Manon Royet

17 October 2023

Strategist’s Digest: Brand growth comes from light and non-buyers 

Contagious digests the most interesting and relevant research from the world of advertising and beyond, because there’s just too much to read and too little time

Where is the brand growth potential? An examination of buyer groups

By Giang Tue Trinh, John Dawes and Byron Sharp. Published in Marketing Letters

Give it to me in one sentence.

Almost all brands will grow more off the back of light and non-buyers than heavy ones.

Give me a little more detail.

The researchers investigated the potential contribution of three buyer groups – previous non-buyers, light buyers and heavy buyers – to a brand’s future sales. Heavy buyers were defined as the top 20% of a brand’s customers, and light buyers as the remaining 80%.

The researchers determined each buyer group’s potential impact on growth by looking at the difference between how often they bought a brand and how often they bought one of its competitors.

First, the researchers did this using a probability model that simulated purchase behaviour. It involved a simulated sample of 10,000 shoppers across four product categories and brand sizes, and predicted sales potential for these buyer groups. The overall average showed that the most growth comes from non-buyers (62%), then light-buyers (28%) and then finally heavy buyers (10%).

Next the authors looked at actual brand purchase data from 12,407 households in the UK. This analysis was conducted within a stable category known for its predictable growth patterns – consumer-packaged goods. Overall, the results were almost identical to the simulation. For small and big brands alike, growth primarily stemmed from non-buyers and light buyers, who accounted for 66% and 25% of a brand’s sales potential, respectively.

On a more granular level, the results showed that small brands find their highest growth potential in non-buyers. Larger brands rely more on current light buyers than smaller brands for their growth, but, like small brands, their primary growth potential still lies within non-buyers. For very large brands however, current light buyers were the largest sources of growth potential, with non-buyers following closely behind. That is because bigger brands already have a significant customer base, which results in fewer non-buyers to tap into as a source of sales.

Why is this interesting?

Studies that analyse current brand sales often highlight the importance of heavy buyers, who make up only 20% of customers but are often shown to account for between 50% and 73% of sales. But these studies do not tell you which groups of customers are most likely to help you grow.

By bridging this gap, this study offers insights for brand growth strategies and targeting. It reveals that a brand’s true sales potential does not reside within its current heavy buyers, but rather with its light and non-buyers.

Any weaknesses?

The researchers point out that this information should be considered as a complementary element within a more comprehensive strategy – which should include factors like a company's capabilities and the costs of reaching a buyer group.

Also, the data examined in the study only spans a short timeframe, from 2009 to 2011. This means that it offers limited insights into long-term brand growth. This is especially noteworthy since the authors themselves bring up prior research showing that brand management should encompass a long-term perspective.

Where can I find the whole report?

Here, and it’s free.

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