. This behavior introduces sales volatility and raises marketing expenses for a company striving to retain and attract customers. Building and maintaining brand loyalty is, therefore, a strategic imperative for businesses aiming for sustained profitability and minimizing the impact of competitive pricing fluctuations.