Channelling First Purchases: Why Brand Growth Is Found In Unexpected Places

Byron Sharp delivered the simple truth in How Brands Grow that the ONLY route

to brand growth is through buyer acquisition. Our work looks at what happens

on the purchase occasions when a brand acquires a new buyer, or wins back a

buyer who hasn’t bought for a year or more. These occasions – which are

essential for brand growth – are called First Purchases. By contrasting First

Purchases with Repeat Purchases we identify the drivers of First Purchases to

help brands gain new buyers. We have analysed nearly 5 million purchases

spanning different countries and categories, and through this work we have

uncovered a number of ‘universal truths’ about First Purchases.

Previously we have looked at how First Purchases of brands are usually

unplanned in advance, how pack size and price impact First Purchases, and how

price promotions really work. Today we look at the role played by the shopper’s

mission and the channel chosen by the shopper to satisfy that mission.

First Purchases Are More Likely On Smaller Shopping Trips

First Purchases of brands are more likely on smaller shopping trips for just a few

items or on Top-Up shopping trips, and less likely on a Main Shop.

The shopper’s mission plays an important part in determining the likelihood of

the shopper making a First Purchase of a brand. Our research shows that when

on a Main Shop the shopper tends to stick with what they know, and they buy

what they usually buy. When on a Main Shop the shopper will often claim to be

“time poor” and so by not contemplating anything new they are more likely to

complete their shopping trip in good time.

However, when shopping for just a few items the shopper tends to be more open

to shopping around and experimenting with new products. In addition, when

shopping for just a few items the shopper may be shopping in a new or different

channel and be presented with an unfamiliar category layout and/or different

brand choices which may in turn to lead to a First Purchase

What Does This Mean For Channels?

The fact that First Purchases of brands are more likely to be made on smaller

shopping trips and away from the Main Shop has an obvious consequence:

channels that are used to satisfy smaller shopping trips will be more likely to

attract First Purchases of brands, and channels that cater predominantly for the

Main Shop mission will be less likely to attract First Purchases.

So in this example we see that supermarkets and grocery.coms have a lower

First Purchase rate for Brand A, whereas Convenience Stores and Discounters

have a higher First Purchase rate. Perhaps this is somewhat counterintuitive -

the channels that have the greatest assortment and offer the most choice to

shoppers (and have the greatest opportunity to influence shoppers with retail

media) actually generate the lowest rates of First Purchase for brands!

Are Discounters Good For Brands?

We see in the example that different channels generate First Purchases for

brands at very different rates. In particular, Discounters generate 2.5x more

First Purchases of Brand A per unit sold than grocery.com channels.

This is a common finding: the Discount or Value channel usually generates a high

First Purchase rate for brands. We have seen previously that First Purchases of

brands are usually unplanned and are more likely at lower price points, and

Discounters are ‘strong’ in both of these areas so there are good - if not

immediately obvious - reasons why many First Purchases occur in Discounters.

What this does mean is that any brand fearful that distribution in the Discount

channel might cannibalise (more profitable?) sales from other channels need not

worry. In fact the reverse is true and the channel offers one of the best routes to

buyer growth. Further this is a win-win situation for brand and discounter, since

not only does the discounter provide a good number of new buyers for the

brand, the brand also provides new buyers of the category for the discounter!

Building A Channel Strategy To Gain Buyers

Whilst channel structure and shopper missions are different in different markets

understanding where to grow First Purchases is just as important for brands as

understanding how!

As a brand builds its plan to gain buyers, identifying which channels offer the

best opportunities to win First Purchases is particularly important.

If you are trying to gain buyers for your brand:

• Do you know which channels and retailers you should be targeting?

• Do you prioritise smaller shopping missions?

• Do you know if your brand helps win new buyers for the retailer?

• When launching NPD do you think about channel and mission?