By identifying how large each of these segments is, it becomes much easier to understand what advertising and promotion can and cannot do for a brand. These segments are:
Sole Users. These individuals purchase only your brand, even when competitors are promoted, because your brand is always perceived to provide the greatest satisfaction. Intentionally promoting to them is foolish unless this can dramatically increase both their purchases and their use-up rates. Since Sole Users require relatively little advertising and no promotion, the more of them there are in a brand's base, the more profitable the brand should be.
Semi-sole Users. These individuals are almost the same as Sole Users except they have at least one competitor positioned near your brand. They do not respond to competitive advertising, but they do respond when closely positioned competitors are promoted. If the competition is promoting, this can be a rationale for defensive promotion. Otherwise, treat them the same as Sole Users.
Discount Users. These are your competitors' Semi-sole Users. They don't buy your brand at full price, but it is well enough perceived that they do purchase it at a discount. If there are many discount users in the brand's base, this is a rationale for offensive promotion. However, to get them to purchase at full price, you will almost always have to improve the product.
Aware Non-triers. These category users have not bought into your message and more GRPs behind that message or more frequent discounts won't help. Right now, they don't even consider your brand when they shop. Since they have not used your brand, their perceptions of it remain somewhat malleable, so a different message could help. Marketers often believe that by spending a little more money they can attract Aware Non-triers. Unless the product is a true innovation, these people rarely offer much potential.
Trier/Rejecters. They bought into your message, but not the product. More advertising and promotion will not change this. However, they can often be recycled back through a brand by reformulating the product to overcome its perceived weakness.
Repertoire Users. These individuals perceive different brands to be superior on different important attributes. They have two or more brands, yours included, that they purchase at full price, and some also have additional brands they purchase at a discount. Repertoire Users determine the success or failure of most marketing plans. They are the ones who switch brands in response to persuasive advertising and they switch within their repertoires in response to promotion. Most of a brand's advertising dollars should be targeted against Repertoire Users.
From the data we have analyzed, it is clear that the vast majority of advertising influences only the upcoming purchase following effective exposure to the commercial. Successful advertising only temporarily tweaks a consumer's desires. However, when a consumer purchases a brand at full price, her odds of purchasing it at full price the next time she shops the category increases slightly.
Advertising can grow a brand long-term by generating incremental full-price purchases (or by persuading entry level users), but its most dramatic impact usually comes from the sum of its short-term results.
Promotion, on the other hand, decreases the odds that the brand will be purchased at full price the next time the category is shopped and can erode a brand's full-price business long-term.
Advertising can also have a category impact. Each commercial generally influences how much consumers desire the generic attributes of the category. On average, a doubling of category GRPs results in a 9% increase in category volume. For large share brands in lightly advertised categories, this category impact alone can potentially yield higher profits.
For the last few decades, marketers have been trying to fit a new product model to brands people already use. Brand switching is often conceptualized as an on-going series of events where a product is repeatedly adopted and abandoned as perceptions are pulled this way and that by advertising in a competitive environment. But in reality, consumers aren't actually switching, they're just switching around. It's the difference between marriage and divorce, and polygamy.
Messrs. Stephan and Tannenholz are with Princeton Brand Econometrics.