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Brand loyalty drives higher ROI and stock price

Guest post by: Mark Johnson

Article Overview: Given the direct impact of brand loyalty on ROI and stock price, where does that leave Toyota?

Brand loyalty drives higher ROI and stock price

Toyota has traditionally had a very loyal base of customers who have paid a premium for their cars, especially the most luxurious brands (Avalon, Lexus, etc). As such, they have not discounted their cars (especially on the higher end) and have historically been the least aggressive on financing and other dealer incentives. Much like Apple, Toyota has also done an effective job at developing brand and line extensions. As people have remained very loyal to Toyota because of the high perceived (or then actual) brand performance, reliability and satisfaction scores, they made repeat purchases. So someone who bought a Toyota Celica as kid would constantly trade up that car for higher-end Toyota products ---- often ending up with three or four Toyota in the garage (Pathfinder, etc).

But now, Toyota is facing a HUGE challenge. Because the company became removed from the voice of the customer and was not honest in addressing the service issues, they now face a problem with the brand loyalty they worked so hard (and effectively) to create.

That's why we've seen the change towards more aggressive pricing (i.e. 0% offers for 72 months, etc.) that they may not have done in the past. Yet, this (especially if they do not address the quality issues) is going to position Toyota in the "price shopping" mentality and you do not want to compete on price --- you want to compete on value, customer engagement (advocates) and loyalty.

People who bought the Prius and other models that have quality and safety problems are going to have issues. I think you are going to see a HUGE backlash now with the Prius owners who are coming to the end of the usable battery life who now have to pony up potentially thousands of dollars for new batteries for their cars. To a devout brand advocate (which there are still many) it is not an issue. But, to someone on the fence or someone who bought what they thought was going to be X and then the perception has shifted, it's quite a different story. I believe Toyota may be having to deal with an unfortunate rise in their brand dis-advocates.

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Article Tags: business, customer, loyalty, marketing



Related Forum Posts
Re: Citizen Journalism: There's no such thing - This clearly shows that if Steve Jobs sneezes the price of the stock will drop. Since Apple is a great company why do they have to link the rise and fall of the stock to one man? So eventually when Steve passes on what is going to happen to Apples stock?
Re: Matching competitors prices - beware - While I agree that getting into a price war should be avoided if possible... on rare occasions, it's not a bad idea to match someone's price (or even beat it) if you're doing it "one time" to land a new customer. For instance, I was recently looking for the best price on a [u:2rhwa2wg]specific[/u:2rhwa2wg] flight to NY and a customer service rep from Flight Centre ended up taking zero commission to help me book my flight. In fact, she even beat the price by $5 in the hopes of creating brand loyalty for the future.
Re: Citizen Journalism: There's no such thing - [quote="ideasuniversity":2zpdpyk9]This clearly shows that if Steve Jobs sneezes the price of the stock will drop. Since Apple is a great company why do they have to link the rise and fall of the stock to one man? So eventually when Steve passes on what is going to happen to Apples stock?[/quote:2zpdpyk9] That's a very good point. He needs to appoint a successor now or in some way affirm that the company will exist even if he goes under!
Cd business going down? - Do you feel cdroms business will still survive after arrival of pen drives and mobile hard drives? Should we build resources?
Re: Matching competitors prices - beware - [quote="BuzzAroundBooks":3ga2u10u]While I agree that getting into a price war should be avoided if possible... on rare occasions, it's not a bad idea to match someone's price (or even beat it) if you're doing it "one time" to land a new customer. For instance, I was recently looking for the best price on a [u:3ga2u10u]specific[/u:3ga2u10u] flight to NY and a customer service rep from Flight Centre ended up taking zero commission to help me book my flight. In fact, she even beat the price by $5 in the hopes of creating brand loyalty for the future.[/quote:3ga2u10u] Matching prices that are close is one thing - but there are times when an inferior competitor can do a job much cheaper - because they are doing a lesser job. There have been times when I'm more expensive, but I'll take the time to explain the reason for the difference. If the person wants a lesser job - then it does not work in my favor to drop my price and take a loss. Customer expectation can make a difference in when this should be done. There is a company who offers work that is somewhat similar to mine, but its just not the same value service and they can undercut my price because they cut a lot of corners. I'm not willing to cut that many corners and that makes a big difference in the amount that we charge. For a person who business who recognizes the difference and some who want to send me business, I'll work with them on the prices or pay them a finder's fee. Lots of possibilities - but I've found it better to evaluate the situation and see if it makes good business sense. Shri


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