Why Category Buying Behavior Matters

Healthy brands are those which are profitable and which grow over time. A big brand that is declining or unprofitable is not healthy. At the same time, a smaller but growing brand can be healthy, and can grow to dominate its category, if carefully nurtured.

Still, some categories are more heavily branded than others. Loyalty and branding are interconnected concepts. Branding is more prevalent in some categories than in others. In some categories, consumers buy brands based on brand preferences. In others, they may buy based on price alone.

Certain categories, such as cigarettes, women's fragrances, and beer, are highly branded. Other categories, such as eggs, gasoline and airline tickets, tend to be far more price driven or "generic". And in a third group of categories (which we call System Beater categories), consumers expect to buy based on brand preferences and a favorable price. Tires, athletic footwear and automobiles are all good examples.

We wanted to find out the extent to which category equity exists, and whether a simple question could measure it. We interviewed 26,000 respondents, roughly equally split between two matched samples, online and mail. By using a simple category-level question, we found that it is indeed possible to map and track categories, based on the extent to which they are branded or driven by price. We looked at 100 categories, spread across packaged goods, services, and durables.

These categories were deliberately chosen to be high-incidence categories. That is, most consumers own a car, as well as a refrigerator, and buy both eggs and milk. The same consumer, who is highly brand oriented when purchasing a car, may be highly price oriented when buying eggs. Category equity varies much more highly across categories, than it does across people. Few if any consumers are brand oriented across all categories. Moreover, almost no one buys based on price alone in every purchase category.

Leverage your brand

Many manufacturers attempt to leverage their strong brands from one category into another category. Toothpaste and toothbrushes are examples. However, we've learned that toothpaste is a highly brand-oriented category, while toothbrushes tend to be dominated by price considerations. A manufacturer who considers leveraging his brand from toothpaste into toothbrushes needs to carefully consider his pricing and promotional efforts. On the other hand, a manufacturer who considers leveraging his toothbrush brand into toothpaste needs to weigh the strength of his brand's product performance and advertising.

It is also possible to isolate the buyers of individual brands and determine whether a given brand's buyers tend to be more or less brand loyal. In other words, if a given category is price oriented, it is still possible that a strong brand can be created within it. In fact, there are many strong brands in price-dominated categories. And there are cases in which strong and growing price brands exist, even in highly brand-dominated categories.

In certain frequently purchased categories, such as mayonnaise, laundry detergent and eggs, lower income households tend to be more clearly price driven. On the other hand, in certain high ticket and information dependent categories, such as automobile tires, wine, VCRs and digital cameras, a different pattern can be seen. More highly educated respondents tend to be System Beaters, looking for their brand, but only at a good price.

Different category, different strategy

Before launching into a brand equity investigation, or as part of one, be sure to step back. Look at the tendencies of buyers in your category. Your category may be a Brand Shopper category, a System Beater category, or a Price-Driven category. Building a strong and healthy brand will require different strategies, depending on which type of category it is.

10 Tips for Strong Brands

• Identify categories where brand differentiation is possible
• Be careful when leveraging brands across categories, particularly if category equity differs
• If your category's price point is high, focus your advertising on involvement and information content
• Check your value equation before raising prices
• Remember, a consumer who is loyal to you in one category may not be loyal in another
• A focus on variety optimization will often help, particularly if your category is frequently purchased
• Branding is possible in any category
• In certain categories demographics influence category equity
• Spend promotional dollars carefully, so as not to unduly raise the level of promotional intensity, or expectations
• Focus all marketing activities towards increased brand loyalty

The Category Dynamics of Branding: How to Turn Generic Categories into Branded Categories