Marketing is Scrambled: All Evidence-Based Theorists are Invited to Breakfast
Shaw and Nowicki (2018) mistakenly suggests that the growing adoption of empirical science by marketing academics and practitioners is a return to an earlier time of treating all customers the same. Fundamental patterns discovered in buying and brand performance data accurately describe differences between buyers (e.g. in category buying rates and in personal brand loyalties), as well as predictable differences in loyalty metrics between rival brands. Theory has been proposed that fits these empirical generalisations; that rival brands largely differ and compete in terms of their mental and physical availability to category buyers (Sharp 2010). An implication is that marketers need to understand the differences between buyers in their category so that they can extend their brand’s reach. This contrasts the practice of offering a single marketing mix to the whole market, and it is opposite to the practice of targeting a brand to a single homogeneous segment of the market and again offering a single marketing mix to that segment.
CitationKennedy, R. and Hartnett, N. (2018) "Marketing is Scrambled: All Evidence-Based Theorists are Invited to Breakfast". Accepted for Australasian Marketing Journal, Issue 4 2018.
How far is too far? Investigating purchasing across packaged goods and services categories for retailer branded products
Retailers are increasingly adding banks, gas stations, mobile services and even real estate agencies to their portfolio and branding these new ventures with the retailer name, such as Tesco Bank or Asda Money. The purpose of this paper is to test the ability of a retailer brand to stretch from traditional packaged goods categories to very different categories such as banking.
Using data from an online survey collected from 953 UK grocery buyers, this paper examines consumers’ behaviour towards UK retailer brands across four categories: soft drinks, chocolate, fuel and banking.
The results show that cross-category retailer brand purchasing is stronger between categories with similar buying behaviour (e.g. soft drinks and chocolate) than in categories with very different buying behaviour (e.g. soft drinks and banking). The behavioural spill over effects are stronger for retailer brands from the same chain and persist even for unrelated categories. However, apart from fuel, the strongest cross-purchasing occurs across competing retailer-branded offers within the same category.
Please contact the Institute for a copy of this article.
CitationNenycz-Thiel, M., Romaniuk, J. (2018) "How far is too far? Investigating purchasing across packaged goods and services categories for retailer branded products." Published in the European Journal of Marketing.
If the Model Fits, Use It: Methods and Benchmarks for Evaluating NBD-Dirichlet Goodness-of-Fit
The Dirichlet model is an empirical generalization describing and predicting repeated choice amongst a set of competitive alternatives. With the advent of big data, there are many new potential applications for this model. Its developers emphasized one goodness-of-fit statistic, and subsequent researchers have used this along with others. There is, however, no consensus in the literature regarding which measures to use or, more importantly, benchmarks. This paper proposes a suite of six goodness-of-fit statistics developed from the literature to assess the fit of the model and develops two new measures that account for category specific factors enabling the development of benchmarks. It also provides appropriate benchmarks for all statistics derived from 54 FMCG categories in the UK.
CitationDriesener, C., Rungie, C., Banelis, M. (2017). "If the Model Fits, Use It: Methods and Benchmarks for Evaluating NBD-Dirichlet Goodness-of-Fit." Australasian Marketing Journal Accepted November 3, 2017.
Does Double Jeopardy apply using Average Spend Per Buyer as the Loyalty Metric?
Double Jeopardy describes how smaller brands lose twice; they have fewer buyers who are slightly less loyal. A common loyalty measure is how often people buy the brand in a given time period. An alternative loyalty measure is how much people spend, which reflects purchase frequency and price paid. The brand equity literature suggests that high equity brands should reap high purchase rates and high prices. It is therefore possible that Double Jeopardy might become obscured when using a revenue-based measure such as spend per buyer. The reason is that price variation could create more, and more pronounced, deviations from the Double Jeopardy pattern. We demonstrate that Double Jeopardy holds for spend in thirteen consumer goods categories: smaller brands have fewer buyers who spend somewhat less on the brand. We further find no relationship between brand share and average price and no relationship between excess/deficit loyalty and average price.
CitationDawes, J., Bond, A., Hartnett, N., Sharp, B. (2017). "Does Double Jeopardy apply using Average Spend Per Buyer as the Loyalty Metric?". Australasian Marketing Journal, Accepted November 1, 2017.
