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CONSUMER LEARNING
Prof. Abhipsa Mishra
Learning Objectives
1. To Understand the Process and Four
Elements of Consumer Learning.
2. To Study Behavioral Learning and
Understand Its Applications to Consumption
Behavior.
3. To Study Information Processing and
Cognitive Learning and Understand Their
Strategic Applications to Consumer Behavior.
Consumer Learning I Prof. Abhipsa Mishra
Learning Objectives (continued)
4. To Study Consumer Involvement and Passive
Learning and Understand Their Strategic
Affects on Consumer Behavior.
5. To Understand How Consumer Learning and
Its Results Are Measured.
Consumer Learning I Prof. Abhipsa Mishra
In Terms of Consumer Learning, Are These New
Products Likely to Succeed?
Consumer Learning I Prof. Abhipsa Mishra4
These Ads Might Induce Learning
Due to the Familiar Names
Consumer Learning I Prof. Abhipsa Mishra5
.
The process by which individuals acquire the
purchase and consumption knowledge and
experience that they apply to future related
behavior
Consumer Learning I Prof. Abhipsa Mishra6
Elements of Learning Theories
Consumer Learning I Prof. Abhipsa Mishra7
Two Major Learning Theories
Consumer Learning I Prof. Abhipsa Mishra
Behavioral Learning
Consumer Learning I Prof. Abhipsa Mishra
It is a type of learning
in which an individual's
behavior is modified by
its antecedents and
consequences.
It is a process of
behavior modification
made famous by Ivan
Pavlov and his
experiments
conducted with dogs.
Ivan Pavlov B. F. Skinner
Classical Conditioning by Ivan Pavlov
Consumer Learning I Prof. Abhipsa Mishra
Consumer Learning I Prof. Abhipsa Mishra 11
Model of Classical Conditioning
Consumer Learning I Prof. Abhipsa Mishra
Food and water
12
Example
Consumer Learning I Prof. Abhipsa Mishra
Dinner aroma
8 O'clock News
8 O'clock News
You are hungry
You are hungry
1313
Discussion Questions
For Coca-Cola (or any other beverage company):
 How have they used classical conditioning in their marketing
 Identify the unconditioned and conditioned stimuli, the conditioned and
unconditioned response.
Consumer Learning I Prof. Abhipsa Mishra14
 How effective conditioning can create a very 
favourable strategy for marketers...
• The cola’s (Pepsi and Coke) have used Classical Conditioning very effectively
over the years.
• Thirst (An Unconditioned Response) is generated by various environmental and 
physical factors like heat, sports, workout, dehydration etc. (These
are Unconditioned Stimuli).
• Pepsi and Coke have strategically placed and associated their products with all the
above Unconditioned Stimuli like heat, sports, etc repeatedly.
• They have also used key words in their branding like “Thanda Matlab Coca Cola”.
This has played the part of a Conditioned Stimulus which is placed along with 
the Unconditioned Stimuli every time (hence the sponsorships for major sporting
events).
• Over time the Conditioned Stimulus (Cola drink) becomes a signal for the 
arrival of the Unconditioned Stimulus (heat, dehydration) for the brain and we
feel thirsty just by seeing a big poster of Coke or Pepsi without actually
experiencing any of the above environmental or physical factors. Thus, we don’t
only have a Coke/Pepsi when we are thirsty, we feel thirsty when we see a
Coke/Pepsi! Consumer Learning I Prof. Abhipsa Mishra
Other examples
• Dermi cool – “Aaya mausam thande thande Dermi cool ka”
• Fair n Lovely winter fairness cream – “Sardiyon mein
nikhar ghatega nahin badhega”
• “Chhoti bhook hai iska naam”
Consumer Learning I Prof. Abhipsa Mishra
Strategic Applications of Classical Conditioning
• Repetition
• Stimulus
generalization
• Stimulus
discrimination
• Increases the association
between the conditioned
and unconditioned
stimulus
• Slows the pace of
forgetting
• Advertising wear out is
a problem
Basic Concepts
Consumer Learning I Prof. Abhipsa Mishra17
Why Did Amul Use Different Ads to Advertise the 
Same Product?
Consumer Learning I Prof. Abhipsa Mishra
Repetition of the Message with Varied Ads Results in 
More Information Processing  by the Consumer
Consumer Learning I Prof. Abhipsa Mishra
How are songs in ads an example of
classical conditioning?
