Regularities in purchase behavior

Transcription

1 Regularities in purchase behavior

2 Outline Frequently purchased products and the notion of stationary markets Regularities in the purchase of a single brand Patterns of purchase in the entire product category

3 Stationary markets established (mature) markets for frequently purchased products tend to be stable for mediumlength analysis periods (say three months to a year); use of mathematical models to mimic actual purchase behavior; these models are based on consumer or household panel data; they can be used to provide sales norms and judge the performance of a brand;

4 The purchase of a single brand The sales equation Do some consumers buy more than others?

5 The sales equation where: m = b w m is the mean population purchase rate (number of purchases in a certain time period per 100 households); b is the penetration (percentage of households buying a brand at least once during a certain time period) w is the average purchase frequency (average number of purchases during a certain time period by those who bought at least once);

6 Percent of buyers Distribution of annual purchases of Ultrabrite Number of purchases

7 Heavy vs. light buyers % of HH (light) % of Sales (light) % of HH (heavy) % of Sales (heavy)

8 How does w (average purchase frequency) vary across consumers? Few consumers are heavy buyers, but Heavy buyers account for a large proportion of a brand s sales: 80/20 rule: the top 20 percent of a brand s buyers are responsible for 80 percent of sales; Heavy half principle: the top 50 percent of a brand s buyers are responsible for 80 percent of sales; These rules depend to some extent on the length of the analysis period;

9 Other purchases 50 Duplication of purchase for Ultrabrite Colgate 35 Crest Macleans Aquafresh Mentadent Gibbs Signal y = x R² = Euthymol Tesco Sainsbury Superdrug Boots Sensodyne 0 Zendium Penetration

10 Patterns of purchase in the entire product category How do penetrations and purchase frequencies vary with market share? What is double jeopardy? How important are sole buyers of a brand? When consumers buy more than one brand, what determines which other brands they buy?

11 Relationship of b and w with market share Mean sales and market share of different brands are primarily a function of differences in penetration, less so of differences in purchase frequency; Double jeopardy: less popular brands have not only lower penetrations, but also lower purchase frequencies;

12 Patterns of multibrand purchase Share of category requirements (SCR): the share of the average buyer s total requirements in a product category (during a certain time period) accounted for by a particular brand; In general, SCR is fairly low (25-35 percent); Duplication of purchase law: frequency of purchasing other brands is proportional to the penetration of these other brands;

13 Next class Infiniti positioning case