Testing the robustness of brand partitions identified from purchase duplication analysis

Abstract

ABSTRACTPurchase duplication analysis examines the extent to which buyers of any brand A also buy other brands B, C, D and so on. A generalised finding from its use is that brands share their buyers with other brands approximately in-line with the size of those other brands. The approach is widely used by analysts and managers. One important use of the method is to identify partitions – brands that share buyers at a higher than expected rate. Partitions may form among competitor brands, but also among ‘same name’ or sub-brands that share a parent name (e.g. Coke, Diet Coke). A partition among same-name brands means they are cannibalising each other. Whether one’s focus is on cannibalisation within a portfolio, identifying close competitors, or to generally understand market structure, duplication analysis can provide insights. However, there are two potential confounds to its use: family buying and buying multiple brands on the same occasion. This study tests if these two factors confound the use of purchase duplications, using data from 12 grocery categories. The principal finding is that the identification of partitions is robust to these confounds. The study finds partitions among same-name brands are common and are also not due to these confounds.