JS/07/03/16
ARMED TO THE TEETH
An Exercise in Understanding Buyer Behaviour
Part A
Andrew Ehrenberg, John Scriven and Mark Uncles
London South Bank University and University of New South Wales
_______________________________________________________________________
Abstract
"Armed to the Teeth” is an exercise in using and interpreting
brand performance measures (penetration, purchase rates,
etc.). These measures are widely provided by consumer panel
operators and are routinely used by many marketing
practitioners.
The exercise centres on toothpaste. It helps to familiarise
students with the brand performance measures and the
underlying concepts of buyer behaviour.
October 2004
___________________________________________________________________________
Andrew Ehrenberg and John Scriven are at London South Bank University, Mark Uncles is at
University of New South Wales.
The data are from TNSofres.
For information contact john.scriven@lsbu.ac.uk, or call +44 (0)20 7815 6162, or visit
www.marketingoracle.com.
2
INTRODUCTION
Individual consumers differ in how often they buy a product and in what brands
they buy. But their purchase behaviour aggregates into regular patterns, e.g. that big
brands have far more customers rather than more loyal ones. These patterns turn out to
be much the same for competitive brands, in different product categories and countries.
They are therefore predictable. This provides the basis for more informed marketing
evaluation and decisions. "Armed to the Teeth" is an exercise to help consolidate and
deepen your understanding of such patterns. It uses toothpaste as the main example.
Brand management is often seen as constantly seeking to improve market share in
a continually changing environment. But in practice, most markets are more or less
steady, at least in the medium term: from year to year, the market contains much the
same brands, with much the same market shares. You may be aiming to increase next
year’s sales, but so are your competitors. Realistically, maintenance is a successful
outcome. The task of marketing management is therefore often defensive - managers
have to run hard just to hold on to what they have. It then helps to know the regular
patterns of buying and brand-choice that occur and also to consider how they might be
changed.
A typical task is new product development (NPD), which is risky. Marketing
managers should therefore be armed with the knowledge that a new brand’s loyalty can
be predicted, based on the regular and virtually "lawlike" steady-state patterns that apply
to all brands. This is discussed for instance in “Using Grounded Benchmarks to
Evaluate Brand Performance” (Ehrenberg, Goodhardt and Uncles 2001, South Bank
University R and D Initiative working paper), which provides a wider background to
"Armed to the Teeth".
The present exercise explores a dynamic scenario, where management seeks to
increase the market-share of an already established brand. The exercise is in two selfcontained parts:
Part A
aims to familiarise you with the basic measures of buyer behaviour, using
simple arithmetical illustrations.
Part B
helps you to recognise
(i) how the same patterns tend to occur across time, countries, and
product categories, and
(ii) how knowing that there are common patterns helps in coping with
the
extensive databases involved.
3
1. The Marketing Target
Suppose you were employed by Colgate in the UK as the brand manager for
Ultrabrite toothpaste. Ultrabrite, a secondary brand to the company's flagship brand
"Colgate", has about a 2% share of the market. Management has now set a 2-year target
of doubling Ultrabrite's share. Six ways of achieving this notional target could be:
a)
Ultrabrite's existing customers buying it more often.
- If so, would it be light buyers or heavy buyers, or both?
b)
Buyers of other brands being induced to switch to Ultrabrite.
- Which other brands might be most susceptible?
c)
Extra sales of Ultrabrite coming from previous non-users of toothpaste.
- Who - e.g. younger or older people - and why?
d)
Introducing a brand extension.
- e.g. Ultrabrite for sensitive teeth, or a "natural" variant, or a
version with baking soda.
e)
Launching a new brand rather than concentrating on Ultrabrite.
- What kind of new brand - e.g. a lookalike or a differentiated product?
f)
A mixture of some or all of these things.
- What mixture?
In attempting any such options, should Ultrabrite rely on:
 marketing-mix ingredients such as advertising, promotions, improved
distribution, heavier selling, more trade merchandising, product or packaging
improvements?
 cutting the price to encourage extra sales, or increasing the price to increase
value share?
 reaching the implicit profit targets by cost-cutting (rather than by investing in
costly or risky extra sales)?
 developing differentiated characteristics of a new brand or extension?
Another consideration is how will the competition react? What will they be doing?
To judge and/or implement these alternatives, it helps to understand the
competitive brand-choice structure of the market in terms of who buys what, and how
often. For example, in deciding who to target and how to position the brand, it matters
whether Ultrabrite's current sales are due to either just a few highly loyal customers, or
to many polygamous customers who buy it occasionally as one of a wider "portfolio" of
habitual brands.
