- Introduction
- Market Share
- Relative Market Share and Market Concentration
- Brand Development Index and Category Development Index
- Penetration
- Share of Requirements
- Heavy Usage Index
- Awareness, Attitudes, and Usage (AAU): Metrics of the Hierarchy of Effects
- Customer Satisfaction and Willingness to Recommend
- Willingness to Search
This chapter is from the book
This chapter is from the book
This chapter is from the book
2.6 Heavy Usage Index
Purpose: To define and measure whether a firm's consumers are "heavy users."
The heavy usage index answers the question, "How heavily do our customers use the category of our product?" When a brand's heavy usage index is greater than 1.0, this signifies that its customers use the category to which it belongs more heavily than the average customer for that category.
Construction
Heavy Usage Index: The ratio that compares the average consumption of products in a category by customers of a given brand with the average consumption of products in that category by all customers for the category.
The heavy usage index can be calculated on the basis of unit or dollar inputs. For a given brand, if the heavy usage index is greater than 1.0, that brand's customers consume an above-average quantity or value of products in the category.
Heavy Usage Index (I) = Average Total Purchases in Category by Brand Customers (#,$)/Average Total Purchases in Category by All Customers for That Category (#,$)
Example: Over a period of one year, the average shampoo purchases by households using Shower Fun brand shampoo totaled six 15-oz bottles. During the same period, average shampoo consumption by households using any brand of shampoo was four 15-oz bottles.
The heavy usage index for households buying Shower Fun is therefore 6/4, or 1.5. Customers of Shower Fun brand shampoo are disproportionately heavy users. They buy 50% more shampoo than the average shampoo consumer. Of course, because Shower Fun buyers are part of the overall market average, when compared with non-users of Shower Fun, their relative usage is even higher.
As previously noted, market share can be calculated as the product of three components: penetration share, share of requirements, and heavy usage index (see Section 2.4). Consequently, we can calculate a brand's heavy usage index if we know its market share, penetration share, and share of requirements, as follows:
Heavy Usage Index (I) = Market Share (%)/[Penetration Share (%) * Share of Requirements (%)]
This equation works for market shares defined in either unit or dollar terms. As noted earlier, the heavy usage index can measure either unit or dollar usage. Comparing a brand's unit heavy usage index to its dollar heavy usage index, marketers can determine whether category purchases by that brand's customers run above or below the average category price.
Data Sources, Complications, and Cautions
The heavy usage index does not indicate how heavily customers use a specific brand, only how heavily they use the category. A brand can have a high heavy usage index, for example, meaning that its customers are heavy category users, even if those customers use the brand in question to meet only a small share of their needs.
Related Metrics and Concepts
See also the discussion of brand development index (BDI) and category development index (CDI) in Section 2.3.