Customer loyalty takes years to build and once it is established, the need is to make sure the company maintains its threshold over the existing customers as well as attract new ones to make the business more and more profitable and strong. (John, 2003)
Establishing a new product out of the blue seems to be not a very favorable option in the developed markets as no one would be attracted to the new hype. Rather people will take it as a ‘just another new product in the market’ idea and continue with their lives. This cannot be allowed for a business, which is in its starting days, at all. Sooner or later, it will come back to the thought of merging itself with some strategic alliance for the betterment of its business, until the business itself is standing on its feet and that too with pride and without anyone’s help. These strategic alliances not only help the big businesses to capitalize on the strengths of large, multinational companies but also draw huge sums of benefits, both in the form of money and customer loyalty. This is a challenge both for the new business as well as the alliance with which the company is thinking of forming a bond with, chiefly because their own business is partly dependent on the new one, which they will help to set their feet upon.
A product’s equity depends on four such factors which might include its name and how much the people are aware of this very name. Another factor is the loyalty level of the consumers with regards to this product or the brand which is available in the market. Under the loyalty, the level is five types of groups present which include the non-customers who simply do not buy this product which is being sold under the company’s name but purchase one of the competitors’. (Griffin, 2002) Another one is the group that houses the price switchers who are extremely sensitive to price. The passively loyal lot buys out of habit rather than any reason.