How much change is there anyway?

A look into the stability of consumer choices and brand momentum

Don’t try too hard changing shopper habits

In a simplified world two types of repeat customers exist: one group repeats choice based on habit and another group repeats choice because of brand preference. The former is behaviorally loyal only whereas the latter also exhibits attitudinal loyalty.

A study has shown that cross-selling promotions that ignore this distinction are less likely to succeed. While the brand preference group can be lured with an attractive offer for the brand, habitual shoppers will not be lured by promotions trying to change their routine and may even develop negative brand attitudes.

Rather, this group must be approached with a strategy furthering their routine. For example, if a shopper shops one specific day per week, reward her for purchasing the brand in a different category several weeks in a row. A simple price-off promotion is less likely to be fruitful as it breaks an established routine.

Stable context – higher repurchasing

The most basic manifestation of brand loyalty is repurchasing – making the same choice on the next category occasion. A study in the Journal of Retailing tests to which extent the stability of contextual cues across purchase occasions affects repurchasing. The authors analyze a total of 1.6 million brand choice pairs (i.e., two consecutive choices) of more than 20,000 shoppers in both Germany and the UK in three FMCG categories. Stable contextual cues (same retailer, basket size or weekday as on previous occasions) increase repurchasing whereas unstable contextual cues (different retailer, basket size or weekday as on previous occasions, a promotion chosen on one of the occasions or a different assortment size) hinder repurchasing.

The findings stress the importance of inertia and suggest a new metric to benchmark brand performance across multiple retail outlets; that is, the likelihood that my brand is purchased again on the next category occasion. This metric is also one which aligns retailer and manufacturer interests and could provide a mutually beneficial objective to focus on.

Winning now – what’s in the future?

We revisit an older analysis (looking at 2008-2018) on momentum of brand growth and decline: If a brand is winning or losing share in a given year, what can it expect several years down the line?

1. Some insights on winners

• Half of the winners in a given year continue to grow in the following year;
• 1 in 4 winners lose in the following year but less than they had won before;
• Winners in a given year have nearly a 60% likelihood of still being above their original share 5,6,7, … years down the road;
• 1 in 10 winners manages to win another three years in a row.

2. Some insights on the losers

• More than half of losers in a given year also lose in the next year;
• 1 in 4 losers in a given year win in the following year, but not enough to recover their losses;
• Just 1 in 4 losers in a given year recover the following year;
• Losers in a given year have a 70% likelihood of still being below their original share 3,4,5, … years down the road.