Introduction
Zoologists study things such as the hunting behaviour of lions. Over time research accumulates fundamental knowledge that any lion expert would be expected to know, such as:
- female lions do most of the hunting
- lions stalk and ambush their prey (as their small hearts and lungs mean they can not keep pace with prey for long)
- in groups they have a success rate of around 30%; while when they hunt alone their success rate drops by half.
Zoologists – especially those studying lions – who don’t know these things may have a long academic career, but may quickly become dinner on the savannah. Similarly, there are things marketers should know about consumers lest they too become dinner.
Individual consumers vary in their buying behaviour. Their timing of category buying and brand choice looks very much random. This makes it near impossible to predict when or which particular brand an individual consumer will buy next. When we look at buying behaviour in aggregate, however, we observe robust patterns that are a fundamental feature of typical consumer behaviour.
We document these patterns of typical buying behaviour, and provide reasons by making reference to research into memory and the human brain. The evidence has important implications for marketing strategy ranging from targeting and segmentation to media planning and brand building.
Polygamous not promiscuous
The most fundamental feature of consumer and industrial buying is loyalty. While we observe a great deal of switching between brands (i.e. buying a different brand from the one bought last time) we also see clear evidence of loyalty. Each buyer buys a few brands far more often than others – practically no buyer devotes equal amounts of buying to every brand in the category. Indeed, any individual consumer almost never buys most of the available brands.
Consumers are polygamously loyal in their purchasing, with each consumer having a repertoire of brands they buy from the category. Buyers are usually neither monogamously loyal to buying one brand nor promiscuously buying all.
So each buyer has their own personal repertoire which vary considerably from buyer to buyer. These individual loyalties, expressed through purchasing, add up to give brands their particular market share. Therefore, larger brands will be in more consumers’ repertoires, and enjoy a higher average share of these repertoires. Still, any individual can have a repertoire that differs wildly from the overall category structure, for example the market leading brand might have 30% share of the market but only 5% share in an individual consumer’s repertoire – or zero%, or 60%.
Repertoires are not permanent, but they are often remarkably stable with brands staying in repertoires for decades, even lifetimes.
#1: Consumers are typically ‘loyal switchers’, repertoire buyers. Even in markets like financial services they will tend to use multiple brands.
How big are consumers’ repertoires?
To better understand the size of consumers’ repertoires, we looked at 50 categories in the United Kingdom covering typical supermarket categories like breakfast cereals, toothpaste and pet food. On average these categories were purchased a little under once a month (fewer than 10 times in the year) with the average category buyer purchasing only two brands in the year. This low average is partly due to the fact that approximately a quarter of category buyers made only one purchase in that year and hence had a repertoire of a single brand.
Consistent with previous Institute research (Banelis et al., 2012) we found a strong correlation between the rate of category buying and the size of the average repertoire (r = 0.75). Those customers that buy a lot also buy more brands (see Figure 1). But while these heavy category buyers look very attractive to marketers, they are actually ‘less loyal’ because they buy more brands.
Researchers at the Institute also looked at the sales volume accounted for by the two buyer groups – the ‘Pareto share’ (see Report 42). They found that on average the top 20% of heaviest buyers accounted for 50-60% of sales, with the remaining 80% of buyers accounting for the other half of sales (not the apocryphal 80/20 rule).
#3: It is important that your product be easy to find and easy to buy for the many brand buyers who could so easily miss you.
Exactly when they buy looks random
Each consumer usually has a good reason for buying a particular brand on a particular day. To an observer, however, the timing and sequence of purchasing looks as if it is random (see Report 1). So again, talk of ‘our average category purchase interval is x days’ can be very misleading.
This is true for durables, as it is for groceries, and store choice.
Purchases may be due to many tiny serendipitous factors and different reasons underlying each purchase occasion; things like the weather, friends or family visiting, dropping a bottle, making a mistake, and even recent exposure to advertising or merchandising. The apparent randomness makes it difficult to predict when a particular consumer will be buying the category, let alone a particular brand.
