Understanding national brand customer erosion: exploring socio-demographic and weight of purchase factors
| Date | 02 August 2024 |
| Pages | 279-296 |
| DOI | https://doi.org/10.1108/JPBM-07-2023-4600 |
| Published date | 02 August 2024 |
| Author | José Miguel Holgado-Herrero,F. Javier Rondan-Cataluña,Carmen Barroso-Castro,José Luís Galán-González |
Understanding national brand customer
erosion: exploring socio-demographic and
weight of purchase factors
Jos
e Miguel Holgado-Herrero, F. Javier Rondan-Cataluña,
Carmen Barroso-Castro and Jos
e Luís Gal
an-Gonz
alez
Departamento de Administraci
on de Empresas y Marketing, Universidad de Sevilla, Sevilla, España
Abstract
Purpose –The purpose of this study is to explore brand customer erosion at both the category and brand levels while considering consumer socio-
demographic characteristics and weight of purchase factors.
Design/methodology/approach –Data from 3,563 buyers encompassing 20,601 purchases were collected from a prominent household data panel.
Findings –Brand customer erosion varies depending on socio-demographic factors (householder age, family size, life cycle and social class) and
weight of purchase; variations are evident depending on the specific brand.
Originality/value –The paper makes a substantial contribution to the established fields of marketing and consumer behavior literature by opening
a new line of research. It does so by demonstrating, the impact of socio-demographic factors on customer erosion. Simultaneously, it presents
results that contradict the limited existing research on the influence of weight of purchase on brand customer erosion.
Keywords Customer erosion, Repeat-purchase, Socio-demographics, Weight of purchase, Fast moving consumer goods
Paper type Research paper
1. Introduction
Customer erosion is a relevant topic of great practical and
theoretical importance (Dawes et al., 2021a). It refers to a
decrease in the rate of repeat-purchases, observed by
comparing the number of buyers during a specified timeframe
to an initial baseline period (Dawes et al., 2021a). This
phenomenon of steady declines in repeat-purchase rates is
relatively frequent in stationarymarkets, being a challenge for
both the management of the companies involved and for
academia. Thus, nowadays, to maintain market share,
companies are counteracting customer erosion by recruiting
new buyers, with all the costs that this entails (Nguyen et al.,
2021;Yun and Hanson, 2020).Meanwhile, scientific evidence
suggests a correlation between brands that experience growth
and those with lower erosionrates (Dawes et al., 2021a).
The decline in repeat-purchase rates can be attributed to
factors related to product categoriesor brand characteristics, as
well as marketing mix factors such as promotions, pricing or
product innovations(Dawes et al., 2021a;East and Hammond,
1996;Ehrenberg, 1988). However, other factors of interest
remain under-analyzed. In this research we argue that, given
the role of purchaser behavior in customererosion (Dunn et al.,
2021a), analyzing socio-demographic characteristics of the
buyers constitutesaresearch question of interest.So, variations
in customer characteristics over time (Gajanova et al.,2019;
Keikhosrokiani, 2022;Kumar and Kumar, 2019), such as
marital status, education, employment status, age, changes in
life cycle and other socio-demographic factors, may modify
consumer behavior (Dunn et al., 2021a;Yilmaz, 2023)and
influence customer erosion. Andall of this will also depend on
the customers’weight of purchase (East and Hammond,
1996). For these reasons, the present study aims to achieve the
following objectives: first, to evaluate the impact of specific
socio-demographic factors on customer erosion; second, to
explore the influence of weight of purchase on customer
erosion, both at an aggregatelevel and at the brand level.
This investigation focuses on exploring consumer behavior
within the fast moving consumer goods (FMCG) sector, which is
characterized by its stationarity (Trinh and Anesbury, 2015).
Meanwhile, the proportion of buyers returning to make purchases
from the base year decreases gradually over time (Dunn et al.,
2021a). Consequently, long-term success heavily depends on
The current issue and full text archiveof this journal is available on Emerald
Insight at: https://www.emerald.com/insight/1061-0421.htm
Journal of Product & Brand Management
34/3 (2025) 279–296
Emerald Publishing Limited [ISSN 1061-0421]
[DOI 10.1108/JPBM-07-2023-4600]
© Jos
e Miguel Holgado-Herrero, F. Javier Rondan-Cataluña, Carmen
Barroso-Castro and Jos
e Luís Gal
an-Gonz
alez. Published by Emerald
Publishing Limited. This article is published under the Creative Commons
Attribution (CC BY 4.0) licence. Anyone may reproduce, distribute, translate
and create derivative works of this article (for both commercial and non-
commercial purposes), subject to full attribution to the original publication and
authors. The full terms of this licence may be seen at http://creativecommons.
org/licences/by/4.0/legalcode
We would like to express our sincere gratitude to Nestl
eEspañaS.A.andthe
market research companies for providing us with access to the data that
significantly contributed to this study.
Received 10 July 2023
Revised 29 December 2023
4 May 2024
30 June 2024
Accepted 3 July 2024
279
acquiring new customers (Trinh et al., 2022) and fostering repeat
purchasing behavior among current ones (Günther et al., 2022). In
this context, if companies could reduce the erosion rate somewhat,
they would require fewer new customers to offset the losses. This
can lead to reduced expenses for companies as it is claimed that
generating additional sales from existing customers is usually more
cost-effective than acquiring new ones(Haripersad and Sookdeo,
2018) but, of a certainty, this is a question that depends on many
factors and needs to be strongly contrasted (Sharp, 2010).
To improve customer erosion, companies must develop a
comprehensive understanding of it and the associated factors.