4
Also, does Ultrabrite differ from its competitors in these respects and if so, how
and why?
2. Market Share and Purchasing Patterns
We now describe the basic measures and information we will be using in our
exercise.
Certain market research companies collect consumer panel data for packaged
goods from large samples of households who continuously record their purchase choices.
Some of the key measures that can be tabulated from this information are:
Sales:
In this exercise sales are expressed as the number of purchases in a given
time-period per 100 households1.
Market Share:
Sales of the brand
Sales of the product category
as a percentage
Penetration (of a brand in a given time-period):
Number of households buying the brand at least once in the period
Total number of households in the population
Average Purchase Frequency:
The average number of purchases by households that buy at least once during the
time period.
The Sales Equation:
Sales = Penetration  Av. Purchase Frequency
Share of Category Requirements: (in the period).
Average purchase frequency of the brand per brand-buyer
Average purchase frequency of the total product category per brand-buyer
The Incidence of Light and Heavy Buyers:
Defined by the distribution of percentage of a brand’s buyers who buy it once,
twice, 3, 4, 5 etc. times in a time period.
Repeat Buyers:
Typically are defined as the percentage of brand buyers in one time period who
also buy the brand in another time period of the same length. This is often
measured on the next consecutive time period, e.g. buyers this quarter who also
buy next quarter.
1
For all the data used in this exercise, the buying unit was the household and only a single pack of a brand
was generally bought on any individual purchase occasion.
5
Brand Duplication:
The percentage of buyers of Brand A who also buy brand B (denoted bB|A) can be
compared with the percentage of buyers in the population who buy Brand B (bB),
and hence the Duplication coefficient, D, calculated such that:
bB|A = D x bB
For example if 30% of the population buy brand B, and 45% of brand A’s buyers
buy brand B, the duplication coefficient is 1.5.
Some of this information is given for the 15 leading brands in the UK toothpaste
market in Tables 1A to 3A. Many of the brands will be familiar and can be found in
several countries around the world (e.g. see Part B). Others are more specific to the UK
market (particularly the retailer brands such as Sainsbury, Superdrug, Tesco and Boots).
Some of the brands advertise extensively, others do not, or less so. Positionings include
family appeal, whiteness, breath freshening, attacking plaque and so on.
The brands vary greatly in terms of market share and penetration. In contrast,
there is very little difference in terms of their average purchase frequency, all about 3.
Table 1A: Toothpaste: Annual Measures of Buying (UK, 1991)
Brand
Market
Share
Penetration
(%)
Average
Purchas
e Rate
Advertising
Positioning
Any
Toothpaste
100 %
84
7.6
Colgate
Macleans
Crest
Aquafresh
Sensodyne
22
11
10
9
6
34
22
22
20
11
4.1
3.2
3.1
3.0
3.3
Family
Whiteness
Dental health
Freshness
Sensitive
Mentadent
Signal
Gibbs
Sainsbury
Superdrug
5
4
4
4
3
11
11
11
8
5
3.2
2.6
2.4
3.0
3.2
Plaque control
Freshness
Family
Value
Value
Boots
Ultrabrite
Tesco
Euthymol
Zendium
All Others
2
2
2
1
0.1
14
6
6
4
2
0.2
30
2.5
2.4
2.6
3.1
2.2
3.0
Family/Sensitive
Whiteness
Value
Traditional
Scientific
Varies
13
2.9
Average Brand
6
6
As an example, in Table 1A Ultrabrite toothpaste was purchased by 6% of
households on average 2.4 times in the year. Other data (not given in the Tables) shows
that within each quarter, those households that purchased Ultrabrite then bought it only
1.6 times on average. In a typical week, it was bought just once (if at all).
Another feature is that few customers of a brand of packaged goods are 100%loyal to it over a period as long as a year. Buyers of Ultrabrite also bought other brands
of toothpaste almost 8 times in the year, plus the 2.4 of Ultrabrite making about 10 times
for toothpaste in all. This is typical also of other brands.
The Incidence of Light and Heavy Buyers:
Ultrabrite's average purchase frequency of about 2.4 in the year might suggest
that people will buy it about every 4 or 5 months. In fact, most buyers buy it far less
often (Table 2A shows the frequency distributions for the 15 brands).
 Almost 40% of the buyers of Colgate buy it only once in the year, and smaller brands
like Boots and Ultrabrite have even more once-only buyers (50% to 60%)
 Euthymol stands out for having relatively few once-only buyers (but still has 80%
buying no more than once a quarter or so).
