The Essential Drivers Of Brand Growth

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The Essential Drivers Of Brand Growth

Growing your brand is a key objective of marketing managers, as strong brands make your company more money, faster and with less risk. They also help you attract the best employees, give you the best deals with channel partners and get the attention of financial investors. But how should you go about growing your brand? Unfortunately, silver-bullet advice on ‘the one number you need to know’ or ‘the one thing you need to do’ is all too common in the industry and can limit your imagination and the growth of your brand. To help avoid this, we recently published “A broader view on brands’ growth and decline.” Let’s begin by focusing on (1) heavy users and existing customers versus (2) light users and improving mental availability and combine these in a broader view and recommendations on growing your brand.

1. Focus On The Heavy Users And Existing Customers

Back in 1964, Dik Warren Twedt coined the term “heavy-half” to describe the market segment that accounts for the lion share of a product’s sales. Moreover, the Pareto 80-20 rule suggests that a large proportion of business is derived from the heavy users in relation to the remainder of purchasers, emphasizing the importance of the heavy-light user research for companies in general. Finally, large investments in Customer Relationship Management (CRM) were driven by the 1990s idea that it costs much less to keep and grow an existing customer than to acquire new customers. Coming from research in services, where customer profitability is highly variable, the transfer of this thinking to products and their market communication efforts was unfortunately rushed and often inappropriate. Very well-known brands, such as Coca-Cola, may indeed mostly focus on reminding existing customer to buy them more often. For the rest of us though, targeting existing customers does little to incrementally grow our brand – which is why ‘negative targeting’ of such customers is highly recommended and feasible in digital marketing. The customers most likely to respond to your digital ads are often those most likely to have bought without your ad, and this self-selection needs to be accounted for when calculating the incremental benefit of your marketing communications. As to heavy users in the category, they are bombarded with your competitors’ ads as well, and are often more price sensitive than light users, making them problematic from an incremental margin perspective. Striving for 100% loyalty is both infeasible and unprofitable. In other words, a focus on heavy users and/or existing customers to grow your brand is not supported by empirical evidence.

If you want to grow your brand, it is in general not a good idea to only focus on existing customers or on heavy users in your marketing.

2. Focus On Light Users And Increasing Availability And Salience

As a wonderful contrast to the focus on heavy users and loyalty, professors Andrew Ehrenberg and coauthors Mark Uncles and Kathy Hammond, showed regular patterns of shopper behavior for every-day (low involvement) products. The vast majority of shoppers practice polygamy (they are not 100% loyal to any brand) and customers of small, niche brands, also often buy large brands (double jeopardy). This could be because large brands are more available in the store (physical availability) or easier come to mind when e.g. shopping for family members or visitors (mental availability). As detailed in ‘How Brands Grow’ (Prof. Byron Sharp, 2010) and How Brands Grow-Part 2 (Prof. Jenni Romaniuk and Sharp 2015), physical and mental availability thus become the dominant drivers for consumer acquisition and brand growth. If anything, brands should focus on distinctive assets that can reinforce mental availability, that is, brand salience. In Sharp’s (2010) example of lemonade stands, the one that advertised achieved higher sales simply by the salience benefit—the specific aspects advertised are not supposed to matter. In other words, any advertising would work, as long as it consistently repeats the brand logo. These books, and the ongoing support by the Ehrenberg-Bass (EB) Institute, have helped many companies step out of hyper-targeting a small group of supposedly ideal consumers. Moreover, the importance of brand salience to brand growth comes up in many publications, including my own on how the often-measured ‘advertising awareness’ (‘have you seen this brand advertised in the last X months’) is a key driver of sales even though the brand has not advertised for said X months. The brand is simply top-of-mind to the consumer, who mentions it when asked in a survey to remember seeing advertising for it. The EB approach is very skeptical of survey-measured attitudes, especially if they involve showing brand differentiation or that improving consumer attitudes leads to brand growth.