To the best of authors knowledge, there have been a limited
number of studies on customer erosion. It remains unknown
whether socio-demographic characteristics are correlated with
higher or lower erosion rates and,we have only encountered
one relevant investigation by East and Hammond (1996) on
the influence of weight of purchase on customer erosion,which
originates from earlier decades, despite the evolving nature of
consumer behaviorover time.
For these reasons, it becomes crucial for both the academic and
business sectors to gain a more comprehensive understanding of
this pertinent matter. While conducting the specified analyses, we
investigate customer erosion in national brands (NB) within the
milk chocolate category in the Spanish market using data obtained
from a prominent household panel data company. The global
chocolate market records sales of $48.29bn, dominated by the
European market, whose sales reached US$19.95bn in 2021
(Fortune Business Insight, 2022).
The results confirm the existence of customer erosion and
highlight significant differences depending on the brand. We
found a relationship between socio-demographic and weight of
purchase factors concerning customererosion. Specifically, we
observed a trend declining erosion asbuyers age and progress
through life cycle stages, as well as among consumers classified
as light buyers. Larger family size and lower social class are
associated with higher levels of customer erosion. These
findings provide valuable insights for managers,enabling them
to develop strategies to reduce customer erosion. These
strategies aim to maintain or increase market share without the
need to replace all customers who discontinue their purchases
in each period. This research is situated within the domain of
consumer buying behavior research, which constitutes a
prominent area of inquirywithin the field of marketing.
2.Literature review and hypotheses
development
2.1Customererosion
The term “erosion”refers to the gradual decline the repeat-
purchases rates over time when compared to a base period (Dawes
et al., 2021a). It is crucial to understand that this individual buyer-
level erosion happens as the brand’s market share and aggregate
loyalty levels stay unchanged. Brand sales are heavily reliant on
repeat-purchases. A repeat-purchase occurs when a customer
makes another purchase from the same company (Damit et al.,
2019;Günther et al.,2022). Customers are more likely to engage
in repeat-purchases if they experience satisfaction with the products
they have previously purchased (Fazal-e-Hasan et al., 2019). It is
also crucial that products are easily remembered, and that they
have easy accessibility to them, such as through proper distribution
(Meilatinova, 2021). A customer who does not repeat his or her
purchase within a certain time frame, may stopbuying that product
(Günesen et al.,2021), which may trigger “customer churn/
customer abandonment/customer defection”(Wang et al., 2022).
Customer churn can be measured through the churn rate, which
quantifies the percentage of customers who have discontinued the
utilization of a product or service within a specifictimeframe,such
as monthly, quarterly or annually (Arai et a l., 2023).
Among all the customers who purchase a brand within a specific
timeframe, only a portion of them make repeat-purchases in the
subsequent period (Dunn et al., 2021b). Brands typically have
around 30%–60% of their buyers from one period not buying in
the next (Bain and Company, 2013). 60% of brands’annual sales
originate from buyers who did not make a purchase in the
preceding year (Dawes et al., 2021a). This pattern primarily results
from infrequent buyers (Dawes et al., 2021a;Dawes et al., 2021b;
Ehrenberg, 1988). Indeed, the frequency of brand purchases for
numerous FMCG conforms to a negative binomial distribution,
consistently exhibiting an inverted J-shaped curve characteristic of
such products. This trend highlights a significant prevalence of
many infrequent purchases alongside a minority of frequent
purchases. Robust findings confirm the prevalence of infrequent
purchasers. For instance, ultra-light buyers contribute almost 31%
to the brand’s sales volume and value over 5 years (Hossain et al.,
2024). In the categories of carbonated soft drinks and breakfast
cereal, only four out of every ten customers make a single purchase
within a five-year span (Dawes and Trinh, 2017). Over 80% of
packaged rice buyers in Asia purchase rice less frequently than
once a month. In contrast, the majority of loose rice buyers
demonstrate a higher purchase frequency, often acquiring rice on a
daily or weekly basis (Bairagi et al., 2021).
Besides infrequent purchases, in multiples consumer goods
markets, customersoften demonstrate loyalty to various brands
rather than exclusively sticking to one (Uncles and Kwok,
2013). This behavior can be attributed to strong attitudes for
two or more brands, coupled with minimal perceived
differentiation, information overload or ambiguous product
information (Walsh et al., 2007) or simply so that consumers
can ensure brand availabilityat the retailer, among other factors
(Arifine et al.,2019). These consumers typically maintain
several brand partnerships within a defined period (East et al.,
2008;Uncles et al.,2003), allocating each brand a share of their
purchases, even if minimal, over time (Banelis et al., 2013;
Dawes, 2008). As a result, buyers tend to exhibit split loyalty,
often selecting a different brand for subsequent purchases
within their brand repertoire (Abdullaeva, 2020;Arslan, 2020)
but, they may eventually revert back to their initially preferred
brand (Dastidar, 2019). For example, in electronic products,
25% of consumers expressed a willingness to switch to
alternative brands (Kumar and Kumar, 2019). In the tourism
market, numerous tourists exhibit loyalty to multiple
destinations(Almeida-Santana and Moreno-Gil, 2018).
In stationary markets, certain individual purchasing
propensities undergo change (Dawes et al., 2021a). The
presence of infrequent buyers within the category, along with
consumers displaying divided loyalty and behaviors aimed at
seeking variety or specific brands, may help explain this
phenomenon. Even so, the aggregate brand purchase
propensitiesshow less volatility, and consistent patterns emerge
regardless of how the data is grouped together(Ehrenberg et al.,
Understanding national brand customer erosion
Jos
e Miguel Holgado-Herrero et al.
Journal of Product & Brand Management
Volume 34 · Number 3 · 2025 · 279–296
280
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