Van Heerde's Thirds Rule: Why Only One Third of a Promo Bump Is Real

In 2003, Harald Van Heerde, Sachin Gupta, and Dick Wittink published the paper that reset how academics and serious practitioners read promotional lift: Is 75% of the Sales Promotion Bump Due to Brand Switching? No, Only 33% Is (Journal of Marketing Research, vol 40 issue 4). The paper attacked a long-standing assumption in industry research that the bulk of a promo bump came from competitor brands.

Their decomposition of household-panel data delivered a very different split. Roughly 74% of an apparent promotional uplift came from within-brand effects: shoppers buying the brand earlier than they otherwise would have (acceleration), or shifting between the brand's own SKUs (cannibalisation). Only about 33% of the bump was true brand switching from competitors, and the residual slice (around 26%) was genuinely new category volume that would not have existed without the promotion.

The four buckets, plain English

Every promotional event hides four very different streams of units inside the same headline lift number:

• Cross-brand switching (~33%): shoppers who bought your brand instead of a competitor. Real volume, the manufacturer wins, the retailer's category is flat.
• Acceleration (~33%): shoppers who would have bought the brand anyway, but bought it during the promo window instead of next week. The dip after the event is where this volume came from.
• Own-brand cannibalisation (~8%): shoppers who switched from one of your other SKUs to the promoted SKU. Same brand, same shelf, thinner margin.
• Category expansion (~26%): genuinely new occasions or new shoppers who entered the category because of the promo. The only stream that grows the pie for everyone.

Add up the within-brand pieces (acceleration plus cannibalisation) and you get the 74% the paper headlines. Subtract that from 100 and you are left with the 33% switching plus the 26% expansion that together represent real, additional volume.

The arithmetic of applying the thirds rule is easy. The discipline is in honestly setting the four shares for your category and event, rather than defaulting to the ~33% / ~33% / ~8% / ~26% averages.

The decomposition equation

Apparent Lift = Brand Switching + Acceleration + Cannibalisation + Category Expansion

The share you actually get to bank as new volume is:

Net Incremental = Brand Switching + Category Expansion

Or equivalently:

Net Incremental = Apparent Lift x (1 minus Within-Brand Share)

Where Within-Brand Share is acceleration plus own-brand cannibalisation (the ~74% in the paper's averages).

Worked numbers at the canonical split

Take an event that shows a 2.0x lift on a baseline of 1,000 units per week, sustained over a 2-week window. Apparent uplift is 2,000 units. Run the canonical Van Heerde split:

• Brand switching: 2,000 x 33% = 660 units (real, manufacturer wins)
• Acceleration: 2,000 x 33% = 660 units (timing-shifted, dips next month)
• Cannibalisation: 2,000 x 8% = 160 units (own-brand swap, no net manufacturer gain)
• Category expansion: 2,000 x 26% = 520 units (real, retailer category grows)

Net incremental = 660 + 520 = 1,180 units (59% of apparent lift)

A 2.0x event report becomes a much smaller 1.59x event after honest decomposition. ROI math built on the 2,000-unit lift is overstated by roughly 70% relative to the math built on the 1,180-unit net.

Why the split is rarely the textbook split

Categories with long shelf life (pasta, detergent, frozen food) run higher acceleration shares because shoppers can stockpile. Categories with short shelf life (bakery, dairy, fresh produce) run lower acceleration but higher category expansion (the promo created an extra purchase occasion that could not be deferred). Heavy TPR runs higher within-brand than equivalent display events because TPR mostly attracts existing buyers. New product launches run higher category expansion in the early weeks while distribution is still building.

The ROI consequence

Plug the decomposed lift into the standard ROI formula:

Promo ROI = (Net Incremental Volume x GP per unit minus Promo Cost) / Promo Cost

A 2.0x apparent lift on a 35% gross margin SKU at a 20% TPR depth that looks ROI-positive on the apparent number frequently lands at negative ROI once the within-brand 74% is stripped out. That swing is exactly why so many FMCG brands run promotional calendars that look healthy on event reports and look broken on the annual P&L.

A premium frozen pizza brand at $5.20 shelf price runs two events at the same retailer in the same quarter. Same brand, same SKU, same retailer, same baseline. Both events show an identical 2.4x apparent lift on the post-event report. The CMO is happy with both. The thirds-rule decomposition tells a different story.

