All the best for 2021 everyone!
Before the holidays, we outlined the importance of How Brands Grow, What Marketers Don’t Know by Byron Sharp as an evidence-based user manual for marketers with a very key central theme. To achieve sustainable growth, a brand must maximize availability in the mind of the shopper and at the shelf where the shopper will make the purchase decision.
Since this purchase decision is mostly a function of the emotional part of our brains, there is limited value from all the effort to differentiate the brand and "create a meaning in the lives of shoppers" which appeals to the rational part of our brains. Sharp suggests using assortment and merchandising to offer consistent and easily remembered brand assets. The design of the logo, a catchy tagline and accompanying jingle as well as the choice of color and packaging are the sensory and semantic cues that are meaningful. Over time, these permanent and temporary attributes produce distinctive memory structures which bring the brand front-of-mind when the shopper engages with the category at the store shelf. He calls this “mental availability.”
Despite the elaborate efforts to segment and target different audiences, evidence-based research suggests that switching among brands is significantly more prevalent that loyalty to a single brand. Sharp calls this the "duplication of purchases law" and although Middlegame repeatedly finds non fair-share results in our modeling, the distribution of the indices around 100 confirms the law. Therefore, growing brands that are gaining market share are the ones with universal appeal based on brand assets targeted to the masses and then have the largest number of total buyers be they heavy or light. It makes more sense to seek mental availability by advertising to everyone in the market rather than limiting communications to a much smaller segment of the audience through targeting.
The Loyalty Trap
Unfortunately, the evidence-based research is drifting into waters that challenge the historical rules of marketing. Everyone knows that 80 percent of sales for powerful brands come from a loyal base of approximately 20 percent of the shoppers, so why shouldn’t we target all mental availability at them? We should avoid this thinking because the data simply does not substantiate this 80/20 rule. At best, the studies that Sharp reviewed found 50/20, and I can substantiate this from my days building multinomial logit models with panel data. This means that a marketing budget dedicated to the top of the funnel — which is constantly attracting new shoppers to the brand to keep and grow penetration —has more potential merit than repeated investing into purchase frequency with existing buyers.
We all see the immediate spike in sales from promotions based on price discounts. They are a "necessary evil" of the industry. There is universal agreement that they offer little impact in the longer term. When shoppers return to the shelf on the next trip, we reset the emotional part of our brains deciding purchase choice. Contrary to the evidence-based rules, the sales increase tends to be subsidized by brand loyalists and only slightly improve penetration. Sadly, few marketers see that the true nature of these promotions is right in their name — trade promotions. These really are investments into the relationship with the retailer partner. To be successful, these promotions need to be just as much about reinforcing the simple and consistent brand assets that grow brands.
I wandered into trade promotions first because the relationship with retailer partners is admittedly the key to physical availability. All the mental availability in the world is worthless if your brand is not physically accessible to buy when your consumers are ready to purchase it! In the 1920s, Robert Woodruff mandated that "Coca-Cola should always be within an arm's reach of desire" and that remained part of the 3 P’s strategy (Preference which aligns with mental availability, Pervasiveness which aligns with physical availability, and Priced relative to value) at The Coca-Cola Company when I was there 20 years ago. Harry Bright and I worked tirelessly to show that everything we produced together tied back to one of the 3 P’s — that might make a great next blog!
Pervasiveness for Coca-Cola was the fulfillment of the Woodruff "arm's reach of desire" mantra. It meant that branding was everywhere that welcomed the interruption on the customer decision journey to refreshment. The subtle series of consistent and simple reminders were truly distinct brand assets — the icon script logo, the silhouette shape of the contoured bottle, the immediately recognized red Pantone color etc. Bryon Sharp explains this as the "always on" approach. Like price promotions, burst advertising in flights followed by a lengthy blackout also struggle to deliver longer-term growth for a brand. Touchpoints based on continuity across all potential shoppers in the category builds brand salience and ensures mental availability is at a maximum when it comes time to make a purchase.
Bryon Sharp released How Brands Grow Part 2, Emerging Markets, Services, Durables, New and Luxury Brands in 2016 with coauthor Jenni Romaniuk. Some say that his volume is a little tamer than the first book, but still supplies similar evidence-based advice using new research from e-commerce, luxury, services, B2B and, of course, emerging markets. We equally recommend this for your reading list.
Middlegame is the only ROMI consultancy of its kind that offers a holistic view of the implications of resource allocation and investment in the marketplace. Our approach to scenario-planning differs from other marketing analytics providers by addressing the anticipated outcome for every SKU (your portfolio and your competitors’) in every channel. Similar to the pieces in chess, each stakeholder can now evaluate the trade-offs of potential choices and collectively apply them to create win-win results.
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