Key Takeaways
1. Brands grow by increasing mental and physical availability
The key marketing task is to make a brand always easy to buy for every buyer; this requires building mental and physical availability. Everything else is secondary.
Mental availability refers to the probability of a brand being noticed or thought of in buying situations. It's built through distinctive brand assets, consistent marketing, and reaching all category buyers. Physical availability means making a brand easy to find and buy across various touchpoints. Both work together to increase a brand's chances of being purchased.
-
Mental availability components:
- Brand recognition
- Brand recall in buying situations
- Associations with category entry points
-
Physical availability factors:
- Distribution breadth and depth
- Shelf position and space
- Online presence and searchability
Marketers should focus on enhancing these two key metrics rather than pursuing differentiation or targeting narrow segments. This approach aligns with how consumers actually behave in the marketplace, making decisions quickly and with limited cognitive effort.
2. Double Jeopardy Law: Bigger brands have more buyers and slightly higher loyalty
Brands with less market share have far fewer buyers, and these buyers are slightly less loyal (in their buying and attitudes).
The Double Jeopardy Law is a fundamental pattern in brand performance metrics. It shows that a brand's market share is primarily driven by its penetration (how many people buy it), with loyalty playing a secondary role. This law holds across categories, countries, and time periods.
- Implications of Double Jeopardy:
- Growth comes mainly from acquiring new customers
- Loyalty metrics are largely a function of market share
- Small brands shouldn't expect high loyalty
Marketers should focus on increasing penetration rather than trying to boost loyalty among existing customers. This law challenges the common belief that niche brands can thrive with small but highly loyal customer bases. Instead, it suggests that all brands in a category face similar loyalty levels, adjusted for their size.
3. Most customers are light, occasional buyers of a brand
A typical Coca-Cola buyer purchases (for him- or herself) just one or two cans or bottles a year. That's half of all Coke buyers.
The NBD (Negative Binomial Distribution) describes the buying frequency distribution for most brands. It reveals that even for major brands, the majority of customers are light buyers who purchase infrequently. This pattern holds true across various product categories and markets.
- Implications of NBD:
- Heavy buyers are important but rare
- Most sales come from light buyers collectively
- Reach is crucial for brand growth
Marketers should aim to reach all category buyers, including light and non-buyers, rather than focusing exclusively on heavy users. This approach ensures brands maintain and potentially grow their customer base. It also explains why continuous, broad-reaching marketing efforts are more effective than short, intense campaigns targeting loyal customers.
4. Brands compete as if undifferentiated, sharing customers based on size
Brands within a product category sell to nearly identical consumer bases; each brand's consumer base varies from the others chiefly in terms of size (i.e. the number of buyers), not in demographics, psychographics, personality characteristics, values or attitudes.
The Duplication of Purchase Law states that brands share customers with other brands in proportion to their market share. This means that all brands in a category compete with each other, regardless of perceived positioning or target markets.
- Key insights:
- Brand user profiles are remarkably similar
- Perceived differentiation is often weak
- Partitions within markets are usually slight
This law challenges the traditional view of brand positioning and market segmentation. Instead of trying to carve out unique niches, brands should focus on being mentally and physically available to all category buyers. Differentiation, while it exists, plays a much smaller role in brand choice than previously thought.
5. Distinctive brand assets are crucial for recognition and recall
Paradoxically, the reduced emphasis on meaningful differentiation makes branding even more important. Loyalty is largely underpinned by mental and physical availability not love/hate. To encourage brand loyalty a brand must stand out so that buyers can easily, and without confusion, identify it.
Distinctive brand assets are the non-brand-name elements that uniquely identify a brand. These can include logos, colors, taglines, packaging shapes, and characters. They help brands get noticed and recalled in cluttered marketplaces.
- Types of distinctive assets:
- Visual (logos, colors, packaging)
- Auditory (jingles, sound effects)
- Verbal (slogans, catchphrases)
Building and maintaining these assets requires consistency over time. Marketers should research which elements are truly distinctive for their brand and use them consistently across all touchpoints. This approach helps brands stand out and be easily identified, even when consumers are not actively engaged with advertising.
6. Advertising works by refreshing and building memory structures
The dominant way that advertising works is by refreshing, and occasionally building, memory structures. These structures improve the chance of a brand being noticed and/or recalled in buying situations; this in turn increases the chance of a brand being bought.
