Background

For a brand to grow its market share it must attract new buyers. But buyers are remarkably loyal. It is well documented how habitual supermarket shoppers are, buying from similar categories and brands within them over time. Clearly, new brand buying does occur but surprisingly little information exists on how common new brand buying is, and when it does occur, what drives consumers to trial a new brand or variant. This report investigates how often new brand buying occurs and what disrupts habitual brand purchasing. To do this, we conducted two studies to estimate the incidence of repeat brand and UPC purchases (unique product code, e.g., all non-new variants, pack sizes, and changes to packaging) and the reasons claimed for disruptions to these purchases. We also test for differences in the consumer profiles of repeat and first-time brand buyers.

Our first study analysed three years of loyalty card transactions containing over two million shopping trips from over 10,000 members, covering 2,716 unique brands and 27,233 UPCs from ten supermarket categories (i.e., grocery, bakery, variety, dairy, fruit & vegetables, tobacco, frozen foods, fresh meat, seafood, and poultry). In our second study, we conducted over 500 supermarket-intercept interviews asking which, if any, items in the cart were brands never purchased before and the reasoning behind the consumer trying a new brand or UPC.

Six factors that may disrupt repeat brand buying

The acquisition of new buyers comes from two sources. Brands either acquire new to the category buyers or existing category buyers who have never bought the brand before (i.e., buyers who only buy competitor brands). Different prompts may disrupt repeat brand buying consequently aiding the process of noticing and buying a brand for the first time. The two key types are direct experiences (i.e., sampling (Antil, 1993; Ehrenberg, 1997; Kempf, 1998)) or indirect experiences (i.e., price promotions (Dawes, 2013), advertising (Chandon et al. 2009; Dawes, 2009), recommendations/word of mouth (Bughin et al. 2010; East, 2006), in-store noticing (Rook 1987; Van Trijp et al. 1996), and out of stock (Hedges, 1974)). We discuss each below.

(1) Sampling

Product sampling may be suitable for new brands or line extensions as it may bring forward buyers’ first experience with the brand. Brand managers hope buyers have a positive experience leading to future brand adoption (Antil 1993; Ehrenberg 1997; Kempf & Smith 1998). However, sampling is expensive, has low reach, and the conversion percentage is less than 20% (McGuinness et al. 1992).

(2) Price Promotions

Price promotions may induce non-buyers to trial or switch, but evidence shows that most buyers attracted to price promotions have purchased the brand before. Dawes (2018) examined 181 brands from 18 consumer goods categories in the UK and USA and found that on average, 77% of price-promotion buyers already bought the brand at least once in their last five category purchases.

(3) Advertising

One of the most common sources of indirect experience is through advertising. Advertising works by building new memories in non-buyers and refreshing those in existing buyers when people shop. Advertising can also play a role in reinforcing first-time purchases to develop loyalty (Ehrenberg et al. 2002). Our research suggests that one of the reasons very small brands suffer from low loyalty is due to low levels of advertising, so many first-time purchasers do not remember which brand they bought (see Corporate Report #93: Deficit loyalty for small share brands).

(4) Recommendations/Word of Mouth

Although recommendations mainly occur for larger infrequent purchases, consumers might seek advice from others when considering the purchase of an unknown brand (Arndt, 1967). Word of mouth can come from free, credible sources like friends and family or professionals such as salespeople and experts. The latter, when from credible experts, reassures consumers of the brand’s performance. When the recommendations are positive, they are often a primary reason for brand choice and prominently influence consumers who are buying a brand for the first time (Bughin et al., 2010; East et al. 2006). Further, positive word of mouth (PWOM) occurs three times as often as negative word of mouth (NWOM) (East, Hammond & Wright, 2007), and although PWOM has a greater impact than NWOM, the effect is largely dependent on the receivers pre-purchase probability (even resisting advice to brands they are highly likely or unlikely to buy) (East, Hammond & Lomax, 2008). Lastly, Mangold, Miller & Brockway (1999) found that WOM occurs because of open-ended questions (~50%), coincidences (~18%), and either satisfaction or dissatisfaction (~9%)).

(5) In-Store Cues

Buyers may purchase a brand for the first time merely because they noticed it during their shopping trip. Buyers may see the brand, are exposed to new information about the brand, and are stimulated by visual factors such as packaging or have their attention drawn to the shelf which generates an impulse purchase. These spontaneous decisions are most likely to occur for products like those found in supermarkets (Rook 1987; Van Trijp et al. 1996).

(6) Out-of-Stocks

Finally, buyers may purchase a new brand for the first time because one or more brands they currently buy are unavailable (Hedges, 1974). Van Woensel et al., (2007) finds that buyers have a high willingness to substitute out-of-stock brands, with those that are available. Interestingly, Kramer & Carroll (2008) find that even previously unconsidered options being out of stock increases the purchase likelihood of the brand consumers are considering.

This brief review highlights how little we know about repeat brand buying disruptions and first time purchasing of brands and that most of the information has come from related fields, rather than direct measurement in a shopping context. We now propose specific research questions formulated for these studies.

Research Questions

1.  What proportion of shopping trips contain new-to-consumer brands and, separately, new UPCs?

2.  What proportion of the shopping basket is formed by newly purchased brands and, separately, newly purchased UPCs?

What is the incidence of new brand purchases?

Our first study used purchase history of 10,000 loyalty club members of an Australian supermarket. This regional supermarket had something close to a monopoly, hence a high loyalty card compliance rate (90%).

