017_i.pdf - january april 2006 esic market merchandising of private brands vs manufacturer brands We will call Private Brands to those brands that have a very elaborate Download our how brands grow byron sharp eBooks for free and learn more about how brands grow byron sharp.

The book challenges conventional ‘wisdom’, replacing it with empirical facts. Its key conclusions are: • Growth primarily comes from gaining new users (penetration) rather than driving increased loyalty. Most of a brand’s users will be light users. • Brands need to build physical availability (distribution) and mental availability (saliency). • Even though brands differentiate themselves, in reality consumers still react (and buy) within a repertoire (as if there were no differences). Indeed, distinctivity is more important than differentiation – as it helps drive saliency. • Advertising works by refreshing (and occasionally building) past memory structures.

The book rejects the concepts of brand loyalty, differentiation, segmentation, Lovemarks, and targeted (i.e low reach) media. The key principles and laws that help reshape marketing Double Jeopardy Law – Brands with higher market share have more buyers than brands with lower market share.

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They also have buyers who are slightly more loyal. Retention Double Jeopardy Law – All brands lose customers in rough proportion to their brand size (i.e. Brands with higher market share lose more buyers than brands with lower market share). That said even though the percentage of its total brand universe is smaller, the sheer size of the brand mean the actual number of lost customers for a larger brand is bigger. Pareto Law (60/20) – c60% of a brand’s sales come from just 20% of their buyer base.

Buyer Moderation Law – Buying tends to regress back toward the mean – i.e. High volume purchasers in one cycle tend to buy less in the next cycle, and low volume purchasers tend to buy more in the next cycle.

Likewise some non-buyers become buyers (and some buyers become non-buyers). Natural Monopoly Law – Brands with higher market share have a greater proportion of light users than brands with lower market share. Brand user bases seldom vary – Competitor brands sell to the same customer profiles inspite the efforts to segment and differentiate (i.e. There is less brand differentiation and segmentation of user bases than we think). Attitudes and brand beliefs reflect behavioural loyalty – Consumers like and know more about the brands they buy more regularly (and know very little about brands they do not buy).

Because larger brands have more regular users, they always score higher in brand attitude surveys than other brands. Usage drives attitude (or ‘I love my mum and you love yours’) – The attitudes and perceptions for a brand amongst its users are very similar, irrespective what brand it is – because we all like the brands we choose to use. Law of Prototypicality – Image attributes of a brand that are more closely tied to the category always score higher than attributes less associated with the category. Duplication of Purchase Law – A brand shares most of its customers with the largest brand and the least number of its customers with the smaller brands – e.g. If 30% of a brand’s buyers also bought brand A in a period, then 30% of every rival brand’s customers also bought brand A.

NBD-Dirichlet Model – A mathematical model that explains many of the above principles of how often buyers purchase from a category and which brands they buy. Evidence based marketing In reviewing nine leading marketing text books, they found it full of unproven ‘advice’.

All the texts reinforce and support each other in suggesting a set ‘way’ of doing marketing. Many things we have been led to believe are important have now been shown to be less important. Examples including changing packaging, running advertising that jettisons its past, over-investing in loyalty programmes, promoting with deep discounts to recruit new users and spending on low reach media. Through empirical analysis, we can now separate facts from myth. From (old myths) To (the facts) Positioning Saliency Differentiation Distinction Message comprehension Getting noticed; Emotional response Unique selling proposition Relevant associations Persuasion Refreshing & building memory structures Teaching Reaching Rational involved viewers Emotionally distracted viewers Attitudes drive behaviour Behaviour drives attitude Brand switchers Loyal switchers Involvement Heuristics (i.e. Short cuts to meaning) Growth through driving loyalty Growth through driving penetration (of light users) Price promotions win customers Price promotion rewards existing users Target marketing/segmentation Sophisticated mass marketing We compete on positioning We compete with all brands in the category Message comprehension Getting noticed, emotional response Unique selling proposition Relevant associations Teaching Reaching Campaign bursts Continual presence.