Nerolac
Titan
Doordarsha
n
How are songs in ads an example of
classical conditioning?
Nerolac
Titan
Doordarsha
n
Strategic Applications of 
Classical Conditioning
• Repetition
• Stimulus
generalization
• Stimulus
discrimination
• Having the same
response to slightly
different stimuli
• Helps “me-too” products
to succeed
• Useful in:
 Product extensions
 Family branding
 Licensing
Basic Concepts
Consumer Learning I Prof. Abhipsa Mishra22
Stimulus generalization
Consumer Learning I Prof. Abhipsa Mishra
4
What Is the
Name of the
Marketing
Application
Featured Here
and Which
Concept of
Behavioral
Learning Is It
Based On?
Consumer Learning I Prof. Abhipsa Mishra Consumer Learning I Prof. Abhipsa Mishra24
Product
Category
Extension
Stimulus
Generalization
Consumer Learning I Prof. Abhipsa Mishra Consumer Learning I Prof. Abhipsa Mishra25
Strategic Applications of 
Classical Conditioning
• Repetition
• Stimulus
generalization
• Stimulus
discrimination
• Selection of a specific
stimulus from similar
stimuli
• Opposite of stimulus
generalization
• This discrimination is
the basis of positioning
which looks for unique
ways to fill needs
Basic Concepts
Consumer Learning I Prof. Abhipsa Mishra26
Stimulus Discrimination
Product Differentiation
Consumer Learning I Prof. Abhipsa Mishra
Instrumental (Operant) Conditioning -
Burrhus Frederic Skinner
Consumer Learning I Prof. Abhipsa Mishra28
Consumer Learning I Prof. Abhipsa Mishra29
A Model of Instrumental Conditioning
Consumer Learning I Prof. Abhipsa Mishra30
Reinforcement of Behavior
Positive Negative
Positive outcome Negative outcome
Strengthen likelihood Encourages behavior
Positive reinforcement is a good thing that happens which rewards a
behavior – Going to the gym made you feel good so you go every other
day.
Negative outcome is a bad thing that happens which encourages a
behavior. You ate a donut every morning for breakfast so gained a lot
of weight over the past week. This causes you to go to the gym every
other day and to stop eating donuts.
Consumer Learning I Prof. Abhipsa Mishra
Reinforcement of Behavior
Extinction Forgetting
A learned response is no longer
reinforced
The reinforcement is forgotten
The link is eliminated between
stimulus and reward
Extinction and forgetting are easily confused. But think of what the
words mean. If the response, is forgotten it can be brought back just by
remembering. If it is extinct, it is unlearned. The link between the
stimulus and the response is destroyed.
Consumer Learning I Prof. Abhipsa Mishra
Strategic Applications of Instrumental Conditioning
• Customer Satisfaction (Reinforcement) – It
means that each time the customer has an
experience with the product or company, there
has been positive reinforcement
• This is the reason relationship marketing is so
important.
Consumer Learning I Prof. Abhipsa Mishra
Strategic Applications of Instrumental Conditioning
• Reinforcement Schedules can vary
• They can be (otherwise called “Schedules of
reinforcements”
 Total (or continuous) reinforcement
 Systemic (fixed ratio) reinforcement
 Random (variable ratio) reinforcement schedule
• Marketers will often use random reinforcement as a
bonus for the customer and fixed reinforcement as
loyalty points or rewards.
Consumer Learning I Prof. Abhipsa Mishra
Strategic Applications of Instrumental Conditioning
• Shaping is a procedure in which reinforcement is
used to guide a response closer and closer to a desired
response.
• Shaping occurs by having the reinforcement
BEFORE the behavior occurs.
• In this situation, the consumer can be given the offer
of a reward before they actually make their decision
and purchase a product.
Consumer Learning I Prof. Abhipsa Mishra35
Strategic Applications of Instrumental Conditioning
• Massed versus distributed learning: Should the
learning and the exposure to the stimuli happen in a
relatively short period of time or be drawn out?
Media planners are often faced with this decision
when putting together an advertising campaign.
