Pop quiz!!  Please answer the following questions True or False:

True   False
_____  _____   Differentiating our brand is a vital marketing task.

_____  _____   Who we compete with depends on the positioning of our brand image.

_____  _____   Mass marketing is dead and is no longer competitive.

iStock_000014084871XSmall.jpgIf you answered true to most of these statements, you would be like most marketers — and be wrong.  At least that’s the provocative point of view taken by Professor Byron Sharp, Director of the Ehrenberg–Bass Institute of Marketing Science at The University of South Australia.

Sometimes a book comes along which challenges many of our most fundamental beliefs about a topic.  Such a book is “How Brands Grow” by Dr. Sharp. If you’re familiar with Ehrenberg-Bass, then you know that they’re heavily focused on research and proving with data and analytics how marketing actually works — or doesn’t.  That’s why they have “Science” in their name.

In this new book, Dr. Sharp takes aim at how brands grow and tries to debunk some of the most cherished beliefs in marketing.  These challenges to Marketing Orthodoxy should be taken seriously because they’re based on facts and data — not opinion.

Marketing Truths (or Not)

Let’s examine the above statements in more depth:

1. Differentiating our brand is a vital marketing task – Dr. Sharp argues that differentiation is much less important than most Marketers think.  Why?

  • User Bases — First, Dr. Sharp argues that the data shows, fairly convincingly, that user bases are usually not very different. That is, users of one brand are generally similar to users of another brand across most dimensions.  If users are similar, then why segment or differentiate?
  • Attitudinal Formation — Second, consumer attitudes toward brands are more reflective of buyer behavior and loyalty than position driven marketing.  Brand usage drives consumer attitudes and not vice versa.  His analogy:  everyone loves mothers, but you love your mother more than others.

2.  Who we compete with depends on the positioning of our brand – Not so, according to Dr. Sharp and his colleagues.  Beyond the fact that brands’ user bases are generally very similar, purchase panel data demonstrates that a brand’s customer base overlaps with competitors in direct proportion to market share.

That is, for any given brand, more of its consumers will come from big brands than small ones. For example, if Brand A competes with Brands B and C, and Brand B has a market leading 50% share while Brand C has only 25% share, chances are high that Brand A will share more buyers with Brand B than C, simply because Brand B is bigger and there are more chances that it’s buyers will also buy Brand A.

This proportional distribution of a brands buyer overlap strongly suggests that consumers are not buying competitive brands because they are similar.  Rather, it says that your brand is more likely to source buyers from big brands than small brands simply because big brands have many more buyers to draw from who have many more chances to buy your brand.

Now, before you jump out of your seat and disagree, Dr. Sharp acknowledges that market partitions are real–e.g. soda drinkers vs. fruit juice drinkers, etc.  It is these natural market partitions and not similar brand images which drive consumers to switch among a given set of brands.  Within any given market partition, switching behavior is driven more by brand size than brand image.

3.  Mass Marketing is Dead and No Longer Competitive – One of my favorites.  Big brands have big shares because they have more people buying them and the people that buy them are also buying more of them.  This fact based observation is usually called “double jeopardy” for obvious reasons.

However, what it also suggests is that, with few exceptions, there is no such thing as small “niche” brands with highly loyal consumers.  Small share brands are small because they not only have fewer buyers, but these buyers are less loyal.

An important point here is that big brands tend to have a larger proportion of light category buyers.  These light category buyers buy the category less frequently, but when they buy, they are more likely to buy big brands.  Why?  Because big brands tend to be more available (better distribution) and have higher awareness (often driven by larger advertising).

Mental and Physical Availability – The Holy Grail for Marketers?

So, if some of our most basic beliefs may not be true, how do brands really grow?  Dr. Sharp argues that it all boils down to two simple truths.  The biggest brands tend to have greater mental and physical availability.

  • Physical Availability – In marketing terms, this means distribution.  Big brands tend to have big distribution.  Marketers sometimes forget that if the product isn’t present, the consumer can’t buy it.  Distribution–physical or digital—is key to growing your brand.
  • Mental Availability – This means having brand salience and top of mind awareness. When consumers are in a buying situation, brands that have high mental availability tend to win out. This is not just awareness. It’s creating brand salience by linking your product to relevant strategic and executional equities that make it easy for consumers to think of your brand in buying situations.

What Next?

Does all this mean that we should throw out all that we’ve learned about consumer understanding, segmentation, differentiating our brand, etc.? Far from it.  Rather, it simply underscores the fact that the most important drivers of brand growth are the simple notions of mental and physical availability.

So, whenever your boss or someone in the organization asks the question:  “what do we have to do to grow volume and share next year?” you now know the answer.  And it’s a lot simpler than most people think. At least that’s what Dr. Sharp and the data say.