Since the early days of business, marketing gurus have preached their beliefs on how to build strong brands. These theories and models have been translated into numerous books to provide a clear framework for marketers on what to aim for and on how to grow their brand. But in this abundance of models and theories, marketers might find themselves lost in translation…
That’s why we at InSites Consulting aimed to simplify the world of marketing in three main school of thoughts or, as we like to call them, Brand Religions: the Penetration Religion, the Influencer Religion and the Relationship Religion.
In this first article we’ll introduce you to the Penetration Religion. This is a very recent school of thought inspired by Byron Sharp, professor of Marketing Science at the University of South Australia, who published How Brands Grow in 2010. The book and its sequel, published in 2015, introduce new marketing laws based on patterns in behavioral and purchase data that challenge the Kotlerian marketing thinking.
#1 Penetration is thy sole path to growth
Basically, penetration is king. What defines big brands? Well, they have larger customer bases, more people buy their product(s). This religion thus suggests that sales growth comes mainly from growth in the size of your customer base. This is in contrast with classic, more Kotlerian thinking, which states that sales growth can come from both the growth in the number of customers as well as from an increase in the customers’ purchase frequency.
Yet research by Byron Sharp reveals that brands with different market shares vary mainly in terms of the size of their customer base. When zooming in on a set of brands within a particular category, sorted according to market share size, you can see that these brands will have a fairly similar purchase frequency. The larger brand will be bought somewhat more frequently and the smaller brand a bit less, but all in all the difference is minor. What truly drives growth is penetration, with an almost linear correlation between penetration and market share. Penetration will also indirectly drive things like purchase frequency. This is demonstrated in the following example, where Byron Sharp refers to the concept of double jeopardy.
This concept was originally defined by Andrew Ehrenberg. It states that larger brands, compared to their smaller competitors, have many more customers who buy them somewhat more frequently. This pattern explains how smaller brands get hit twice: their sales are lower because they have fewer buyers who buy the brand less often. It is the curse of being small.
Tweetaway: Penetration is thy sole path to growth insit.es/2kH2Fyy by @KPallini via @InSites #brandreligion #brandpenetration #howbrandsgrow
#2 Retention is an illusion
So how do we reach penetration? As marketers, we are all familiar with the saying that it costs five times less to retain a customer than to acquire a new one. Yet, according to Byron Sharp this is a classic myth that has never been proven with hard data. Marketers need to stop thinking about customer retention and start focusing on acquisition, because defection is largely out of a brand’s control. Defection levels do not vary significantly with brand size; all brands lose some buyers and this loss is in proportion with their market share. The number of customers a brand loses depends on the number it has to lose; big brands lose more customers though this represents a smaller portion of their total customer base. Gaining market share by halving the defection rate would be nearly impossible. Getting customers to buy with 100% loyalty is unrealistic; even big cult brands like Harley Davidson (33%) and Apple (55%) have less loyalty than one might expect.
This religion emphasizes the fact that loyalty in its pure form does not exist; 72% of Coke drinkers also buy Pepsi (UK), only a small minority of people will stubbornly refuse Pepsi when ordering Coca-Cola or vice versa. People are in fact promiscuously loyal, meaning that they switch between rival brands based on availability. The norm is polygamous loyalty, having a repertoire of brands and switching between them. People are loyal to a repertoire of brands rather than to a single brand and they are more loyal to the brands they see and buy a bit more regularly. All brands enjoy loyalty; bigger brands enjoy it a little bit more (the double jeopardy law is also present here).
Tweetaway: #Retention is an illusion insit.es/2kH2Fyy by @KPallini via @InSites #brandreligion #brandpenetration #howbrandsgrow #acquisition
#3 Thou shalt treat all thy buyers as equal
When looking at the customer base of a typical brand, we can see that it has a skewed distribution, the minority of customers being the heavy buyers while the big bulk consists of light buyers. In order to maintain and grow sales, marketers must reach these masses rather than to focus on a select few.
This religion emphasizes the importance of mass marketing, including those light buyers (who are often neglected in more classic thinking). Light buyers are important to target and this strategy is also considered as a more lucrative one, because it is nearly impossible to target light buyers without also reaching heavy buyers: in targeting light buyers, brands are automatically also targeting their heaviest buyers.
Tweetaway: Thou shalt treat all thy buyers as equal insit.es/2kH2Fyy by @KPallini via @InSites #brandreligion #howbrandsgrow #massmarketing
#4 Thou shalt repeat repeat repeat
In these mass marketing efforts, brands should focus on building and repeating memory structures. Brands should not differentiate yet establish brand distinctiveness through memory structures. And this all starts with building distinctive assets and focusing and repeating these assets. Brand distinctive assets are brand identity elements that signal the brand name to consumers. It is a portfolio of assets which are visual, aural and verbal; examples are colors, slogans, logo, packaging shapes… These assets allow a brand’s communication to work. Even if a brand’s advertisement is noticed, according to Byron Sharp it cannot work unless it refreshes or creates useful memory structures for the brand. The goal is to be consistent in everything you do and repeat these brand identity elements in order to build mental availability or brand salience. The latter refers to the probability of a consumer noticing, recognizing and thinking of your brand in a buying situation. This is critically different from brand awareness, which is simply the link to the name of the product category and depends on a single and specific cue. You could say that it closely links to Pavlovian conditioning, where you want consumers to unconditionally associate the asset with the brand.
A brand that truly succeeds in this is McDonald’s, just like this 1994 advertisement demonstrates. The double golden arch is a more recognized symbol than the Christian cross and, according to Eric Schlosser, author of Fast Food Nation, children often recognize the McDonald’s logo before their own name.
With our Implicit Measurement tool we’re able to identify the extent to which brand attributes (logos, colors, tag lines and sound bites) are distinctive and associated strongly and uniquely with brands. In a recent research project for Jacobs Douwe Egberts (JDE) we measured around 60 assets in 13 countries leading to a new communication and packaging design strategy for the brand.
Tweetaway: Thou shalt repeat repeat repeat insit.es/2kH2Fyy by @KPallini via @InSites #brandreligion #howbrandsgrow #pushmarketing
#5 Thou shalt be everywhere
Apart from building strong memory structures, Sharp emphasizes the importance of being physically available – being as easy to notice and buy as possible, for as many consumers as possible, across as many buying situations as possible. As purchases are driven by availability, you need to be where they buy. A textbook example is Coca-Cola: it is a brand you can literally find anywhere in the world. This was also the brand’s BHAG (i.e. Big Hairy Audacious Goal). Robert Woodruff, the company’s leading figure from 1923 until his death in 1985, aimed to put the Coca-Cola products “within arm’s reach of desire” and you could say he succeeded. Regardless of where you are in the world, there will be Coca-Cola; be it in hotel bars, supermarkets, restaurants, vending machines, even in smalls stores along hot dusty roads or in the most remote villages in Africa.
The latter is also something The Global Fund understood. They had problems getting medicines to the people in the more remote villages in Tanzania. Yet to their surprise Coca-Cola was available there. This is why they teamed up with Coca-Cola and started using their distribution system to get the medicines to the people in those hard-to-reach regions.
Tweetaway: Thou shalt be everywhere insit.es/2kH2Fyy by @KPallini via @InSites #brandreligion #howbrandsgrow #triggerbased
Want to find out more on our Brand Religion thinking? Download the full paper and stay tuned as in the coming week we’ll share the key beliefs linked to the Influencer Religion or sign up for our Brand Religion Smartees Webinar on Feb 28.