Effective advertising doesn't necessarily need to persuade or differentiate. Instead, it should focus on creating and reinforcing memory structures associated with the brand. These structures make the brand more likely to be noticed or thought of in buying situations.
- Key principles for effective advertising:
- Consistent use of distinctive brand assets
- Emotional engagement to aid memory
- Broad reach to maintain mental availability
Advertisers should prioritize getting noticed and being correctly branded over complex messages or unique selling propositions. This approach aligns with how consumers process information in low-involvement categories and explains why seemingly simple or repetitive ads can be highly effective.
7. Price promotions provide short-term sales spikes but don't build brand equity
Price promotions boost sales volume in the short term; but by how much? The term used to discuss this is price 'elasticity' – the percentage change in volume from a 1% change in price.
Price promotions can deliver immediate sales increases but often at the cost of long-term brand building. They primarily attract existing category buyers who would have purchased anyway, just at a different time or from a different brand.
- Effects of price promotions:
- Short-term sales spikes
- Potential for decreased profit margins
- Limited impact on long-term brand equity
Marketers should be cautious about relying too heavily on price promotions. While they can be useful tactical tools, they shouldn't come at the expense of investing in mental and physical availability. A balanced approach that maintains brand pricing power while occasionally offering value to consumers is often more sustainable.
8. Loyalty programs have minimal impact on long-term growth
Loyalty programs produce very slight loyalty effects, and do practically nothing to drive growth. The consequent effect on profits is presumably negative.
Loyalty programs often fail to deliver significant benefits because they primarily reach and reward customers who are already loyal. They struggle to attract light buyers, who collectively account for a large portion of sales.
- Limitations of loyalty programs:
- Mainly attract already loyal customers
- Limited reach to light category buyers
- High costs of implementation and maintenance
Instead of investing heavily in loyalty programs, marketers should focus on strategies that increase mental and physical availability to all category buyers. This approach is more likely to drive long-term growth by attracting new customers and encouraging light buyers to purchase more frequently.
9. Customer retention follows the same patterns as customer acquisition
All brands lose some buyers; this loss is proportionate to their market share (i.e. big brands lose more customers; though these represent a smaller proportion of their total customer base).
The Law of Customer Retention shows that customer churn is a natural part of brand dynamics. Larger brands lose more customers in absolute numbers but retain a higher percentage of their total customer base.
- Key insights on customer retention:
- All brands experience customer churn
- Retention rates are linked to market share
- Acquisition is crucial for all brands, regardless of size
This law challenges the common belief that it's much cheaper to retain customers than to acquire new ones. In reality, brands need to continually attract new customers to replace natural churn and drive growth. Marketers should balance their efforts between retention and acquisition rather than focusing solely on loyalty-building initiatives.
10. Brand growth comes through increasing penetration, not loyalty
Growth in market share comes by increasing popularity; that is, by gaining many more buyers (of all types), most of whom are light customers buying the brand only very occasionally.
Penetration growth is the primary driver of market share increases. This means attracting more buyers to the brand, rather than trying to increase purchase frequency among existing customers.
- Strategies for increasing penetration:
- Broad-reaching marketing campaigns
- Improving physical distribution
- Making the brand easier to buy in various situations
Marketers should focus on making their brands easier to buy for more people in more situations. This approach aligns with the reality of how brands grow and challenges the common practice of targeting narrow segments or focusing primarily on building loyalty among existing customers.
Last updated:
FAQ
What's How Brands Grow about?
- Focus on Marketing Science: How Brands Grow by Byron Sharp emphasizes empirical research to understand consumer behavior and brand growth, challenging traditional marketing theories.
- Laws of Growth: Introduces concepts like the "double jeopardy" law, which explains why smaller brands have fewer, less frequent customers compared to larger brands.
- Practical Insights: Offers actionable advice for marketers to focus on increasing market penetration rather than just targeting loyal customers.
Why should I read How Brands Grow?
- Evidence-Based Approach: The book is grounded in scientific research, providing a reliable resource for understanding consumer behavior.
- Challenges Conventional Wisdom: Critiques common marketing practices, offering a fresh perspective that can lead to more effective strategies.
- Versatile Application: The principles are applicable across various industries, making it a valuable read for anyone involved in marketing.
