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Does the Duplication of Purchase Law Apply to Radio Listening?
Gavin Lees, Victoria University
Malcolm Wright, University of South Australia
Emails
gavin.lees@vu.edu.au
malcolm.wright@unisa.edu.au
Abstract
Radio markets are often claimed to be highly segmented, with different stations targeting
particular niches. We evaluate this idea by applying duplication analysis to test for structure
in a regional radio market. We find that there is market partitioning (segmentation).
However, this segmentation is not between different radio brands, as popularly believed.
Rather it is between two formats – talk radio and music stations.
Keywords
Duplication of purchase, radio listening, empirical generalisations.
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Does the Duplication of Purchase Law Apply to Radio Listening?
Introduction
“An EG (empirical generalisation) is a relationship between two or more variables that has
been observed across a range of conditions. Because the relationship is observed to occur and
recur it is regarded as a pattern, regularity or law, and can be represented using a
mathematical, graphic or symbolic language” (Uncles and Wright, 2004, p 5). Thus empirical
generalisations are what Bass (1995) called the ‘building blocks of science’. However, to be
considered an empirical generalisation a pattern must be accumulated across a number of
studies.
Ehrenberg (1988) shows that most of a brand’s customers are multi-brand buyers in that they
buy from a range of brands within their purchase repertoires. But what other brands do they
buy? Again Ehrenberg (1988) shows that the other brands they also buy is in the aggregate,
again similar from brand to brand. Thus it appears brands share their customers with other
brands in line with each brand’s penetration. This is known as the Duplication of Purchase
Law, and means, in general, consumer goods markets have been found to lack specific
partitions which appeal uniquely to a specific category or segment of customers. For instance
in previous research (Ehrenberg et al. 2004) has shown that most markets for directly
substitutable brands are not usually partitioned in that they indicate no special grouping or
clustering of the brands. However, in some markets evidence of subcategories does exist, for
example, petrol - leaded and unleaded and coffee – decaffeinated and regular. It could be
expected that these subcategories, usually based on a functional attribute, may attract a special
or ‘segmented’ following with purchasers showing a marked grouping towards selected
attributes - thus indicating a partition in the marketplace.
This segmentation is supported by the New Zealand radio industry where the largest radio
station owner informs intending radio advertisers that “Radio in New Zealand is actually very
well niched and when matching your target market to the networks available, the
choice…becomes quite straightforward” (The Radio Network 2006). The network claims that
their different genres or station formats attract a special ‘segmented’ listener base. This claim
is in contrast to those made by Ehrenberg and others who believe that switching between
stations should follow the Duplication of Purchase Law.
Duplication of Purchase Law – Radio Listening
The Duplication of Purchase Law states that the competitive stations to which listeners
indicate affiliation will be similar in the aggregate from station to station, and that the
listening duplications for one station with another will vary in line with the cumulative
audience of the other station. In terms of radio listening the expected duplication for different
stations x and y can be expressed as bxy = D.bx. D being the switching coefficient which is
constant for all stations. If there are partitions in the radio market place, then it is expected
that the Duplication of Purchase Law will apply both within each separate partition and also
between the partitions but with differing ‘duplication coefficients’. So this paper tests the
various claims with the proposition that audience duplication between radio stations will vary
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according to each station’s market penetration, in accordance with the Duplication of
Purchase Law.
Methodology
Radio audience data was collected in Manawatu, a regional New Zealand marketplace with 20
radio stations regularly broadcasting on a 24 hour-seven-day-a week basis. An initial sample
of randomly selected Manawatu residential telephone numbers was supplied by the local
telecommunications company. Phoning of potential respondents was carried out each week on
Monday evenings (only), and on Tuesdays and Wednesdays during both the day and the
evening. If the respondent agreed they were posted a radio diary package in order to enable
them to start recording their listening from the following Monday. The radio diary’s format
and definition of ‘listening’ followed the procedures used by Research International, the
“official” New Zealand radio research company. The final number of respondents contacted
was 4,029, of which 1,399 agreed to complete a radio diary. Of the 1,399 respondents who
agreed to complete the radio diary a total of 1,136 diaries were returned.
