Sales Distribution of Consumer Electronics

Using the uniform most powerful unbiased test, we observed the sales distribution of consumer electronics in Japan on a daily basis and report that it follows both a lognormal distribution and a power-law distribution and depends on the state of the market. We show that these switches occur quite often. The underlying sales dynamics found between both periods nicely matched a multiplicative process. However, even though the multiplicative term in the process displays a size-dependent relationship when a steady lognormal distribution holds, it shows a size-independent relationship when the power-law distribution holds. This difference in the underlying dynamics is responsible for the difference in the two observed distributions

How small brands grow. Dirichlet analysis of the small brand syndrome

Until now, too little has been known about how small brands compete. Where conventional marketing advocates segmentation, targeting and positioning (STP) to establish strong relationships with loyal buyers, there is almost no evidence whether this approach works for small brands. Instead, research focus has been squarely fixed on the titanic struggles of the market leading brands. Their small rivals are ignored to the point that there is cast disagreement on what a "small brand" is – let alone on how their customers behave. To better understand small brand competitiveness, an empirical-generalist approach was adopted using commercial consumer panel data provided by Kantar WorldPanel. The longitudinal analysis demonstrated robust and generalizable buying behaviour patterns from a built-in replication design of over 500 brands in more than 30 product categories. The data include the continuously reported fast-moving consumer good (FMCG) purchase records of 15,000 UK households that were used to generate standard brand performance measures (i.e. market share, penetration, repeat purchases, buying frequency and purchase duplication). The NBD-Dirichlet was utilised as a theoretical foundation – as in prior studies on brand performance (see Kahn et al., 1988; Pare et al., 2006). Repeat purchasing for small brands was analysed over periods ranging from one to five years. Their brand buying patterns were near-stationary and replicated and generalised over time. They were also similar to earlier results for larger brands. Category buying was mostly as expected, hence (small) brand performance is closely predictable. Loyalty was largely a function of brand size, and the Dirichlet benchmarks were used to document and quantify deviations. It was found that niche brands are rare; and so are change-of-pace brands. In fact, the majority of small brands underperformed Dirichlet loyalty predictions yet they managed to maintain the same size (±1% share) over time. They did this by attracting a large proportion of infrequent buyers, year-on-year. The few small brands that grew, did so through significant increases in penetration – in line with Double Jeopardy expectations. Altogether, the in-depth analysis provides a comprehensive insight into how small brands compete. This is vital because small brands vastly out-number big ones. Plus, even todays giants started out small. These findings run counter to dominant marketing beliefs and are therefore a major contribution to knowledge and practice. The key limitations are that this study is restricted to one geographical market (the UK), the industry of FMCGs and a period of five consecutive years. Several future research avenues are revealed and discussed