Investigating cross-category brand loyal purchase behavior in FMCG

Abstract

In competitive markets, customer retention is in general more efficient than trying to attract new customers. Therefore, as a resulting outcome brand loyalty is regarded as a major strategic asset that has been investigated as an important source of equity. Most analyses, however, have been conducted in one specific product category only. The aspect of crosscategory related brand loyalty has been widely neglected so far. We concentrate on crosscategory relationships of national brands and on how customers' brand choice decisions are related across several product categories. This knowledge is of relevance for retail managers and manufacturers who think of segment-specific promotion strategies that consider the customer segments' loyalty patterns across categories. Our measure of brand loyalty is the Share of Category Requirements (SCR) to capture the relative share of category purchases that individual households give to each brand they buy, defined to be each brand's market share among triers of the brand. We use the SCR measure as a behavioral and individualoriented measure. We use scanner panel and corresponding survey data. The scanner panel data contains households' repeated FMCG purchase information of purchases in different kinds of store types within a limited geographic region. All the participating households were also asked to fill in a questionnaire on their values and attitudes. From an analysis of brand loyalty patterns different consumer segments result. An ex-post analysis based on general attitudes and other consumer characteristics reveals distinguishing factors between the consumer segments.