Business Definition for: purchase frequency
purchase frequency
number of occasions during a period of time that a consumer purchases a particular product or buys from a particular seller. Marketers can increase purchase frequency by promoting additional uses for the product such as a "not just for Thanksgiving" promotion for cranberry sauce. The higher the purchase frequency, the greater the opportunity for
brand switching
. Products with a high purchase frequency, such as coffee, require a sustained, year round advertising effort to avoid losing market share. Products with a low purchase frequency, like Christmas decorations, require seasonal advertising efforts. Consumable goods tend to have higher purchase frequencies than
durable goods
. Direct marketers try to identify customers with high purchase frequency rates because they are usually the marketer's best prospects. An auto dealer uses knowledge of customer purchase frequency patterns to schedule mailings or phone calls to customers around the time of their next car purchase decision.
See also
synchromarketing
,
repeat rate
,
recency/frequency
Related Terms:
marketing efforts aimed at trying to bring inconsistent or seasonal demand levels in synch with supply levels. Restaurants use early-bird dinner specials to bring in customers during the slow period between normal lunch and dinner hours. Ski resorts promote summer activities and festivals to bring in tourists during the summer months.
number of times a product is purchased by an individual consumer within a period of time. For example, soap has a higher repeat rate than automobiles, because it is used up more quickly. A high repeat rate for a particular brand indicates a high degree of customer satisfaction. Repeat rates are particularly important in the evaluation of a new product. The time needed to conduct a product test is proportionate to the length of time between purchases, because the marketer must evaluate whether that product or brand is selected again by the same consumer.
The results of a repeat-rate measurement can be used to determine future promotional strategies. A high repeat rate after little introductory advertising indicates that additional advertising will provide disproportionately great returns. A low repeat rate indicates that the product might benefit from being promoted more heavily. If, after heavy promotion, repeat rates remain low, this suggests that the product should be redesigned or abandoned.
measure of the value of a customer or group of customers in terms of the number of purchases made and the length of time between purchases as well as the length of time since the last purchase. The higher the degree of recency and frequency, the more valuable the customer. For example, a customer who made 20 purchases last year is more valuable than a customer who made 20 purchases three years ago. They are both more valuable than a customer who made one purchase three years ago.
Copyright c 2000, 1994, 1987 by Barron's Educational Series, Inc. Reprinted by arrangement with Publisher.