 The “tail” of 6+ buyers for any brand typically consists of 3% buying 6 times, 2% 7 or
8 times, down to 1% buying 10, 11 or 12 times.
Table 2A: Frequent and Infrequent Buyers in the Year
UK, 1991
Any Toothpaste
Number of Purchases Per Buyer
1
2
3
4 5
6+
Average
Purchases
% 10
11
11
11
10
48
7.6
Colgate
Macleans
Crest
Aquafresh
Sensodyne
39
47
48
44
45
16
18
17
20
15
11
10
11
11
11
6
7
6
7
7
5
4
4
4
6
23
14
14
14
16
4.1
3.2
3.1
3.0
3.3
5 other brands
49
19
9
6
4
13
2.9
Boots
Ultrabrite
Tesco
Euthymol
Zendium
61
56
60
34
70
15
20
18
21
12
9
9
7
15
6
5
4
4
15
0
3
3
2
5
5
7
10
9
10
7
2.5
2.4
2.6
3.1
2.2
% 50
18
10
6
4
12
2.9
Average (15 brands)
7
Duplication of Purchase between Brands:
Table 1A showed that 6% of households bought Ultrabrite during the year. Table
3A shows how many of these buyers of Ultrabrite also bought each of the other brands
during the year. Thus, 40% also bought Colgate, 34% also bought Macleans, and so on.
This is compared with the % of households who bought each brand at all – so 40% of
Ultrabrite buyers also bought Colgate, compared with 34% of all households who bought
Colgate.
Table 3A Duplication of Purchase for Ultrabrite (UK, 1991)
% buyers of Ultrabrite who in the year also bought other brands.
% Who Bought
Co
Ma
Cr
A
Se
Me Si
G
Sa
Su
B
U
T
E
Z
Buyers of
Ultrabrite
%
40
34
37
33
7
17
15
16
11
10
5
—
8
3
0
All Households *
%
34
22
22
20
11
11
11
11
8
5
6
6
4
2
0.2
* i.e.Penetration from Table 1A
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3. Exercises
The following questions focus on the patterns in the data, and on thinking about
their marketing implications.
Q1 to Q5 ask you to compare some results for Ultrabrite with those for Colgate,
which are given in full. They help you to check that you understand the basic measures.
Q6 to Q9 look at more patterns for Ultrabrite compared with other brands, and
ask you to think about the nature of loyalty and competition.
Q10 to Q14 then ask about the marketing implications in the context of the target
of doubling Ultrabrite's sales.
Q1. Market Shares: What were Ultrabrite’s market shares in a typical quarter and in a
typical week?
Year
Quarter
Week
Ultrabrite
Colgate
2
…
…
22
22
22
Q2. Sales Levels: What were Ultrabrite's sales levels in the last year?
(Use the sales equation from page 4).
Then work out the sales levels for a quarter (i.e. 13weeks) and in a
typical week.
Year
Quarter
Week
Ultrabrite
Colgate
…
…
…
139
35
2.7
Q3. Purchase Frequency: The average purchases per year, quarter, and week per buyer
were given earlier in Section 2.
Copy these figures here, and compare them with Colgate’s.
Year
Quarter
Week
Ultrabrite
Colgate
…
…
1.0
4.1
2.1
1.0
9
Q4. Penetration: Using the sales equation again, work out what percentage of
households bought Ultrabrite in a quarter and in a typical week.
How do these figures compare with Colgate’s?
Ultrabrite
Year
Quarter
Week
6
…
…
Colgate
34
17
3
Q5. Pattern over Time: Summarise in a few words how the measures in Q1 to Q4 vary
with the length of the analysis period from a week to a year.
It will help if you draw a sketch graph for each of the measures.
Market Share
Sales
Time
Penetration
Time
Av.Purch.Freq.
Time
Time
Market Share: ……………………………………………………………………………………
……………………………………………………………………………………………………
Sales Levels: ……………………………………………………………………………………
……………………………………………………………………………………………………
Penetration: ………………………………………………………………………………………
………………………………………………………………………………………………………
Av. Purchase Frequency: ………………………………………………………………………
………………………………………………………………………………………………………
10
Q6. Light and Heavy Buyers: What does the frequency distribution for Ultrabrite in
Table 2A suggest about Ultrabrite’s buyers’ involvement with the brand?
How much repeat buying from quarter to quarter can be expected?
How does this differ from the other brands?
…………………………………………………………………………………………..
