What’s the Occasion? Brand growth!

Posted by Oliver Koll on Jun 15, 2017

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).