Exploring the incidence and antecedents of buying an FMCG brand and UPC for the first time
Two studies provide estimates of the upper range of incidence of first-time (brand and UPC) purchases, claimed reasons for these new purchases, and consumer profiles of first-time brand buyers. Study 1 analyzes three years of transaction data from 10,000 loyalty card members; Study 2 reports on 510 mall-intercept interviews in two different stores. Despite the vast range of items available in modern supermarkets, new brand purchasing is not particularly common: new brands constitute about 5% of items in a basket and are purchased on about 1/3 of shopping trips. The majority of these new-to-consumer purchases have been prompted by in-store stimuli (noticing new brands, price promotions and stock-outs). Interestingly, demographic characteristics between first-time and existing buyers did not differ. Providing further evidence to the habitual nature of grocery shopping, the results indicate limited opportunities to expand/change consumer repertoires suggesting the need for ongoing marketing activities for FMCGs.
Keywords: shopping, first-time brand purchase, brand switching, in-store choices. Paper type:
Research paper
CitationBogomolova, S., Anesbury, Z., Kapulski, N., Lockshin, L. & Bogomolov, T. (2017). “Exploring the incidence and antecedents of buying an FMCG brand and UPC for the first time.” Journal of Retailing & Consumer Services: 1-28.
There is no doubt that the practice of brand extension is very popular with some reports suggesting as many as 70 percent of new products are launched with existing brand names on them. This popularity appears to stem from the rather enthusiastic attention that the practice of brand extension is getting in academic journals and trade publications. Brand extension has been hailed as the way to: achieve growth in a cost controlled world; capitalize on brand assets; redefine the nature/direction of a firm's business; gain economies of scale in advertising; introduce new products without advertising; assist a new product's success through endowing it with the goodwill which allows it to more easily gain trial and distribution.
To be fair, these accolades are often tempered with the warning not to "stretch" the brand image too far, that is, attempt to use a brand name on an incongruous extension, e.g. Exxon popcorn, Sara Lee dog food, Reebok computers. However, the warning, while in itself very serious, unfortunately also gives a clear impression that it is quite easy to manage brand extension, all it takes is common sense and a little brand image research.
CitationSharp, Byron (1993), “Managing Brand Extension,” Journal of Consumer Marketing, 10 (3), 11-17.
There are two types of repeat purchase markets
In this paper we report on a pattern in aggregate buying behaviour. We have observed two distinct types of repeat purchase markets with very different patterns of customer loyalty. These differences have profound implications for marketing theory and practice.
The first, and best known, are markets with relatively few solely loyal buyers and with buyers allocating their category requirements across several brands; we call these repertoire markets. Examples of repertoire markets include fast moving consumer goods, store choice, medical prescriptions, and television channel selection.
The second are markets with many solely loyal buyers, and with buyers allocating their category requirements almost entirely to one brand; we call these subscription markets. Examples of subscription markets include insurance policies, long distance phone calls, and banking services.
The distinction between these two types of markets is not a theoretical taxonomy, but is instead a dramatic empirical difference. For example, the proportion of solely loyal buyers enjoyed by a brand over a year seldom exceeds 20% in a repertoire market, but seldom falls below 70% in a subscription market. There is virtually no middle ground between these extremes.
CitationSharp, Byron. & Wright, Malcolm (1999) ‘There are Two Types of Repeat Purchase Markets’, paper presented to the 28th European Marketing Academy Conference, Berlin, Germany, 11-14 May.
Questioning the value of the ‘true brand loyalty’ distinction
Many authors regard attitudinal loyalty to be ‘true’ brand loyalty, or at very least that
composite measures of attitudinal and behavioural loyalty are required to gain insight into
loyal behaviour. However, this position is at odds with basic epistemological principles,
empirical evidence regarding attitudinal stability, and the scope of existing causal explanations
in a variety of fields, including marketing. We demonstrate these points with reference to the
existing literature, and call for a greater focus on behavioural approaches to brand loyalty.
CitationSHARP, B, SHARP A, & WRIGHT, M. 1999 Questioning the Value of the True Brand Loyalty Distinction. In: Conference. J. Cadeaux, Dr., ed. Australian & New Zealand Marketing Academy 1999, 29 November – 1 December, School of Marketing, University of New South Wales.
Three Conceptualisations of Loyalty
The objective of this paper is to throw some light on the issues of conceptualisation in brand loyalty research. Distinctions are made between three brand loyalty conceptualisations: attitudinal loyalty, repeat-purchase loyalty, and differentiation loyalty. The latter conceptualisation having received far less attention in the marketing (cf economic) literature on brand loyalty. This paper then details some recommendations for future research concerning the operationalisation of these concepts and exploring the relationships between each concept.
CitationSHARP, Byron, RUNDLE-THIELE, S. & DAWES, John “Three
Conceptualisations of Loyalty”. In: REED, P., LUXTON, S. &
SHAW, M. R., eds. Australia New Zealand Marketing Educators
Conference 1997, 1-3 December 1997 Melbourne, Monash
University, 1283-1293.
