Professional Documents
Culture Documents
2 D Ehrenbergs Law of Buying Frequencies
2 D Ehrenbergs Law of Buying Frequencies
3
Buying Frequencies We can predict buying frequencies
Category
Would you expect this? Or this? Or this? (every brand)
100
90
% of customers
80
% of customers
70
60
50
40
30
20
0 1 2 3 4 . . . . . . . 12 . . . . . . . .
10
0
purchases per year 0 1 2 3 4 5 6 7 8 9 10+
purchases per year China, 2013
5 6
Ehrenberg’s Law of Buying Frequencies Table 2.1 HBG PT 2, p 29: Chinese Toothpaste
Andrew Ehrenberg (1959) identified the Negative
Binomial Distribution in buying frequencies of all brands, Brand Buying frequency Year 1% Year 2 % Change (Y2-Y1)
• The biggest shift when brands grow is the zero buyer Four times 0.6 0.5 -0.1
column shrinks - more light buyers are gained than Five times or more 0.5 0.5 0
heavy, but all frequencies increase.
8
Holds accross categories & countries
We can predict where change will occur
Figure 2.1 Ehrenberg’s Law of Buying Frequencies allows
HBG Pt 2, p 27 Toothpaste Brazil predictions of future frequency distributions.
100
All brands have many infrequent (light) buyers and a
90
long tail of a few (very) frequent buyers.
% of customers
80
70
60
50 • If market share changes for a brand then ALL
40
30 buying frequencies will change in line with the
20 negative binomial distribution, i.e. most change
10
0 will occur in the ‘light’ buying frequencies.
0 1-3 4-6 7-10 11+ • See How Brands Grow: Part 2, Romaniuk & Sharp (2016) pages 27-28
purchases
China, 2013
9
More light buyers are needed to grow a brand – No Brand is Different, all show a reverse-J shape distribution, as per the
negative binomial distribution (NBD)
– In 1959 Andrew Ehrenberg identified this distribution in the buying
Reaching and monitoring light buyers is also
frequencies of brands
needed to maintain share
• Ehrenberg’s Law of Buying Frequencies informs strategies to grow
brands
Neglect light buyers at your peril!
12