EXCESS BEHAVIORAL LOYALTY FOR HIGH-SHARE BRANDS - DEVIATIONS FROM THEDIRICHLET MODEL FOR REPEAT PURCHASING

Small market-share brands are known to suffer from two specific disadv antages compared with high-shore brands: they tend to have fewer buyer s than high-share brands, and they also tend to be bought less often ( Ehrenberg, Goodhardt, and Barwise 1990). The authors consider a third important advantage for high-share brands: unusually high behavioral l oyalty (e.g., degree of repeat purchasing). We show, across many produ ct-markets in both Japan and the U.S., that high-share brands have sig nificantly greater loyalty than the levels that would be expected on t he basis of a popular consumer purchase model (the Dirichlet model). S everal possible causes for this effect are examined, including four ke y assumptions that underlie the Dirichlet model. The most likely sourc e appears to be the existence of distinct consumer segments, which may emerge through the distribution strategies pursued by both large bran ds and small retailers. The authors discuss other possible causes of t his market-share premium as well as several of its managerial implicat ions.