We have previously shown that the most effective way to drive brand growth is by attracting additional buyers (i.e. foster penetration), but fundamentally, brand sales are a consequence of the number of purchase occasions. We can further our understanding by distinguishing the three sources of growth when a brand increases its number of purchase occasions (see the numbers in the diagram relating to each source):
1) Pure penetration gain: A brand wins more new buyers than it loses.
2) Extra occasions from the penetration gain: Additional occasions of new buyers outnumber the additional occasions of lost buyers.
3) Retained buying intensity: Retained buyers on average increase their purchase frequency for the brand.
We looked at these sources of brand growth for several hundred brands in a European market, and found the following:
- The top 20% of growing brands have, on average, increased the number of purchase occasions by 29%.
- The extra occasions come from all three sources outlined above: Pure penetration (1) contributes 30%, new buyers purchasing more than lost buyers (2) contributes 34% and retained buying intensity (3) contributes the remaining 36%.
- Big brands rely more on the contribution of retained buyers (3), while the largest growth for small brands tends to be from pure penetration gain (1).