Byron Sharp

Loyalty programs and their impact on repeat-purchase loyalty patterns

Abstract Loyalty programs are currently increasing in popularity around the world. This paper discusses the potential of loyalty programs to alter the normal market patterns of repeat-purchase behaviour which characterise competitive repeat-purchase markets. In line with this thinking, a large scale loyalty program is evaluated in terms of its ability to change normal repeat-purchase patterns by generating ‘excess loyalty’ for brands in the program. Panel data were used to develop Dirichlet estimates of expected repeat-purchase loyalty statistics by brand. These estimates were compared with the observed market repeat-purchase behaviour. Overall a trend towards a weak level of excess loyalty was observed, although the expected deviation was not consistently observed for all the loyalty program brands. Only two of the six loyalty program participant brands showed substantial excess loyalty deviations. However, these deviations in repeat-purchase loyalty were observed for non-members of the loyalty program as well as members and appear likely to be at least partially the result of other loyalty efforts particular to these brands.

Brand Awareness Effects on Consumer Decision Making for a Common, Repeat Purchase Product:: A Replication

This article is a replication of a study of Hoyer and Brown that used a controlled experiment to examine the role of brand awareness in the consumer choice process. The replication used the same methods, but with a different (but similar) product category, a larger sample, and a sample group that included experienced as well as inexperienced consumers. Results support the original studys findings that brand awareness is a dominant choice tactic among awareness group subjects. Subjects choosing from a set of brands with marked awareness differentials showed an overwhelming preference for the high awareness brand, despite quality and price differentials. They also made their decisions faster than subjects in the nonawareness condition and sampled fewer brands. In a surprising finding, respondents use of the awareness choice heuristic did not seem to decline steadily over repeated choice trials, but rather showed something of a U-shaped pattern, with subjects returning to the high awareness brand in the latter choice trials. Little support was found for Hoyer and Browns finding that subjects in the no brand awareness conditions chose the quality brand on the final trial more often that those in the awareness differential conditions. In summary, awareness differentials seem to be a powerful influence on brand choice in a repeat purchase consumer product context. Consumers show a strong tendency to use awareness as a heuristic and show a degree of inertia in changing from the habit of using this heuristic.

Purchase Loyalty is Polarised into either Repertoire or Subscription Patterns

Abstract We have observed that competitive repeat purchase markets are polarised into two radically different structures. The first and best known we call repertoire markets; these have few solely loyal buyers as most buyers allocate their category requirements across several brands in a steady fashion. The other we call subscription markets; these have many solely loyal buyers as most buyers allocate category requirements entirely to one brand. This is an empirical difference rather than a theoretical distinction, and surprisingly there appear to be no markets which occupy the middle ground between these two extremes. The repertoire-subscription distinction turns out to be an important boundary condition for some well-established generalisations about repeat purchase behavior. Despite this, the NBD-Dirichlet model of purchase incidence and brand choice fits both types of markets, and the differences in loyalty are adequately captured by the Dirichlets switching parameter, S. This represents an important extension of the generalisability of the Dirichlet, allowing the insights gained from repertoire market analysis to be applied to customer churn analysis in subscription markets.

Conceptualizing and measuring brand salience

Historically, brand salience has been considered synonymous with the brand being ‘top of mind’ (mentioned first) when the product category is used to cue retrieval from memory. In this article we argue that this conceptualization (and associated measure) is too narrow. We show that there is value in distinguishing salience from the concepts of awareness and attitude by conceptualizing brand salience as the brand’s propensity to be noticed or come to mind in buying situations. Brand salience reflects the quantity and quality of the network of memory structures buyers’ hold about the brands. This article offers guidelines to facilitate research on the role of brand salience in brand choice and buyer behaviour that are an important progression from the evaluation (attitude) focus of contemporary marketing theory.

Market statistics for the Dirichlet model: Using the Juster scale to replace panel data

Abstract The well-known NBD-Dirichlet model of purchase incidence and brand choice is usually estimated from aggregate market statistics such as penetration, average purchase frequency, and market share. In practice, panel data have been the only accurate source of this information. This research developed estimators of these market statistics based on the Juster scale, an 11-point purchase probability scale that can be applied using a survey. A validation study, involving comparisons with panel data for 16 brands in three categories, showed that the Juster-based estimators performed very well. This result allows the data requirements of the NBD-Dirichlet model to now be satisfied using a survey.

Marketing Orientation: More than Just Customer Focus

As the wine industry globally is pushed towards a marketing orientation, what does this mean for companies and their managers and owners? Distinction should be made between market orientation and marketing orientation. Market orientation places the customer at the top of the organisational chart, yet in the wine industry the customer can be very fickle. As such it does not encapsulate the marketing concept of the matching process – it is not a marketing orientation. The true marketing orientation has evolved from a realisation of the inadequacies of production and sales orientation. Marketing orientation should give equal weight to customer demands and to company requirements. It must choose its markets and manage its own productive capabilities in order to achieve its goals in pursuit of a strategic policy. In the wine industry in particular, it is imperative for management that customer and company needs and wants should be correctly balanced.

Managing brand extension

Examines the inherent risks of brand extension alongside empirical evidence of the success rates of brand extensions compared with brand‐name product launches. Concludes that the brand extension is justifiable only when it can be clearly shown to enhance the success of a new product launch and existing brand equity. Puts forward a number of rules for the appropriate use of brand extension.

Evidence concerning the importance of perceived brand differentiation

The credibility and vibrancy of any discipline depends on a willingness to question even the most strongly held beliefs. Our research challenges the central importance of differentiation to brand strategy. We provide an empirically grounded theoretical argument that differentiation plays a more limited role in brand competition than the orthodox literature assumes. We then present empirical data, spanning many categories and two countries, showing that there is a low level of perceived differentiation across competing brands. However, despite this lack of perceived differentiation, customers are still buying these brands. This leads us to question the importance of perceived and valued differentiation and to instead place distinctiveness at the centre of brand strategy - where a brand builds unique associations that simply make it more easily identifiable. We discuss the very positive implications for marketing management and call for research on being distinctive and getting noticed.

It's a Dirichlet World: Modeling Individuals' Loyalties Reveals How Brands Compete, Grow, and Decline

ABSTRACT The Dirichlet is one of the most important theoretical achievements of marketing science. It provides insights into the distribution of consumer loyalties and is used widely in industry for benchmarking and interpreting brand performance. The Dirichlets implications run counter to some well-entrenched marketing pedagogy and so, unsurprisingly, it has attracted criticism arguing that it cannot adequately reflect the dynamic nature of consumer choice. The authors address these criticisms by discussing how consumer loyalties are manifested and examining whether changes in consumer loyalties do, in fact, disrupt Dirichlet buying patterns. To the best of our disciplines knowledge, based on extensive empirical and theoretical work, brands compete in a Dirichlet world.

Television: Back to the Future

ABSTRACT TV keeps changing, and viewers have more alternatives than ever. Yet television-viewing behavior continues to follow some law-like patterns that have remained in place over the past 40 years. These empirical generalizations suggest that TV will remain the preeminent fast and vast advertising medium, if a more complex and expensive one. Knowledge of these empirical laws—including the special reach of high-rating programs, channel loyalty, low program repeat rates, lack of segmented audiences, and weak genre loyalty—can be used to guide advertisers in buying the most effective TV schedules. They give us confidence that TV will remain an effective advertising vehicle for many years to come.