Jack Wakshlag (Chief Research Officer of Turner Broadcasting) asked me to comment on a finding from TRA that the largest advertising sales response comes from a group of consumers TRA call “Heavy Swing Purchasers” – who are defined as “category heavy purchasers who have bought the brand previously, but not loyally”.
My comment is in light of what is known about how brands grow, and how advertising affects sales (thanks to 40+ years of single source based research).
Promotional literature from TRA reports a repeated finding that “Heavy Swing Purchasers” buy the brand more in response to advertising And even more importantly it is a large segment, so 80% of incremental sales come from this group – after all, ROI is a dumb marketing metric, it’s total response that matters.
The TRA finding fits with a known empirical generalisation that the largest sales uplift come from the brand’s lightest buyers, who are by far the brand’s largest group of customers. By the way, the same happens when TV shows increase their ratings, it’s largely because the program’s most infrequent viewers watch slightly more often.
The only twist here is that TRA don’t just say “light buyers of the brand” but “light buyers of the brand who are also heavy category buyers”. I suspect, however, that they merely mean people/households who buy the category more often than the average person. I hope so because category buying rates follow a skewed (Gamma) distribution with most buyers buying less often than the category average. This means that any brand’s lightest buyers are made up of two groups:
1) there are people who buy the category often but that particular brand is small within their repertoire – these are the easiest to nudge (and gain sales from), i.e. high ROI.
2) there are people who don’t buy the category very often, so even if the brand is quite large within their repertoire they don’t buy it often.
This second group matters too. Especially in the long term.
They matter a lot for market share growth. One of the things that distinguishes large brands from small is that a greater proportion of their customer base is made up of light category buyers (see ‘Natural Monopoly Law’ page 97). Ignoring these people might boost your advertising ROI, but will prevent you from moving to a higher market share position.
Professor Byron Sharp, June 2011.