Consumer Learning I Prof. Abhipsa Mishra
Classical and Operant Conditioning
Consumer Learning I Prof. Abhipsa Mishra
Consumer Learning I Prof. Abhipsa Mishra38
Observational Learning
(modeling or vicarious learning
• A process by which
individuals learn
behavior by observing
the behavior of others
and the consequences of
such behavior
Consumer Learning I Prof. Abhipsa Mishra
Albert Bandura
Information Processing and
Cognitive Learning
Consumer Learning I Prof. Abhipsa Mishra
Cognitivism
• Grew in response to Behaviorism
• Knowledge is stored cognitively as symbols
• Learning is the process of connecting symbols
in a meaningful & memorable way
• Studies focused on the mental processes that
facilitate symbol connection
Cognitive Learning Theories
 Discovery Learning - Jerome Bruner
 Meaningful Verbal Learning - David Ausubel
Cognitive Learning Theory
 Discovery Learning
 Bruner said anybody can learn anything, at any age,
provided it is stated in terms they can understand
 Powerful Concepts (not isolated facts)
– Transfer to many different situations
– Only possible through Discovery Learning
– Confront the learner with problems and help them find
solutions. Do not present sequenced materials.
Cognitive Learning Theory
 Meaningful Verbal Learning
Advance Organizers:
New material is
presented in a
systematic way, and
is connected to
existing cognitive
structures in a
meaningful way.
 Meaningful Verbal Learning
Cognitive Learning Theory
When learners have
difficulty with new
material, go back to
the concrete anchors
(Advance Organizers).
Provide a Discovery
approach, and they’ll
learn.
Cognitivism in the Classroom
• Inquiry-oriented
projects
• Opportunities for the
testing of hypotheses
• Curiosity encouraged
• Staged scaffolding
Attention Cognitive
Action Conative Purchase
Postpurchase
Evaluation
Trial
Adoption
Decision
Confirmation
Affective
Evaluation
Interest
Evaluation Persuasion
Knowledge
AwarenessAwareness
Knowledge
Interest
Desire
Innovation
Adoption
Model
Decision-
Making
Model
Tricompetent
Model
Innovation
Decision
Process
Promotional
Model
Knowledge
Behavior
Evaluation
Generic
Framework
Theoretical Models of Cognitive Learning
Consumer Learning I Prof. Abhipsa Mishra47
Measures of Consumer Learning
Brand Loyalty
• Recognition and Recall Measures
• Brand Loyalty
Consumer Learning I Prof. Abhipsa Mishra
Measures of Consumer Learning Brand Loyalty
Brand Equity – the value inherent
in a well-known brand name
Consumer Learning I Prof. Abhipsa Mishra
Consumer Learning
Consumer Learning I Prof. Abhipsa Mishra

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Consumer Learning

  • 2. Learning Objectives 1. To Understand the Process and Four Elements of Consumer Learning. 2. To Study Behavioral Learning and Understand Its Applications to Consumption Behavior. 3. To Study Information Processing and Cognitive Learning and Understand Their Strategic Applications to Consumer Behavior. Consumer Learning I Prof. Abhipsa Mishra
  • 3. Learning Objectives (continued) 4. To Study Consumer Involvement and Passive Learning and Understand Their Strategic Affects on Consumer Behavior. 5. To Understand How Consumer Learning and Its Results Are Measured. Consumer Learning I Prof. Abhipsa Mishra
  • 4. In Terms of Consumer Learning, Are These New Products Likely to Succeed? Consumer Learning I Prof. Abhipsa Mishra4
  • 5. These Ads Might Induce Learning Due to the Familiar Names Consumer Learning I Prof. Abhipsa Mishra5
  • 6. . The process by which individuals acquire the purchase and consumption knowledge and experience that they apply to future related behavior Consumer Learning I Prof. Abhipsa Mishra6
  • 7. Elements of Learning Theories Consumer Learning I Prof. Abhipsa Mishra7
  • 8. Two Major Learning Theories Consumer Learning I Prof. Abhipsa Mishra
  • 9. Behavioral Learning Consumer Learning I Prof. Abhipsa Mishra It is a type of learning in which an individual's behavior is modified by its antecedents and consequences. It is a process of behavior modification made famous by Ivan Pavlov and his experiments conducted with dogs. Ivan Pavlov B. F. Skinner
  • 10. Classical Conditioning by Ivan Pavlov Consumer Learning I Prof. Abhipsa Mishra
  • 11. Consumer Learning I Prof. Abhipsa Mishra 11
  • 12. Model of Classical Conditioning Consumer Learning I Prof. Abhipsa Mishra Food and water 12
  • 13. Example Consumer Learning I Prof. Abhipsa Mishra Dinner aroma 8 O'clock News 8 O'clock News You are hungry You are hungry 1313