For example, in Table 1 we observe that household #2348 (let’s call them the Simpsons) made three purchases in quarter 1, but only a single purchase in quarter 2, three in quarter 3, and five purchases in quarter 4; so, on average, one purchase a month over the year – even though in most months they didn’t buy.
The Simpsons purchased (only) six brands from the 28 brands tracked in this category, when they could have bought 12 different brands (a different brand on each of their 12 category purchase occasions) – this is a typical example of the loyalty we described at the start of this report – they repeatedly returned to a few brands while missing out most others (this is the behaviour which explains the pattern in Figure 1).
There is a natural human tendency to mistakenly see patterns in randomness. For example, the Simpsons’ hot run of four consecutive purchases of brand B – is this a burst of loyalty that then eroded? The correct interpretation is simply that brand B is in the Simpson’s repertoire, and in a fairly prominent position (hence 50% of their repertoire in this particular year) and so it is likely to feature frequently in their purchasing. Just as it is perfectly possible to toss ‘heads’ with a coin several times in a row.
It is easy to mistake random fluctuations for real change. The loss of about 50% of a brand’s heavy buyers year-on-year sounds catastrophic. Yet it is quite normal, even for brands with stable sales, when buyers are making no changes to their underlying loyalties/preferences. While this sounds extraordinary, it is simply that some years people make a few more purchases and some years a few less – for the sorts of serendipitous reasons we listed above. That’s why brands with stable market share can ‘lose’ half of last year’s heavy buyers and yet still have the same number of heavy buyers overall (for every buyer who buys less, another buys more).
#4: The randomness in the timing of consumer purchasing supports a continuous advertising strategy (see Report 57 and 66 for more media recommendations). Unsurprisingly, an ad exposure closer to the purchase occasion is more effective. Since it is very difficult to know on what day or even in which week any particular consumer will be in the market, evenly spaced exposures maximise your chance of hitting consumers shortly before they buy.
Consumers have more than one reason-to-buy
Sometimes a consumer is looking for high quality, sometimes they are looking for smaller pack sizes. On one occasion a consumer feels frugal, and another they feel like treating themselves. Consumers have many motivational reasons for purchasing a category and brand managers have been adept at identifying these. Consequently, most brands can fulfil most of a consumer’s various needs.
Then, there are less motivational, more situational reasons for buying a particular brand on that particular occasion:
- today this brand caught my eye
- this one was on discount
- this one was on the end of aisle display
- or just the stochastic firing of neurons in the brain.
Consequently, repeat-buying data doesn’t tend to show a distinct group of consumers buying from a distinct group of brands to the exclusion of the rest of the market (see Report 51), nor do we see the user profiles of brands differing much (see Report 7). Rather, a brand shares customers with all other brands, mostly in proportion to market share. More customers of a brand also buy the biggest brands in the market and fewer buy the smallest, regardless of positioning or attempts at differentiation.
So, at the market level consumers buy across all brands, though individually a consumer generally buys from a (limited) repertoire. And while some consumers may have a preference for some types of offerings (e.g. value vs. premium, sugar vs. diet, sports vs. family), many consumers still buy from both ‘parts’ of the market – more vegetarian meals are bought by non-vegetarians.
#5: Sharing customers with all other brands is the norm. Don’t look for a largely exclusive customer segment that needs limiting and often expensive differentiation and targeting strategies. Instead embrace and cater for the heterogeneity between consumers – be a sophisticated mass-marketer.
Consumers are busy, and efficient at buying
People do not spend much of their time buying. US labor statistics report that in 2015 Americans spent on average 21.6 minutes per day on buying all consumer goods (including their meals). The Institute’s research (Report 64) shows that the average time spent in-store on a trip to the supermarket is 22 minutes (including checkout time), with 50% of trips being shorter than 18 minutes. Yet in this time shoppers are making their selections from approximately 30,000 items available.
