Complex Sciences. Second International Conference, COMPLEX 2012, Santa Fe, NM, USA, December 5-7, 2012, Revised Selected Papers

Research Article

Self-image and the Emergence of Brand Loyalty in Networked Markets

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  • @INPROCEEDINGS{10.1007/978-3-319-03473-7_25,
        author={Andrzej Nowak and Paul Ormerod and Wojciech Borkowski},
        title={Self-image and the Emergence of Brand Loyalty in Networked Markets},
        proceedings={Complex Sciences. Second International Conference, COMPLEX 2012, Santa Fe, NM, USA, December 5-7, 2012, Revised Selected Papers},
        proceedings_a={COMPLEX},
        year={2013},
        month={11},
        keywords={brand loyalty self-image evolving thresholds cascades binary choice with externalities},
        doi={10.1007/978-3-319-03473-7_25}
    }
    
  • Andrzej Nowak
    Paul Ormerod
    Wojciech Borkowski
    Year: 2013
    Self-image and the Emergence of Brand Loyalty in Networked Markets
    COMPLEX
    Springer
    DOI: 10.1007/978-3-319-03473-7_25
Andrzej Nowak,*, Paul Ormerod, Wojciech Borkowski1
  • 1: University of Warsaw
*Contact email: andrzejn232@gmail.com

Abstract

Brand loyalty consists of a consumer’s commitment to repurchase or otherwise continue using a given brand and is demonstrated by repeated buying of a product or service, or other positive behaviours such as word of mouth advocacy.Standard models of the emergence of brand loyalty consider the behaviour of autonomous individuals who are essentially reacting to the objective attributes of the brand. Here, we show that brand loyalty can be regarded as a social construct, which emerges when the fundamental psychological principle of self-image is combined with agents reacting to each others’ decisions in social network markets. Brand loyalty can emerge even when agents find it hard to distinguish between brands in terms of their objective attributes. We illustrate the principles in the context of the well-known model of binary choice with externalities. We endogenise the behaviour of agents using the principle of self-image, and illustrate the consequences in situations where consumers face not a one-off choice of adopting or not adopting, but a chain of mutually dependent decisions about complex products over a period of time.