  • 14. Discussion Questions For Coca-Cola (or any other beverage company):  How have they used classical conditioning in their marketing  Identify the unconditioned and conditioned stimuli, the conditioned and unconditioned response. Consumer Learning I Prof. Abhipsa Mishra14
  • 15.  How effective conditioning can create a very  favourable strategy for marketers... • The cola’s (Pepsi and Coke) have used Classical Conditioning very effectively over the years. • Thirst (An Unconditioned Response) is generated by various environmental and  physical factors like heat, sports, workout, dehydration etc. (These are Unconditioned Stimuli). • Pepsi and Coke have strategically placed and associated their products with all the above Unconditioned Stimuli like heat, sports, etc repeatedly. • They have also used key words in their branding like “Thanda Matlab Coca Cola”. This has played the part of a Conditioned Stimulus which is placed along with  the Unconditioned Stimuli every time (hence the sponsorships for major sporting events). • Over time the Conditioned Stimulus (Cola drink) becomes a signal for the  arrival of the Unconditioned Stimulus (heat, dehydration) for the brain and we feel thirsty just by seeing a big poster of Coke or Pepsi without actually experiencing any of the above environmental or physical factors. Thus, we don’t only have a Coke/Pepsi when we are thirsty, we feel thirsty when we see a Coke/Pepsi! Consumer Learning I Prof. Abhipsa Mishra
  • 16. Other examples • Dermi cool – “Aaya mausam thande thande Dermi cool ka” • Fair n Lovely winter fairness cream – “Sardiyon mein nikhar ghatega nahin badhega” • “Chhoti bhook hai iska naam” Consumer Learning I Prof. Abhipsa Mishra
  • 17. Strategic Applications of Classical Conditioning • Repetition • Stimulus generalization • Stimulus discrimination • Increases the association between the conditioned and unconditioned stimulus • Slows the pace of forgetting • Advertising wear out is a problem Basic Concepts Consumer Learning I Prof. Abhipsa Mishra17
  • 20. How are songs in ads an example of classical conditioning? Nerolac Titan Doordarsha n
  • 21. How are songs in ads an example of classical conditioning? Nerolac Titan Doordarsha n
  • 22. Strategic Applications of  Classical Conditioning • Repetition • Stimulus generalization • Stimulus discrimination • Having the same response to slightly different stimuli • Helps “me-too” products to succeed • Useful in:  Product extensions  Family branding  Licensing Basic Concepts Consumer Learning I Prof. Abhipsa Mishra22
  • 24. What Is the Name of the Marketing Application Featured Here and Which Concept of Behavioral Learning Is It Based On? Consumer Learning I Prof. Abhipsa Mishra Consumer Learning I Prof. Abhipsa Mishra24
  • 25. Product Category Extension Stimulus Generalization Consumer Learning I Prof. Abhipsa Mishra Consumer Learning I Prof. Abhipsa Mishra25
  • 26. Strategic Applications of  Classical Conditioning • Repetition • Stimulus generalization • Stimulus discrimination • Selection of a specific stimulus from similar stimuli • Opposite of stimulus generalization • This discrimination is the basis of positioning which looks for unique ways to fill needs Basic Concepts Consumer Learning I Prof. Abhipsa Mishra26
  • 28. Instrumental (Operant) Conditioning - Burrhus Frederic Skinner Consumer Learning I Prof. Abhipsa Mishra28
  • 29. Consumer Learning I Prof. Abhipsa Mishra29
  • 30. A Model of Instrumental Conditioning Consumer Learning I Prof. Abhipsa Mishra30
  • 31. Reinforcement of Behavior Positive Negative Positive outcome Negative outcome Strengthen likelihood Encourages behavior Positive reinforcement is a good thing that happens which rewards a behavior – Going to the gym made you feel good so you go every other day. Negative outcome is a bad thing that happens which encourages a behavior. You ate a donut every morning for breakfast so gained a lot of weight over the past week. This causes you to go to the gym every other day and to stop eating donuts. Consumer Learning I Prof. Abhipsa Mishra
  • 32. Reinforcement of Behavior Extinction Forgetting A learned response is no longer reinforced The reinforcement is forgotten The link is eliminated between stimulus and reward Extinction and forgetting are easily confused. But think of what the words mean. If the response, is forgotten it can be brought back just by remembering. If it is extinct, it is unlearned. The link between the stimulus and the response is destroyed. Consumer Learning I Prof. Abhipsa Mishra