We can safely say that not a lot of time is devoted to buying brands by normal people most of the time.
#6: As consumers don’t spend much time thinking about or buying brands, make sure your products are easy to find and quickly recognised on shelf. Work with the heuristics consumers use for efficient shopping. Consistency of packaging (over time and with campaigns) and good visibility of brand elements and distinctive assets (see Report 52) are key to creating and maintaining a brand’s mental and physical availability.
Consumers are cognitive misers
Humans have an aversion to work, be it the effort associated with physical activity, with thinking or decision-making (Kool et al., 2010). Being a ‘cognitive miser’ is not just a result of inherent laziness, but born from necessity (Fiske and Taylor, 1984).
Human preference for energy conservation likely explains why we satisfice when making decisions, why little effort is devoted to thinking about brands in comparison to other aspects of life (the rewards are small!), why consumers have repertoires, why memory is imperfect, and why consumers limit their attention to things that matter. It explains why we are cognitive misers.
#7: Be aware that the ‘biggest’ choice for the consumer is to buy from the product category, e.g. cereals versus toast for breakfast, and after that brand choice is of less importance, as brands in the category address a similar range of needs. While this means consumers do switch between brands, it’s also an important basis of their loyalty. If you can allow consumers to buy from you without them having to do much thinking, they are likely to continue to do so.
Human memory is not perfect, and is situation dependent
Each era tends to use its dominant technology as a metaphor for the brain. The brain has been described as a system of water fountains and pumps; as a clockwork mechanism; as a steam engine; and a telegraph network (Daugman, 2001). The current metaphor of choice is the computer, which is really quite misleading as human memory is in fact nothing like the permanent and perfect recall of computing. Human memory, while vast, is far from perfect; it is indeed very fallible. We often forget important information, remember events that never happened or misplace them in time.
The human brain has evolved over the last three million years or so to facilitate survival in a hostile environment and to create the next generation, not to recall the minutiae of marketing campaigns and make buying decisions.
Memory is associative, or linked, so that one memory is associated with and helps bring to mind the next (Anderson, 2013). Links between memories have to be actively built (and refreshed). Memory retrieval is probabilistic and is improved by recent activation and repetition. Everything encountered in the same context as the brand can be stored in memory linked to that brand. For example, memories of the brand may link to prior consumption, associated colours or packaging. With more memory links to the brand there is a higher probability that the brand will be thought of in the buying situation. This is one of the reasons why consumers are loyal but not exclusively, and they buy brands from a repertoire.
Relevant memory structures may include consumption situations, brands and brand features. Needs or reasons for consuming, say ‘thirst on a hot summer’s day’ can trigger memories. There may be a number of brands and categories of drinks linked to this situation (Coca-Cola, Pepsi, water, Corona, and so on), which may or may not be recalled and considered.
Product usage and marketing communications can refresh memories and sometimes create new ones. The formation of long-term memory involves several steps beginning with a (perhaps subconscious) decision that something is worth remembering and then successfully completing the necessary neurological processes to do so. Similarly, recent activation of relevant memories (again by usage or marketing communications) increases the chances of the brand being thought of and located in the retail environment.
#8: The theory of mental availability (see Report 16) refers to the propensity of the brand to come to mind and/or be noticed in buying situations. It is driven by existing brand-related memories. Marketers need to build links to the sorts of cues that consumers use in buying situations to give the brand greater chance of being chosen.
Attention is limited
Our fallible memory also plays an important role in directing our attention. The human brain has a very limited capacity to attend to and meaningfully process stimuli from our senses (Craik, 1972). We have evolved very effective mechanisms to direct attention (i.e. conscious processing) to important stimuli and to ‘ignore’ everything else. The brain makes many decisions that the conscious ‘me’ is not aware of, which may appear far-fetched, but is most certainly the case (Smith & Kosslyn 2006). So, not only is the typical consumer good at screening things out and ignoring information, they are usually not even aware of doing so.