To study the incidence rate of the first-time brand and (separately) UPC purchases, we used data from 2014 as the “purchase” period and considered 2012–2013 as the “reference” period. That is, if a buyer bought a brand in 2014 that they did not buy during 2012–2013 and partially 2014 (before the date of shopping trip), then we considered it as a first-time purchase for a given brand. Separately, for a UPC, if a buyer bought a product with a unique barcode in 2014 that they did not buy previously, then we considered it as a first-time UPC purchase.

Recent findings (after the data for this research was collected) shows some 80% of any brand’s buyers purchase less often than once a year, and 45% purchase less than once in five years (i.e., they are ultra-light brand buyers) (see Corporate Report #73: Ultra-lights – The Unbearable Lightness of Buying). Therefore our results undoubtedly incorrectly class many ultra-light buyers as a new brand buyer hence over-estimating the number of new purchases.

Table 1 shows the results where one in three baskets contain a “new brand”, and they constitute 6% of purchases. Framed the opposite way, two-thirds of baskets contain no “new brand”, and an overwhelming majority of previously purchased brands were repeat purchases. So while most buying is repeat-buying, new brand purchases are not uncommon.

Table 1: Incidence of new brand/UPC buying over three years of purchase data

To explore further whether disruptions to repeat buying (i.e., first-time purchases) are driven by novelty and adoption of new-to-market brands, or just switching to existing brands, we conducted a follow-up analysis. We focused only on products new-to-the buyer by removing all UPCs introduced to the market in 2014 and kept only UPCs that were in the data during the previous two years.

The results of this analysis returned very similar findings to the overall results presented above: 36% of trips had new-to-consumer brands, 76% new-to-consumer UPCs; 5% of brands bought were new to the consumer, and 23% of UPCs. This follow-up analysis suggests that the majority of first-time purchases observed on the aggregated level were driven by switching to existing brands, rather than the introduction of new-to-market brands.

” At a maximum, one in 20 brand purchases is
new-to-the-consumer “

3.  What are the most common triggers associated with disrupting repeat brand purchases?

In our second study (500+ mall-intercept interviews obtained over a week in two different stores) we asked respondents if they had purchased any new-to-them brands and then asked what prompted this novel purchase. Respondents could mention as many options as they wanted. The results are in Table 2.

The claimed reasons suggest that the in-store environment influenced about 58% of the first-time brand purchase. However, this is likely to be an over-estimate with respondents not crediting mental availability created outside the store that enhanced their likelihood of noticing the brand. Noticing and recognition in-store often follows a long process of building mental availability in consumers’ minds through advertising and publicity (Romaniuk & Sharp 2016).

Interestingly, stockouts (usual brand unavailable) account for very few mentions (3%), suggesting that stockouts perhaps mainly direct consumers to another brand in their repertoire (in which case they may not even notice the stockout).

Table 2: Claimed reasons for buying a brand for the first time

” In-store stimuli (i.e., noticing the brand, and price promotions)
disrupt repeat brand buying “

4.  Do first-time brand purchasers have a different demographic profile to those who repeat purchase a brand on a given occasion?

Finally, we looked at the shoppers’ demographic profiles in the interview study and compared those that claimed they bought a new brand with those who did not. There were no demographic differences between shoppers who had at least one new to them brand in their basket and those who repeatedly purchased their brands.

” First-time brand buyers share the same
demographic characteristics as repeat brand buyers “

Summary & Implications

Consumers do occasionally add a new brand to their repertoire. Our findings suggest that while this is not an everyday event, it is also no big deal for consumers and rarely planned in advance.

We found that repertoires/loyalties are very stable: no more than 5% of purchases are for a new-to-the-consumer brand; two thirds of shopping trips contain only brands bought in the previous two years.

New UPC (e.g., a new flavour or pack size) buying is much (5 times) more common, suggesting that it is much easier for consumers to include other variants/packs of the brand they already buy into their repertoire, compared to trialling an entirely new brand.

Up to half the time a new purchase was claimed to have been made mainly because of being noticed in-store.

The conclusion of these findings is that, while not impossible, it is very difficult to catch shoppers’ attention in-store, and hence difficult to disrupt their repertoire loyalty. The implication is that shelf and retail space design needs to work with shopper behaviour rather than seeking to disrupt it (see Corporate Report #64: The Fundamentals of Shopper Behaviour).

The implication for advertising is that it can very rarely motivate consumers to seek out a brand that isn’t in their repertoire. Instead the job of advertising is to build/nudge mental availability so that the brand has greater chance of being noticed in-store (see Corporate Report #13: Brand Advertising as Creative Publicity and Corporate Report #16: Brand Salience? What it is and why it matters).

Finally, our results show that the demographics of first-time brand buyers and repeat brand purchasers are very similar. First-time brand buyers do not have any particular characteristics and do not form a specific segment. The idea of finding a more responsive, less loyal, group of new brand buyers, would appear to be a waste of effort.

These findings further underscore that brand managers and retailers should try to maximise reach for both advertising and in-store activities. Retailers can build excitement to promote shopping at their stores by featuring new products in-store as a part of their marketing strategy. Brand managers can work with retailers by investing in advertising and in-store promotions to grow sales for new products. These activities together should result in greater noticing and purchases of new products.

Acknowledgements

The authors would like to acknowledge the support of the Barossa Co-op and the Foodland Group. Svetlana Bogomolova would also like to acknowledge the support of the Australian Research Council through her DECRA Fellowship (No. DE130101577).