With market share, the goal to be and stay number one can be a great growth driver.  Companies that have mastered brand loyalty offer some of the safest investments with the best profit and growth prospects available.

This means better returns for investors with the added protection from economic downturns.  Of course, most companies don’t have the marketing strategy figured out to grow brand loyalty.

As investors, we should avoid companies with little to no customer loyalty.  But when we do come across a company that has built a growing loyal customer base, it’s worth a second look and possibly an investment.

Defining Brand Loyalty

The American Marketing Association defines brand loyalty as:

1.The situation in which a consumer generally buys the same manufacturer-originated product or service repeatedly over time rather than buying from multiple suppliers within the category.  2.The degree to which a consumer consistently purchases the same brand within a product class. – AMA

As investors, we want to find companies that people are choosing of their own free will.  Given two or more options, people will always buy Company A.  These are the brands that people will buy for life, tell their friends and family about, and act as human billboards.  If it happens often enough, the company builds a consistent loyal base that grows exponentially. Continue Reading…