Unit 3: Barriers to Entry & Brand Loyalty

There are lots of excellent reports coming out at the moment focusing on the strategic issues facing businesses as they prepare for the new year. I was interested to pick up on one part of a report from MORI which highlights the variation in levels of customer loyalty in different consumer markets.

A chart from this report is highlighted below and it generates some interesting comparisons that students might analyse as they consider the relative importance of customer loyalty as a barrier to entry:

According to the data, sectors such as grocery retailing and financial services enjoy much higher consumer

loyalty than hotels, department stores or clothing retailers.

Why?
*Hotels are listed at the bottom of the table, yet they are active in promoting use of customer loyalty schemes?

* To what extent does high customer loyalty present an insurmountable barrier to entry for a new entrant wanting to build a viable scale in a new market?

* Is the best way to overcome entrenched customer loyalty to enter a market through acquisition?

The above are just some of the questions you should think about when discussing the competiton strategies of firms.