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Consumer Loyalty Strengths/Vulnerabilities in Cycles 71

The customer is in the market for a certain type of
widget and you sell widgets. Loyalty is based on dimen-
sions such as price, value perception, and convenience.
The customer may find a better deal at any time and
switch without hesitation.

The doctor writing prescriptions for Pfizer drugs is
an example of transactional loyalty. She writes one
prescription at a time. Because the doctor’s loyalty is
affected by her medical assessment – the product
costs her nothing, and she gets an occasional free
trip each year – the economic relationship is vulnera-
ble to a better deal, e.g. more free trips. If some other
pharmaceutical manufacturer develops a better educa-
tional program in a more attractive warm weather loca-
tion, it is likely the physician will prescribe equivalent
products from the new company offering the better
perks.

Transactional loyalty is easy to stimulate with promo-
tions or rewards programs. But to the degree nonessen-
tial promotional elements are used, “loyalty” can be
difficult to sustain at a profitable level. In addition, trans-
actional loyalty can be achieved primarily from a cus-
tomer’s perception of the switching cost relative to
moving their business. With financial services, consum-
ers may perceive a great deal of work in switching banks
for slightly higher value propositions.
3. Functional loyalty. To the functionally loyal customer,
the product’s core attributes are perceived as superior,
thus more desirable. One wireless phone company may
provide superior reception at the customer’s home,
making for solid functional loyalty. The Nike example
represents functional loyalty; if you have wide feet, you
develop a functional loyalty to footwear that fits your
large feet.