What are the key takeaways of How Brands Grow?
- Market Penetration is Key: Growth primarily comes from increasing the number of buyers, not just focusing on loyalty.
- Importance of Distinctiveness: Brands should focus on being distinctive, creating memorable assets for easy recognition.
- Double Jeopardy Law: Smaller brands face a compounded disadvantage with fewer, less frequent customers, highlighting the need to expand the customer base.
What is the "double jeopardy" law in How Brands Grow?
- Definition: Smaller brands have fewer customers who are also less loyal, leading to a compounded disadvantage.
- Marketing Implications: Focus on increasing market penetration rather than solely enhancing loyalty among existing customers.
- Empirical Evidence: Supported by data from various industries, showing the pattern holds true across different markets.
How does How Brands Grow redefine brand loyalty?
- Loyalty is Not Exclusive: Most consumers purchase from multiple brands, challenging the traditional view of loyalty.
- Focus on Light Buyers: Targeting light buyers can significantly contribute to sales volume and brand growth.
- Behavior Over Attitude: Emphasizes actual buying behavior as a more reliable indicator of loyalty than consumer attitudes.
What is the significance of "distinctiveness" in branding according to How Brands Grow?
- Distinctiveness Over Differentiation: Focus on creating recognizable brand elements for easy consumer identification.
- Building Memory Structures: Distinctive assets help refresh and build memory structures, increasing brand recall.
- Legal Protection: Distinctive elements can be trademarked, adding value and maintaining unique market identity.
How does How Brands Grow suggest brands should approach advertising?
- Refresh Memory Structures: Advertising should focus on building memory structures rather than rational persuasion.
- Targeting Broad Audiences: Reach large audiences, especially light buyers, to increase market penetration.
- Consistency in Branding: Use distinctive brand assets consistently to reinforce brand identity.
How does How Brands Grow address the concept of market segmentation?
- Critique of Segmentation: Challenges the effectiveness of segmentation, as brands often share customers across segments.
- Focus on Mass Marketing: Suggests embracing mass marketing strategies to reach a broad audience for greater penetration.
- Empirical Evidence: Provides data showing competing brands sell to similar customer bases, questioning segmentation's effectiveness.
How can brands build mental availability according to How Brands Grow?
- Reach All Consumers: Aim to reach all potential buyers, not just loyal customers, to increase brand consideration.
- Create Strong Associations: Build a network of positive associations related to the brand for enhanced mental availability.
- Consistent Messaging: Maintain consistency in branding and messaging to reinforce memory structures.
What is the significance of physical availability in How Brands Grow?
- Definition: Refers to how easily a brand can be found and purchased by consumers.
- Impact on Market Share: Higher physical availability leads to larger market shares due to increased accessibility.
- Strategies for Improvement: Expand distribution channels and optimize shelf placement to enhance physical availability.
What are the best quotes from How Brands Grow and what do they mean?
- "Education consists mainly of what we have unlearned.": Encourages marketers to rethink assumptions about consumer behavior.
- "Growth in market share comes by increasing popularity.": Emphasizes attracting more buyers, particularly light buyers, for growth.
- "Advertising works by refreshing memories.": Highlights the importance of memory in consumer behavior and brand recall.
How do loyalty programs fit into the concepts of How Brands Grow?
- Limited Effectiveness: Often fail to significantly increase loyalty or market share, primarily rewarding existing customers.
- Targeting Existing Customers: Focus on heavy users may not lead to substantial growth; prioritize reaching light buyers.
- Need for Broader Strategies: Invest in building mental and physical availability for sustainable growth rather than relying on loyalty programs.
Review Summary
How Brands Grow receives mixed reviews. Many praise its data-driven approach and challenge to traditional marketing wisdom, calling it eye-opening and essential reading. Critics argue it's outdated, overly focused on large FMCG brands, and lacks evidence for some claims. Readers appreciate Sharp's insights on brand growth, mental availability, and advertising effectiveness. However, some find the writing style dry or arrogant. Overall, it's considered a significant, if controversial, contribution to marketing theory that provokes thought and debate among professionals.
Similar Books








Download PDF
Download EPUB
.epub
digital book format is ideal for reading ebooks on phones, tablets, and e-readers.