Research & Publications

Journal Articles

Excess Loyalty in CPG Markets: A Comprehensive Examination

2010, Journal of Empirical Generalisations in Marketing Science

Sanguk Jung, Thomas S. Gruca, Lopo L. Rego

Abstract

Customer loyalty is a key concern of marketing managers due to its potential impact on brand and firm performance. Share of category requirements (SCR) is one of the most widely used (and available) metrics of behavioural loyalty. We replicate existing research indication that the Dirichlet model is an accurate predictor of a brand's SCR using a broad set of brands and categories in consumer packaged goods (CPG) markets across multiple retial channels in the United States. However, systematic deviations between the observed SCR and that predicted by the Dirichlet benchmark (i.e. "excess loyalty") remain. Excess loyalty is positively related to market share in most CPG categories (86%), a circumstance labelled by some authors as Triple Jeopardy. A cross-category analysis suggests that excess loyalty is significantly influenced by a brand's market share and average purchase volume while measures of the brand's marketing mix provide comparatively little explanatory power. By better understanding the drivers of excess loyalty, managers can more accurately evaluate a brand's performance with respect to SCR, a key behavioural loyalty metric.

Citation

Jung, Sanguk, Thomas S. Gruca, and Lopo L. Rego (2010), "Excess Loyalty in CPG Markets: A Comprehensive Examination," Journal of Empirical Generalisations in Marketing Science, Vol. 13, No. 1, pp. 1-13.

Keywords

Brand Loyalty, Share of Requiremenjts, Dirichlet Model, Empirical Generalizations.