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Personal computer brand loyalty



A Markov model shows the degree of brand loyalty to Apple, Compaq, IBM, and Wyse personal computers by large corporate customers of Businessland, a large reseller of personal computers in the late 1980s and early 1990s. Because Businessland temporarily lost its franchise to carry Compaq for half a year in the middle of our sample, the model captures the effect on Businessland's sales of rival brands when a name brand is eliminated and then reintroduced. Large corporate customers were brand-loyal and relatively price insensitive. Their loyalty did not diminish over time. They did not view IBM-compatible computers as perfect substitutes. Eliminating and then reintroducing a brand has different short- and long-run effects. It is difficult to explain which firms diversify, but, contrary to reports in the popular press, most firms used both Apple and IBM-compatible machines.

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