  • 33. Strategic Applications of Instrumental Conditioning • Customer Satisfaction (Reinforcement) – It means that each time the customer has an experience with the product or company, there has been positive reinforcement • This is the reason relationship marketing is so important. Consumer Learning I Prof. Abhipsa Mishra
  • 34. Strategic Applications of Instrumental Conditioning • Reinforcement Schedules can vary • They can be (otherwise called “Schedules of reinforcements”  Total (or continuous) reinforcement  Systemic (fixed ratio) reinforcement  Random (variable ratio) reinforcement schedule • Marketers will often use random reinforcement as a bonus for the customer and fixed reinforcement as loyalty points or rewards. Consumer Learning I Prof. Abhipsa Mishra
  • 35. Strategic Applications of Instrumental Conditioning • Shaping is a procedure in which reinforcement is used to guide a response closer and closer to a desired response. • Shaping occurs by having the reinforcement BEFORE the behavior occurs. • In this situation, the consumer can be given the offer of a reward before they actually make their decision and purchase a product. Consumer Learning I Prof. Abhipsa Mishra35
  • 36. Strategic Applications of Instrumental Conditioning • Massed versus distributed learning: Should the learning and the exposure to the stimuli happen in a relatively short period of time or be drawn out? Media planners are often faced with this decision when putting together an advertising campaign. Consumer Learning I Prof. Abhipsa Mishra
  • 37. Classical and Operant Conditioning Consumer Learning I Prof. Abhipsa Mishra
  • 38. Consumer Learning I Prof. Abhipsa Mishra38
  • 39. Observational Learning (modeling or vicarious learning • A process by which individuals learn behavior by observing the behavior of others and the consequences of such behavior Consumer Learning I Prof. Abhipsa Mishra Albert Bandura
  • 40. Information Processing and Cognitive Learning Consumer Learning I Prof. Abhipsa Mishra
  • 41. Cognitivism • Grew in response to Behaviorism • Knowledge is stored cognitively as symbols • Learning is the process of connecting symbols in a meaningful & memorable way • Studies focused on the mental processes that facilitate symbol connection
  • 42. Cognitive Learning Theories  Discovery Learning - Jerome Bruner  Meaningful Verbal Learning - David Ausubel
  • 43. Cognitive Learning Theory  Discovery Learning  Bruner said anybody can learn anything, at any age, provided it is stated in terms they can understand  Powerful Concepts (not isolated facts) – Transfer to many different situations – Only possible through Discovery Learning – Confront the learner with problems and help them find solutions. Do not present sequenced materials.
  • 44. Cognitive Learning Theory  Meaningful Verbal Learning Advance Organizers: New material is presented in a systematic way, and is connected to existing cognitive structures in a meaningful way.
  • 45.  Meaningful Verbal Learning Cognitive Learning Theory When learners have difficulty with new material, go back to the concrete anchors (Advance Organizers). Provide a Discovery approach, and they’ll learn.
  • 46. Cognitivism in the Classroom • Inquiry-oriented projects • Opportunities for the testing of hypotheses • Curiosity encouraged • Staged scaffolding
  • 47. Attention Cognitive Action Conative Purchase Postpurchase Evaluation Trial Adoption Decision Confirmation Affective Evaluation Interest Evaluation Persuasion Knowledge AwarenessAwareness Knowledge Interest Desire Innovation Adoption Model Decision- Making Model Tricompetent Model Innovation Decision Process Promotional Model Knowledge Behavior Evaluation Generic Framework Theoretical Models of Cognitive Learning Consumer Learning I Prof. Abhipsa Mishra47
  • 48. Measures of Consumer Learning Brand Loyalty • Recognition and Recall Measures • Brand Loyalty Consumer Learning I Prof. Abhipsa Mishra
  • 49. Measures of Consumer Learning Brand Loyalty Brand Equity – the value inherent in a well-known brand name Consumer Learning I Prof. Abhipsa Mishra
  • 50. Consumer Learning Consumer Learning I Prof. Abhipsa Mishra

Hinweis der Redaktion

  1. This definition of learning can be looked at more specifically. It is important to realize that it is a process, that it changes over time as new knowledge and experiences are gained by the consumer. New knowledge and experience serve as feedback to the consumer and will influence their future behavior.
