Brand loyalty

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Updated: Aug 20, 2021

The tendency for consumers to prefer products with familiar brand names. Consumers frequently buy brands they have used before, or seen widely advertised, in preference to unbranded products or unfamiliar names. Brand loyalty is a form of satisficing behaviour: actions which have produced satisfactory results in the past are repeated unless something goes wrong. This makes it difficult for new suppliers to enter a market, even if their product is, in fact, just as good as or better, and as cheap as or cheaper than established branded products. Brand loyalty may be rational for consumers, however, unless the cost of unsuccessful experiments with new brands or unbranded products is low. It may even be rational to prefer more widely advertised brands, on the argument that the seller would be wasting money it was good enough for people to be likely to make repeat purchases.

Reference: Oxford Press Dictonary of Economics, 5th edt.



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James Knight
Editor of Education
James is the Editor of Education for Invezz, where he covers topics from across the financial world, from the stock market, to cryptocurrency, to macroeconomic markets.... read more.