…………………………………………………………………………………………..…
………………………………………………………………………………………..
…………………………………………………………………………………………..
…………………………………………………………………………………………..
Q7. Big Brands and Little Brands: From Table 1A, compare (in words) the average
purchase frequencies of the four biggest and the four smallest brands.
Then compare the penetration figures for the four biggest and smallest.
Can you say what pattern you can see for the buyers of small brands?
Average Purchase Frequency
Four
Biggest
Brands
Average
Four
Smallest
Brands
Penetration
Four
Biggest
Brands
Four
Smallest
Brands
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…
…………………………………………………………………………………………..
…………………………………………………………………………………………..
…………………………………………………………………………………………..…
………………………………………………………………………………………..
…………………………………………………………………………………………..
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Q8. Duplication of Purchase:
Compare the brand duplications in Table 3A to the brands’ market penetrations.
Table 3A Duplication of Purchase for Ultrabrite (UK, 1991)
% buyers of Ultrabrite who in the year also bought other brands.
% Who Bought
Co
Ma
Cr
A
Se
Me Si
G
Sa
Su
B
U
T
E
Z
Buyers of
Ultrabrite
%
40
34
37
33
7
17
15
16
11
10
5
—
8
3
0
All Households *
%
34
22
22
20
11
11
11
11
8
5
6
6
4
2
0.2
* i.e.Penetration from Table 1A
Describe how they relate, what main pattern you find.
………………………………………………………………………………………….
…………………………………………………………………………………………..
………………………………………………………………………………………….
What exceptions are there to any main pattern you have described?
………………………………………………………………………………………….
…………………………………………………………………………………………..
…………………………………………………………………………………………
What does this tell you about Ultrabrite’s main competition in the market?
…………………………………………………………………………………………..
…………………………………………………………………………………………..
………………………………………………………………………………………….
Q9. Share of Category Requirements: For Ultrabrite buyers, what percentage does
Ultrabrite represent of their total purchases of toothpaste?
Say what this tells us about Ultrabrite’s customers’ loyalty?
…………………………………………………………………………………………..
…………………………………………………………………………………………..
…………………………………………………………………………………………..
12
Q10. More Buyers or More per Buyer?: Can a target of doubling of Ultrabrite’s sales
be reached by making existing buyers of the brand buy it twice as often?
Does the data suggest a constraint in terms of
a) Their total annual usage of toothpaste?
Yes:
No:
Don’t know:
b) Their average number of annual Ultrabrite purchases?
Yes:
No:
Don’t know:
c) Why do you say that?
…………………………………………………………………………………………..
…………………………………………………………………………………………..
…………………………………………………………………………………………
…………………………………………………………………………………………
Q11. Target Measures for Increased Sales: With an increased 4% market share for
Ultrabrite, what annual penetration (% buying) and average purchase frequency
would you expect?
a.
Penetration: …………………………
b.
Average Frequency: …………………
Q12. What about a New Brand: Suppose Colgate decided to launch a new line
extension of its flagship “Colgate” brand, (e.g. “Colgate for Sensitive Teeth”) to
achieve a 2% market share after three years. What annual penetration and
purchase frequency could you expect then for the new line extension?
a.
Penetration: ……………………………
b.
Average Frequency: ……………………
13
Q13. Partitioning: In terms of the patterns in Table 3A, from which brand or brands
you would expect Ultrabrite to gain the most if it should succeed in doubling its
sales? Can you say why this is?
…………………………………………………………………………………………..
…………………………………………………………………………………………..
………………………………………………………………………………………….
………………………………………………………………………………………….
If Colgate launched a new brand (e.g. “Colgate for sensitive teeth”) from which
brand or brands would you expect to gain most? Why do you say that?
…………………………………………………………………………………………..
………………………………………………………………………………………….
………………………………………………………………………………………….
Q14. Evaluating Marketing Proposals
Consider now the alternative ways listed in Section 1 (“The Marketing Target")
for possibly achieving the doubling of Ultrabrite's sales.
How would you now go about judging these in terms of buyer behaviour
benchmarks (e.g. Ultrabrite's existing customers buying it more often, or more
buyers)?
…………………………………………………………………………………………..
…………………………………………………………………………………………..
………………………………………………………………………………………….
………………………………………………………………………………………….
What can you say about proposals that are expressed in terms of the marketing
mix? Is advertising the way to set about it, or a new pricing strategy?
Which action do you recommend, and why?
…………………………………………………………………………………………..
…………………………………………………………………………………………..
………………………………………………………………………………………….