Loyalty Deviations and the Small Brand Syndrome.

Small brands are often described as niche, i.e. they have a small group of dedicated buyers who buy them frequently. We test that assertion over the short and long-term by analysing the performance of 250 small brands. We find that more than half of all small brands underperform their expected loyalty metrics and only about one in ten achieve higher (niche) loyalty. This loyalty premium does not result in share growth. On the flip side, deficit loyalty does not lead to decline as small brands attract more light buyers than expected. Overall, loyalty metrics for small brands are closely predicted by a double jeopardy (DJ) model. Resources should be directed towards attracting new buyers and not trying to raise the loyalty of existing ones. It is aimed to extend stochastic modelling of brand choice behaviour to the under-researched realm of small brands across multiple sets of data and time.