  2. There are the four major elements of all learning theories. Motivation is important because it will differ from one consumer to the next. We may all have a need, but some are more motivated to fulfill the need versus another. Often, a consumer does not realize they have a need. A cue is the stimulus that helps direct a consumer’s motives. They include price, styling, packaging, advertising, and store displays. A consumer will have a response to a drive or a cue. The response is how the consumer behaves after being exposed to a cue or developing motivation. Finally, reinforcement is tied to the likelihood that the response will occur in the future.
  3. In behavioral learning, it is classical conditioning and instrumental conditioning that are the two most researched, explored, and applied within consumer behavior.
  4. This is Pavlov’s experiment. As explained on the previous slide, the dog learned, was conditioned, to salivate from the bell after it was repeatedly paired with the unconditioned stimulus of the meat paste.
  5. Here is another example of how classical conditioning might work. Why are dinner aromas an unconditioned stimulus? Why is salivation an unconditioned response? Do you often get hungry when you watch television?
  6. Think about the advertisements for these ads. The smiling people and music.
  7. For the association between the unconditioned and the conditioned stimuli to become strong, the exposure to the pairing must be repeated. In addition, the repetition is important so that the association is remembered by the subject. Of course, too much repetition can also be a problem. Think of the ad you have just seen so many times you feel like you can’t stand to see it again. This advertising wearout can be a big problem for advertisers, which is why they change their ads frequently. This web link is for a fun site which lists songs that have been used in advertisements. How are songs in ads an example of classical conditioning?
  8. Stimulus generalization is when a consumer applies a conditioned response to a stimulus that is not the same but is similar to a conditioned stimuli. An example you might recognize is when we react to someone in a certain way because they remind us of someone we know and have interacted with before. Stimulus generalization can be helpful as marketers extend their product line, product form, and product category.
  9. Here is a model of instrumental conditioning. You can see this consumer tried on four brands. The first three brands ended with no rewards – they simply did not fit. The final brand, Brand D gave the consumer the reward of a perfect fit. The consumer has learned that these jeans are a good fit and will likely repeat this behavior the next time they are in the stimulus situation of needing good-looking jeans.
  10. Observational learning occurs NOT through responses directly to the consumer but by observation of the behavior and responses of others. Marketers often use role models in their advertising so that consumers can understand the rewards of purchasing the advertisers’ products.
  11. This is a move away from the behavioral learning theories of classical and operant conditioning. Cognitive learning focuses on problem solving and consumer thinking. It is closely tied to information processing and how consumers store, retain, and retrieve information.
  12. Grew in response to Behaviorism in an effort to better understand the mental processes behind learning
  13. New material is related to something they already know!
  14. .
  15. Staged scaffolding: not based on ability or experience…based on developmental stage (age most predominantly)
  16. These are the major models of cognitive learning that have been developed over the years. Although they have different terms, they follow the same three stages of knowledge, evaluation, and behavior.
  17. Recognition and recall tests determine whether consumers remember seeing an ad and the extent to which they can recall the ad. The researcher can use aided recall, which would rely on recognition as opposed to unaided recall. There are a number of services which conduct these tests, including Starch Research which you can reach with the web link on this page.
  18. Brand loyalty is also a measure of consumer learning. Ideally, it is the outcome of learning where the consumer now knows the best choice to make each time. Brand loyalty includes attitudes and behaviors toward the brand. Behavior measures are observable whereas attitudinal measures are concerned with the consumers’ feelings about the brand. On this chart, we see an integrated conceptual framework which views loyalty as a function of three factors or influences upon the consumer. These three factors can lead to the four types of loyalty including no loyalty, covetous loyalty, which is no purchase but a strong attachment to the brand, inertia loyalty, which is purchasing the brand out of habit or convenience with no attachment, or premium loyalty, which is a high attachment to the brand. Brand equity reflects brand loyalty and together they lead to increased market share and greater profits for the firm.