Cigarette Brand Loyalty and Purchase Patterns: An Examination Using US Consumer Panel Data
16 Pages Posted: 10 Aug 2012
Date Written: August 9, 2012
This study analyzes data on cigarette purchasing, using the IRI academic dataset. Major findings are: cigarette purchasing in this market exhibits a reverse-J, or ‘NBD (Negative Binomial Distribution)-like shape: many infrequent buyers and fewer frequent buyers, although this pattern may be influenced by a low coverage of purchases made at convenience stores; cigarette brands do exhibit comparatively high loyalty metrics in the context of other consumer categories, with 12-month brand ‘share of requirements’ of approximately 60%; A ‘Double Jeopardy’ pattern of large brands enjoying more loyalty is found, but the brand penetration-brand loyalty correlation is only around 0.30 on average; While buyers indeed exhibit high loyalty, there is ‘cross purchasing’ of competing cigarette brands by these consumers, and it follows a predicable pattern: buyers of a given brand are on average more likely to purchase another large cigarette brand than another small brand; several brand partitions are identified, one of these partitions appears to be based on low price; there is evidence of certain brands enjoying particular appeal among specific demographic groups, for example, the brands Misty and Virginia Slims are overwhelmingly bought by female smokers. This finding contrasts to the general lack of association found between demographics and consumer brand usage in numerous categories.
Keywords: brand loyalty, brand-switching, cigarettes, addiction
JEL Classification: M31, I18
Suggested Citation: Suggested Citation