Founded in 1916, BMW is headquartered in Munich, Germany. Today the company employs around 122,000 people worldwide (BMW Group, 2016). BMW is synonymous with luxury and driving dynamics within the automotive industry, and owns brands such as MINI and Rolls-Royce Motor Cars. The company's UK market share has ranged between 4.42 and 9.54 percent, meaning it has consistently controlled a relatively high portion of the UK car market. BMW had the fourth highest car sales in the UK in 2015 (Statista, 2016).
Before looking at the causes behind brand loyalty, the impact that a ‘brand relationship’ can have on both the consumer and business must be taken into consideration. This can be characterised into four key dimensions: ‘behavioural loyalty, attitudinal attachment, sense of community, and active engagement’ (Keller, 2013 p.346).
The concept of customer loyalty first appeared in the scientific literature in the 1940s (Rundle-Thiele, 2005). Initially, loyalty was regarded as a one-dimensional construct. Researchers focused primarily on the behavioural side of loyalty (Bodet, 2008), not taking into consideration the thoughts and feelings of the consumers that they were targeting (Caruana, 2002).
When looking at what causes customers to exhibit loyal behaviour in regard to a product or a brand, researchers, including Howard and Sheth (1969) and Engel et al. (1978) point to the relevance of satisfaction with previous services as the determining factor in the buyer decision process.
Latterly, authors have focused their attention on other possible components of loyalty. In general, most authors now agree that it is a multidimensional construct with behavioural and attitudinal components taking an important role (Velazquez et al., 2011). The direction of influence on a brand’s perception and image has become increasingly bilateral.
Today, consumers are no longer simply “receivers” of company and brand-related information. Instead, they operate as “senders” of this information, e.g., by giving brand recommendations, by expressing criticism, or by sharing information with others (Hennig-Thurau et al., 2010). Consumers therefore play an important role in forming a company’s or brand’s perception and value in the marketplace (Keller, 2007).
Brand loyalty can therefore, be interpreted as a consistent consumer preference to make purchases with the same brand on a specific product or a specific service category (Schiffman and Kanuk, 2004). Consumers now interactively shape the image and perception of companies and brands, which may in turn influence economic performance, for example, changes in sales (Algesheimer et al., 2005; Sawhney et al., 2005).
Brand loyalty is also of paramount importance for marketers, because it helps to retain customers, and often requires less marketing resources than it would to acquire new customers (Reichheld and Sasser, 1990).
Several studies have focused on trying to understand the concept of brand loyalty and the factors that can influence it. Product attributes, after sales service/usage, marketing capabilities, perceived quality/aesthetics, depth of product line and brand popularity are key differentiating factors influencing the behaviour of repeat purchasers and brand switchers in case of consumer durables (Lin, Wu and Wang, 2000). Studies have also found that brand commitment is a necessary condition for true brand loyalty to occur (Bloemer and Kasper, 1995; Amine, 1998). Consumer’s demographic characteristics such as age and household income are also associated with high levels of brand loyalty (East et al., 1995).
From this, it is clear to see that the idea of brand loyalty has evolved over the years, from being a one-dimensional, one-directional idea, to being a multi-dimensional, bilateral one. The importance of brand loyalty for companies should not be underestimated, particularly for a company the size of BMW, with consumers and fans all over the globe. It should seek to make the most of its customer base to further raise awareness of their products, and to further increase the sense of brand loyalty amongst its followers.
Continuing this idea of harnessing brand loyalty and using it to a firm’s advantage, it seems wise to look into secondary data surrounding the BMW Group. For example, in 2010 ‘BMW Group Financial Services in the USA rolled out a program designed to get its loan customers into new BMWs earlier than usual and to generate more trade-ins that might flow into the automaker's certified used-vehicle program. In part, the program aimed to build loyalty among consumers who took out loans rather than leases’ (Sawyers, 2011).
This demonstrates that BMW USA are aware of how they can give their customers what they really want, which helps to further their brand loyalty, as well as bolster their Financial Services business. ‘Of the 3,200 new BMW sales the program generated, 79 percent were financed by the captive finance company’ (Sawyers, 2011).
Ludwig Willisch, the CEO of BMW USA said ‘in the past four years (2011-2015), customer loyalty – the rate at which owners choose the same brand for their next car – has grown to 60% from 52%. The average loyalty rate for all automotive brands in the U.S. ranges between 42 and 48%’ (Levin, 2015).
To conclude, the above literature outlines some of the key areas for consideration within this project. The idea that brand loyalty is no-longer a one-way process, but in fact a two-way process has led to the creation of the project title: “Brand loyalty: an analysis of the driving forces behind consumer’s allegiance to BMW.” There has been no published work that focuses on this specific idea, and as such, this is a unique project that will take into account the thoughts of actual BMW customers and seek to analyse what it is that leads them to feel a sense of brand loyalty.