Results
With over 20 radio stations included in the data many of the stations have a very small market
share and/or cumulative audience. Due to potential small sample sizes it was considered that
those stations whose cumulative audience was less than 10% should be merged together into
an ‘Other’ category (see Pellegrini and Purdye 2005).
Table 1:
Duplication of Listening Between Stations (%)
Cume
More FM
National
Radio
Classic Hits
Newstalk ZB
The Rock
The Edge
Solid Gold
ZM
The Breeze
Radio Sport
Radio Live
Radio Pacific
Others
Average
Expected
Duplication
Average Expected
More
FM
30
Nation
al
Radio
Classi
c Hits
Newst
alk ZB
The
Rock
The
Edge
Solid
Gold
ZM
The
Breeze
Radio
Sport
Radio
Live
Radio
Pacific
Others
13
40
13
34
29
21
23
14
11
11
12
38
16
23
10
7
11
7
8
16
16
9
65
18
30
9
20
21
31
28
17
29
24
18
12
28
33
17
22
24
13
16
20
11
19
20
14
13
17
15
16
9
13
10
12
13
13
9
18
13
19
9
17
9
9
14
26
20
36
46
45
37
44
48
52
43
65
55
28
14
26
21
21
19
19
17
15
14
12
11
38
21
48
19
49
47
35
40
27
25
26
34
44
34
17
29
12
11
16
11
15
32
36
24
68
24
21
36
28
39
27
37
35
19
31
35
30
9
24
19
15
33
32
23
38
38
24
35
34
35
19
22
18
18
37
25
24
36
19
18
19
29
26
23
18
25
23
20
17
31
22
13
18
19
15
32
19
18
12
20
30
17
20
34
22
18
24
31
15
22
15
48
35
32
30
25
25
22
22
20
18
16
14
12
44
-1
-8
1
-1
0
1
0
0
0
2
1
3
4
Table 1 illustrates the Duplication of Listening between the stations with the average
duplications, cumulative audiences, expected duplications and the difference between the
expected duplication and the average duplication.
The stations are ranked by their cumulative audience (cume) or penetration- in descending
order. The column titled ‘Cume’ indicates the proportion of listeners that listened to that
station at least once during the survey period. For example, 28% of the listeners listened to
National Radio at least once, 26% listened to Classic Hits and 11% to Radio Pacific. The
numbers in the table under the columns “More FM… to ….Radio Pacific” represent the
proportion of listeners of the row station who also listened to the column station. For
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example look at the first entry under the column titled “More FM”, which says “14”. This
means of the people who listened to National Radio, 14% also listened to More FM. If you
look under the column titled “Radio Pacific”, go down to the row listing for Radio Live - it
says “20”. This means of the people who listened to Radio Live, 20% also listened to Radio
Pacific - and so on.
The D value coefficient used to calculate the expected duplications in Table 1 was 1.125
(1.1). The D value coefficient for each combination of stations has been calculated by taking
the raw number of listeners for each station that listen to some competitor and presenting it as
a percentage of the total number of listeners to the station. In calculating the expected
duplication (Cumulative Audience x D Value) the D value has been worked out by calculating
a D value for each pair of stations recorded by the respondents. The average of these
computations was then calculated having weighted each initial calculation by the number of
listening occasions for each combination. The D value coefficient used to calculate the
expected duplications in Table 1 was 1.125 (1.1). The D value can also be quickly calculated
by dividing the average duplication by the average penetration.
