Cigarette Brand Loyalty and Purchase Patterns: An Examination Using US Consumer Panel Data

16 Pages Posted: 10 Aug 2012

See all articles by John Dawes

John Dawes

University of South Australia - Ehrenberg-Bass Institute

Date Written: August 9, 2012

Abstract

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

Dawes, John, Cigarette Brand Loyalty and Purchase Patterns: An Examination Using US Consumer Panel Data (August 9, 2012). Available at SSRN: https://ssrn.com/abstract=2126951 or http://dx.doi.org/10.2139/ssrn.2126951

John Dawes (Contact Author)

University of South Australia - Ehrenberg-Bass Institute ( email )

GPO Box 2471
Adelaide, 5001
Australia

HOME PAGE: http://www.johndawes.info

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