We can choose what we pay attention to (a ‘top-down’ or internal process related to knowledge, beliefs, expectations and goals of the moment) or have our attention drawn to things in the environment, perhaps because they are dangerous or simply interesting to us (a ‘bottom-up’ or external process). Locating a desired specific brand on the shelf whilst shopping the category is a top-down driven process, whereas noticing a price promotion for a brand in a non-shopped category is a bottom-up process.
Both top-down and bottom-up processes rely on memory networks. The richer the memory networks are or the more recently they have been activated, the more likely the brand will be located on shelf, or the price promotion will be noticed when walking past. Thus, recent users of a brand (who have larger memory networks than non-users, see Report 41) and those recently exposed to an ad (relevant networks are hopefully more likely to have been activated) are more likely to notice something in-store. Relying only on bottom-up processes for attracting attention (e.g. price promotions and other in-store activations) without supporting marketing communications is a risky strategy for growth.
#9: Consumers need to be reminded over and over that a brand is an eligible member of a category, that it meets relevant needs, is available for purchase, and what it looks like. Well-branded and consistent marketing communication plays an important role in this process. By using distinctive assets in communication and on pack (see Report 52) marketers can increase the branding footprint and enhance the probability of the brand being thought of and/or noticed in the retail environment. Distinctive assets should be maintained over the long term, and changed only after due consideration has been given to the consequent need (and the cost and time) to create relevant memory structures in the minds of millions of consumers (i.e. the market). If change is then deemed necessary, evolution rather than revolution is the key.
Consumers satisfice
Consumers buy as if they care little about brands. This is not to say that brands are unimportant to them, just that their role is mostly about identification of the products they buy and are familiar with. It is less important that the brand conveys special meaning or evokes emotions. It is quite likely that any consumer has a couple of brands that for some reason have special meaning, but then every consumer still buys hundreds of other brands that have no particular meaning to them.
Traditional marketing books suggest that consumers undertake a multi-stage decision making process when choosing brands, one that involves comprehensive information search and careful evaluation of alternatives on critical attributes. The final decision is then made based on all available options to provide the greatest utility to the consumer. The traditional decision-making process is considered to be very rational.
We draw on an alternative viewpoint, raised by Nobel prize-winner Herbert A. Simon, of bounded rationality and ‘satisficing’ whereby consumers select an option that is good enough in the particular choice situation. Bounded rationality and satisficing are consistent with recent findings in behavioural economics that consumers use simple and efficient rules (i.e. heuristics) in decision-making.
#10: Persuading consumers that your brand is better is a difficult task, and even if it could be achieved (in a satisficing world), it is unlikely to deliver extraordinary loyalty. When designing ads you must appeal to consumers’ distracted brains with attractive, entertaining content. Critically, advertising must be well branded.
Persuasive messages are not essential as they are of secondary importance to these essentials. Fortunately, as advertisers, we rarely need to say a lot to our buyers – and emotional messages can be processed very quickly. Much of our work as advertisers is to refresh very simple memory associations, especially the brand.
Summary
In summary, consumers are naturally loyal, but they pay little attention to brands as they lead busy lives. They have fallible memories and they are satisficing cognitive misers.
While they largely buy from categories and brands they are familiar with, they do so infrequently and quickly, in an ‘as-if-random manner’.
These facts have profound implications for marketing, its activities, and what can be achieved. Importantly, they underpin the Institute’s evidence-based marketing recommendations.
Consumers do like brands (especially the ones they personally buy). The primary role of brands for consumers is to make their lives easier through simplifying purchasing decisions. It is important to keep in mind that you the reader are not a normal consumer as far as your category and particularly your brand is concerned. The brand that pays your wage makes you abnormal. You are in fact the ultimate brand loyalist; it consumes your waking hours. Now that is real brand love!