The correlation between the average duplication and the expected duplication in Table 1, was
0.95, r2 = 0.90 indicating a very good fit. The major deviation between the average and
expected duplications is for National Radio. This deviation appears partly due to its greater
than expected sharing with the ‘Others’ which includes the Concert Programme and Access
Radio’s BBC News. One possible reason for this particular deviation is that they are all
commercial free programmes. In considering the actual differences between the average
duplication and the expected duplication have a Mean Absolute Deviation (MAD) of 1.8%
was observed.
However, there are a number of combinations of stations where the listening duplication
between stations is either higher or lower than predicted. For instance, The Edge, The Rock
and Classic Hits have a greater than expected duplication with More FM, whereas Newstalk
ZB and National Programme have a much lower duplication than was anticipated. These
duplications or deviations from the Duplication of Purchase Law suggest a need for further
analysis. They could represent a number of potentially confounding factors including partition
in the market, functional differences such as station frequencies (AM/FM), formats
(music/talk), or segmentation among the listeners.
When considering possible partitions, it is intuitive to expect that formats are more likely to
result in a partition as listeners choose stations with a similar format, be that either ‘music’ or
‘talk’. Therefore the stations were grouped together in terms of their formats (music/talk).
Tables 2, 3, 4 and 5 show the listening duplications between the ‘Music’ stations and ‘Talk’
stations.
Table 2:
Duplication of Listening Between the ‘Music’ Stations (%)
Cume
More FM
Classic Hits
The Rock
The Edge
Solid Gold
ZM
The Breeze
Average
Expected Duplication
Average -Expected
30
26
21
19
19
17
15
21
More FM
Classic
Hits
40
48
49
47
35
40
27
41
40
-1
36
28
39
27
37
34
34
0
The Rock
The Edge
Solid Gold
ZM
34
30
29
20
31
21
28
29
24
23
18
28
33
17
35
34
35
19
31
28
3
24
36
19
27
25
2
18
25
24
24
0
13
22
22
0
The
Breeze
14
22
13
16
20
11
16
20
4
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Table 3:
Duplication of Listening Between ‘Music’ and ‘Talk’ Stations (%)
Cume
National Radio
30
26
21
19
19
17
15
21
13
17
12
11
16
11
15
14
19
-5
More FM
Classic Hits
The Rock
The Edge
Solid Gold
ZM
The Breeze
Average
Expected Duplication
Average -Expected
Table 4:
Radio Sport
13
18
9
24
19
15
33
19
14
4
Radio Live
11
19
14
13
17
15
16
15
9
6
Radio Pacific
11
9
10
12
13
13
9
11
8
3
12
13
9
17
9
9
14
12
7
5
Duplication of Listening Between ‘Talk’ and ‘Music’ Stations (%)
National Radio
Newstalk ZB
Radio Sport
Radio Live
Radio Pacific
Average
Expected Duplication
Average -Expected
Table 5:
Newstalk ZB
Cume
More FM
Classic
Hits
The Rock
The Edge
Solid Gold
ZM
The
Breeze
28
21
14
12
11
17
14
19
25
26
34
24
33
-9
16
21
35
19
31
24
28
-4
10
9
22
18
18
15
23
-8
7
21
18
19
29
19
21
-2
11
17
23
20
17
18
20
-3
7
12
18
19
15
14
19
-4
8
24
18
12
20
16
17
0
Duplication of Listening Between ‘Talk’ and ‘Talk’ Stations (%)
Cumulative
Audience
National Radio
Newstalk ZB
Radio Sport
Radio Live
Radio Pacific
Average
Expected
Duplication
Average -Expected
28
21
14
12
11
17
National Radio
Newstalk ZB
Radio Sport
Radio Live
Radio Pacific
23
16
20
16
13
18
9
19
26
20
29
32
36
24
31
32
23
38
29
20
34
23
24
18
19
38
30
19
17
15
-8
-1
4
1
4
In considering Tables 2 to 5 and their associated listening duplications by format, the
structure of the Manawatu radio market becomes clearer. This is most obvious when the
duplication of listening for the music station listeners who also listen to either music or talk
stations is considered. The average duplication for music to music station listeners is 28%,
double the proportion of music station listeners who listen to talk stations (14%). A similar
pattern is seen with talk station listeners who also proportionately listen to other talk stations
(24%) more, on average, than they do to music stations (19%). These differences are
reinforced when the correlation between the average and expected duplications between the
two formats is calculated. Although there are good correlations between the music/music (r =
0.97), talk/music (r = 0.83) and talk/talk (r = 0.95) formats, there is not a good fit with
music/talk (r = 0.48). Along with the much lower average duplication, the correlation figures
support the contention that the radio listening market has a sub market or partition based on
format.