Event A: 25% off TPR on the brand's hero SKU, 2 weeks, no display

Apparent lift: +1,400 units over the window. Apply a category-calibrated decomposition for shelf-stable mainstream FMCG (a touch heavier on within-brand than the textbook split because frozen pizza stockpiles well in a freezer):

• Brand switching: 1,400 x 28% = 392 units
• Acceleration: 1,400 x 38% = 532 units
• Cannibalisation: 1,400 x 12% = 168 units (the brand has 4 other frozen-pizza SKUs at the same retailer)
• Category expansion: 1,400 x 22% = 308 units

Net incremental = 392 + 308 = 700 units (50% of apparent lift)

Within-brand share: 50%. The TPR is mostly subsidising loyalists who would have bought next week, plus stealing volume from the brand's value-tier pizza on the same shelf.

Event B: 10% off plus gondola end display, 1.5 weeks

Apparent lift: also +1,400 units over the window. But the mechanic is fundamentally different: a shallower depth, with display support that intercepts shoppers who were not planning to walk the frozen aisle at all.

• Brand switching: 1,400 x 36% = 504 units (display puts the brand in front of competitor-brand shoppers)
• Acceleration: 1,400 x 22% = 308 units (smaller, because the depth is too shallow to motivate stockpiling)
• Cannibalisation: 1,400 x 8% = 112 units
• Category expansion: 1,400 x 34% = 476 units (display drove genuinely new occasions)

Net incremental = 504 + 476 = 980 units (70% of apparent lift)

Within-brand share: 30%. The shallow-plus-display event delivered 40% more genuinely incremental volume than the deep TPR, despite the identical apparent lift.

Reading the comparison

The post-event report would tell the CMO that both events were "+140% lift" wins. The Van Heerde decomposition tells the trade-spend committee that one event delivered 700 real units and the other delivered 980. At the brand's $2.20 gross profit per unit, that 280-unit gap is $616 of incremental gross profit per store, multiplied across 200 matched stores = $123,200 of profit difference between two events that scanned identically on the lift report.

Van Heerde's thirds rule is not an Excel formula you apply with three decimal places. It is a calibration discipline that keeps your in-house decomposition honest. Treat it as the gravity check on whatever model your TPO team is running.

Three places the rule pays off

First, pre-approval challenge. When a planner submits a projected ROI based on a 2.5x lift forecast, ask: "What is your assumed within-brand share, and why is it different from 74%?" If they cannot answer, the projection is sitting on a number they have not interrogated. The thirds rule turns a vague forecast into a defensible one.

Second, post-event reality check. The post-event report shows a 2.2x lift. Apply a 70% within-brand haircut as a sanity floor. Does the resulting net-incremental number still look good? If the post-event story falls apart at a thirds-rule haircut, the original story was probably propaganda.

Third, category-mix prioritisation. Categories where the within-brand share runs structurally above 74% (heavy stockpiling, low brand-switching propensity, narrow assortment) are categories where promotional ROI is structurally lower. The thirds rule lets you flag those categories early in the annual planning cycle and steer trade dollars toward categories with more switching headroom.

Three places the rule misleads if used naively

First, new product introductions. Early in a launch, switching and category expansion both run far above the 33% norms because the brand has no existing buyers to cannibalise from. Applying the thirds rule to an NPD event will make the ROI look worse than it actually is.

Second, competitive defence events. When you are running a counter-promo specifically because a competitor moved first, the brand-switching share can spike to 60% or more (you are pulling shoppers back). The 33% switching number understates the real incremental lift in defensive moments.

Third, bonus-pack and pack-size mechanics. The thirds rule was estimated on price-promotion data. Bonus packs and pack-size moves change the consumption rate, not just the purchase decision, and have a different decomposition profile. Use the rule as a directional gut-check on those mechanics, not as the actual decomposition.

How the rule travels with you

When you move from one company to another, or one category to another, the actual decomposition shares will differ. The discipline of making the share explicit is what travels. Senior RGM leaders who have internalised Van Heerde never ask "what was the lift?" without immediately asking "and what share of it was within-brand?". That second question is the one that separates trade-spend stewards from trade-spend spenders.