However, plenty of empirical evidence shows that improved attitudes drive behavioral change, whether it is brand consideration in emerging markets or brand liking in mature markets. Think of how a high-priced and peculiar tasting soft-drink (Red Bull) created a different proposition, which was able to gain share from an always “at arm’s reach” salient Coke. Think how a mainstream brand such as Dove managed to maintain growth in the very mature and competitive personal care market, by pioneering a self-esteem trend years ahead of its full acknowledgment in public opinion. Or how relevant non-sensory perceptions are in driving taste preference for beers. Winning consumers’ hearts and minds has been a growth driver for many brands, and also opens up distribution (physical availability), as retailers prefer to stock brands that consumers ask for. Moreover, different consumer segments may prioritize different benefits the brand can over them, so it still makes sense to target your communication strategies if you can demonstrate such differences.

If you want to grow your brand, it is in general not a good idea to only focus on availability and one-size-fits-all marketing communication to achieve it.

3. A Broader View: Drive Attitudes, Innovate And Target A Broad Portfolio Of Segments

So what are we proposing? First of all, use a dynamic perspective to take care of both your brand’s availability and how consumers and channel partners think and feel about it in the market. At specific times, it is more important to focus on one versus the other (and understanding your current and desired situation helps you decide), but it is their combined effects that makes your brand grow. Consumer attitudes, retail penetration and brand sales show dynamic causality over time: growing them creates a positive spiral, while declines create a negative spiral: consumers stop thinking about your brand, which allows retailers to give it less physical shelf space and/or online prominence, and the resulting sales drop justifies these positions. The good news is that, even for a mundane product such as toilet paper, brands can re-invigorate such consumer attention and reverse the path of decline. Instead of the equilibrium thinking that underpins much of economics, strategic marketers know they benefit from change. For instance, strategist Richard D’Aveni and I show how the “fair value” line (price/quality relationship) form, evolves, and gets replaced in markets, and that company actions can help mold these perceptions to their benefit.

Second, innovate to stay relevant. Balance the management of your existing franchise with the introduction of new products. The EB’s mass-marketing recommendation does not offer detailed explanation on the role of innovation in brand growth, as it favors salience and reinforces existing mental structures. By failing to innovate and stay relevant, brands such as MySpace, AltaVista, Blockbuster, Barnes & Noble, and Nokia have seen their market leadership disappear because of new propositions offered by Facebook, Google, Netflix, Amazon, and Apple, respectively. This happened despite the fact that they maintained their brand salience and consistent branding. In their June 2019 report, BrandZ shows that the brands that dropped most in the global brand value rankings maintained their salience, but lost being “meaningful” and being “different.” “Building Meaning in a Volatile World” and “Meaningful disruption and Scalable Relevance” are key chapter titles, and “Be purposeful” and “Change the Mindset” are the first two action points of the report. Legacy brands such as Gillette, Luxottica, and Serta are challenged by new business models such as Dollar Shave Club, Warby Parker, and Casper, respectively, despite no evident loss in their salience or ease of buying. Several studies have shown that key to defending against such entrants, including private labels, are advertising and innovation.

Third, broaden your portfolio to encompass two competing dimensions: leadership in a subsection of the market and growth in adjacent sections or even entirely new markets. Great recent examples include Amazon, CVS and UnitedHealth Group, which grew the most in non-stationary environments, such as markets with low penetration.

Brand salience must not overshadow meaningful product differentiation. Large businesses manage a portfolio of multiple products and brands, needing to avoid cannibalization as well as technological or cultural obsolescence. Ben & Jerry’s, Pukka Tea, Neurobion and This is L. are four brands that have grown through meaningful differentiation and not merely salience. They are also part of a much larger portfolio; the first two in Unilever, the next two in P&G.

As to market research, A combined view on attitudinal and behavioral data is key to understanding brand growth. Knowing when to innovate strategically (Change the Game) rather than tactically optimize (Play the Game) requires understanding multiple consumers’ needs through engaging each section of a brand’s portfolio. A brand must be visible and make it easy for consumer to buy the ‘Brand Right Now’. However, it should also strive to be the ‘Brand Right’ for today and tomorrow.

So do the hard work of getting to the consumer insights (the why) behind the observed behavior (the what) and to craft a relevant marketing mix (so what) to serve the demand (how) better than others. This is the way.

Contributed to Branding Strategy Insider By: Dr. Koen Pauwels Author of: It’s Not the Size of the Data — It’s How You Use It: Smarter Marketing with Analytics and Dashboards

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