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Conclusion
The Duplication of Purchase Law states that brands share their customers in line with the
other brands’ penetrations. It was expected that a switching between stations would follow a
similar pattern. The correlation between the average duplication and the expected duplication
in Table 1 was found to be 0.95, a very good fit. This was in spite of the fact that the
correlations supported the proposition there did seem to be evidence of a market partition
based on format. In considering the stations grouped according to their primary formats of
either music or talk, it was shown that music station listeners were more likely to switch to
another music station than to a talk station suggesting a partition in the market place.
However, once market partitioning has been taken into account the duplication patterns within
each partition still shows clear support for the proposition.
An important feature of competitive radio markets is that (broadly) most stations keep their
market shares, be they large or small, for several years at a time If listeners were, because of
advertising or promotion, consistently changing stations this ‘steady state’ would be unlikely.
However, this paper’s explanation is simple – individual listeners are polygamous or multistation listeners and tend to remain loyal to their station repertoires. While listeners switch to
other stations because they are similar, there appears to be no great motivation for a ‘search’
for a switch. Habitual, even divided loyalty is less effort to the listener.
Therefore, to make good marketing decisions, reasonably accurate and usable information is
needed. For instance, it appears radio station managers assume that listeners selectively listen
to the various radio stations – but this is not supported by the evidence. In fact this research
casts doubt on the strategic marketing of the various networks; despite campaigns focused on
building/sustaining station loyalty, and being differentiated in such a way that listeners should
actually change their behaviour, those networks mostly compete with apparently directly
substitutable competitors.
This research has shown that listeners appear to treat the differing radio stations alike: there
happen to be some loyal listeners, but most listeners have a station repertoire. This implies
that stations can be judged against norms and that brand performance measures can be
benchmarked. Also, given the near ubiquitous duplication of listening regularities, it is
doubtful whether a station manager should view any deviations as marketing opportunities –
certainly not until the deviation (e.g. Radio Rhema and a religious format) has been clearly
explained. In essence ‘good marketing’ means going with the market and not trying to ‘buck
the trend’. It imposes constraints on what can be expected. However, stations can and do gain
or lose listeners, but those changes are mainly as a result of changes in cumulative audience,
not in loyalty-related measures. While there are no set answers as to how a station manager
should promote their station it appears that increases in awareness result in increases in
cumulative audience and increases in market share.
References
Bass, F., 1995. Empirical Generalizations and Marketing Science: A Personal View.
Marketing Science. 14 (No. 3, Part 2 of 2): G6-G19.
Ehrenberg, A. S. C., 1988. Repeat Buying: Theory and Applications. London: Charles5
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Griffin.
Ehrenberg, A. S. C., Uncles, M. D., & Goodhardt, G. J., 2004. Understanding brand
performance measures: Using Dirichlet benchmarks. Journal of Business Research, 57, 13071325.
Pellegrini, P. A., & Purdye, K., 2005. Measuring radio audiences with a PPM panel in
Québec. ARF-ESOMAR WAM Proceedings, Amsterdam.
The Radio Network. 2006. Making radio work. Retrieved July 18th, 2006 from the World
Wide Web: http://www.radionetwork.co.nz
Uncles, M. D. and Wright, M., 2004. Empirical Generalisation in Marketing. Australasian
Marketing Journal 12, (3) 5-18.
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