Using polarisation to identify variations in behavioural loyalty to price tiers

Purpose – This paper has two purposes: to use polarisation to identify variations in loyalty and to apply polarisation to an important non‐brand attribute, price.Design/methodology/approach – A comprehensive revealed preference data set of wine purchases is used to apply polarisation. Polarisation was defined in two ways: as a function of the beta binomial distribution (BBD) to give a measure of loyalty for an alternative; and as a function of the Dirichlet multinomial distribution (DMD) to give a baseline level of loyalty. Variations were identified by analysing the differences between the BBD and DMD.Findings – Polarisation was shown to be one way of identifying variation across price tiers. In the empirical example used, the DMD model is violated with the price tiers not being directly substitutable with one another. Buyers show excess loyalty towards the lowest and highest price tier levels. One tier shows “change‐of‐pace” loyalty. Small brands do better when they focus on high loyalty tiers, middle b...