I have not taken an Economics course since high school, but Michael Goodwin’s Economix was a very nice refresher (the pictures were even more helpful, who woulda thought). The section about Competing Monopolies on Pg. 167-168 reminded me of a discussion I had with a friend recently about an article they had read about millennials being extremely brand loyal. This made me read further into the behavioral economics of brand loyalty and found that brands with high brand loyalty allows them to set price and, in a way, make a monopoly of their own.
Brand loyalty refers to the consumer's desire to continue to purchase a specific brand of product. It is the consumer's perception of a particular brand or name, developed through advertising and marketing efforts. Marketing for high brand equity will create advertising that attracts, fosters, and maintains an ongoing relationship between consumers and the product. This ongoing relationship and positive perception creates brand loyalty in the consumer's mind. People like a particular product for many different reasons, and they typically continue to buy the product if it keeps doing what it promises.
Brand loyalty is the result of an effective marketing or advertising campaign, or of good experiences with a particular product or brand, and it typically requires a lot of time — sometimes years — to build. There are many reasons that consumers develop loyalty to a particular brand, including a connection to some pleasurable experience or the use of a product or brand by previous generations in their family. The long process requires accumulated positive experiences over an extended period of time. I have noticed that I am brand loyal, and so are my roommates. Once we find a product we like, we are skeptical of trying something else out when there is a possibility of not liking it. The possibility of a less than pleasurable experience is not worth the risk to us. I do not recall Goodwin talking about brand loyalty in any other section, but I think it definitely fits in with discussion of monopolies. Some might argue that brand loyalty is a sign of perfect competition, but I would disagree since Goodwin states that every brand is a monopoly.
Damn, brand loyalty is who I am! I find a certain product I like and I stick with it! Adidas shoes for the last 23 years and still going strong! My brand loyalty is also routed into brands that facilitate my hobbies and I feel like embrace my personality more. I do feel like most brands that are more expensive, you only pay to have their name on the commodity and in that way they can set their price to what they want (within reason); but time has shown that capital is increasing so companies will charge more and more for their product. Apple is the worse at this, $1000 for the Iphone X?! Their monopoly on the apple crowd still pay that. Outrageous.
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