Observe The Law Of Buyer Moderation

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(By Bob McCurdy) The benefit of a message broadcast is that it is broadly “cast.” It is inclusive, reaching all current and future users of any product/service. This is significant, as the future economic value of any consumer differs from their current economic value, due to the marketing “law of buyer moderation.” This “law” states that, over time, the heaviest buyers buy less, the lightest buyers buy more, and non-users begin to buy. It is a real-world marketing “regression to the mean” illustration of purchasing extremes on both ends, over time, moving closer to the average.

We came across an article written by Jonathan Maze titled “As Restaurant Visits Decline, The Heaviest Users Cut Back Most,” that lends credibility to this “law,” as well as validates the “heavy buyer fallacy,” which states that most growth comes from light and non-users. If we reflect upon this “fallacy,” it becomes clear as to why this is the case. First, light and non-users greatly outnumber heavy users. Second, the light and non-user bandwidth for additional usage is much greater. An excerpt from the article:

“But who isn’t eating out, at least in the quick-service segment in January, might be a surprise: heavy users. According to the data research firm Sense360, which analyzed data from 140 chains and 5 million limited-service visits, 38 percent of heavy quick-service restaurant users reduced their visits in February, compared with the period before Christmas. Heavy category users visit 10 or more times per month. Overall visits among this group fell by 20 percent. Light users, on the other hand, actually visited 13 percent more often during the month.”

The data referenced above is a categorical example of the law of buyer moderation. Local market data confirms the foundational “numbers” behind this law:

Per Boston Scarborough, there are approximately 600,000 A18+ QSR patrons who qualify as the heaviest QSR consumers, frequenting Boston QSR’s 10+x/month, and there are 2.1 million QSR patrons visiting three or less times/month.

Which group is more likely to contribute most to revenue growth? The 600,000 who already feast on fast food or the 2.1 million who do not, but could?

Numbers aside, let’s consider what happens to the behavior of a person who eats at a QSR 10+x/month after hearing or seeing a QSR commercial — probably not much, as QSRs are already very much top-of-mind, not to mention they have limited additional QSR stomach bandwidth. Conversely, there is a much greater likelihood of encouraging additional QSR visits/purchases by the light/lightest user, as their current consumption would enable them to do so.

It is important to bring both of these marketing tenets to the attention of clients, as they can influence media channel selection. Campaigns that focus primarily on reaching the heavy user would utilize more targeted media and creative that would be less likely to reach/resonate with the light and non-user. Whereas campaigns that were designed to appeal to the light, non-user (with the greater purchasing upside) with mass appeal creative, would still resonate with the heavy user. This would require the advertiser to deliver at least some of its messaging via a high-reach medium such as radio.

The “math” and marketing tenets discussed above would also apply to any individual retailer or product/service. Casting a wider net typically results in catching more fish, and high-reach media enable an advertiser to cast that wider net.

Bob McCurdy is The Vice President of Sales for The Beasley Media Group and can be reached at [email protected]

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