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Take Purchase Frequency Into Account in Estimating When Trends and Irresistible Forces Will Shift

Mar 27, 2008
Now let's turn our attention to a happier subject concerning anticipating changes in trends and irresistible forces. Let's look at the effect that purchase frequency for goods and services has on estimating time lags.

Consider how much purchase frequency can vary. Items like chewing gum may be purchased every few days by an individual, while equipment for new cement plants may be purchased only once a decade by a company.

Whenever someone is about to buy something is the time when market share and habits can change. With frequently purchased goods, competitors have a chance at almost all of the customers right away, while with less frequently purchased goods most customers are out of the market at any given time. On the other hand, the opportunity to build loyal habits is much stronger with those who buy more frequently.

When a company launches a new product or service, the usual approach is to put a lot of marketing support (more than will continue in the long run) behind the product during the introduction. For a typical consumer product, this extra marketing attention can translate into a schedule lasting six months to a year.

The irresistible force you are dealing with is the time and effort required to form a lasting customer habit of buying your product or service. What the company in this case may not realize is that forming a habit among customers usually takes about thirty repeat purchases.

If the product is bought once a week, the thirty repeat purchases can happen in only seven months. If the product is bought once every six weeks, the same thirty repeat purchases require three and a half years to occur. Unless the company keeps a high spending level to reinforce the habit-building for that entire three and a half years, the product's customer base will be vulnerable to in roads from competitors.

A different application of time delay is seen in the market for replacement auto tires, which are usually first sold when a new car has been operated for about 60,000 miles. The irresistible force here is that most people won't replace their tires before the old ones wear out, no matter how superior the replacement tires are. Replacement tire manufacturers can mark when new cars were sold and track annual driving distance trends to get a sense of the future demand for their products.

A major strategic opportunity then is to find ways to increase purchase frequency. By monitoring the effects of your attempts to make this change, you can see what to focus on.
About the Author
Donald Mitchell is an author of seven books including Adventures of an Optimist, The 2,000 Percent Squared Solution, The 2,000 Percent Solution, The 2,000 Percent Solution Workbook, The Irresistible Growth Enterprise, and The Ultimate Competitive Advantage. Read about creating breakthroughs through 2,000 percent solutions and receive tips by e-mail by registering for free at

http://www.2000percentsolution.com .
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