How Brands Grow – Byron Sharp

hbg01How brands grow is a book largely about fundamental marketing principles: brand growth, how advertising works, price promotions and loyalty programs.  It’s a myth-busting classic, filled with scientific discovery so it feels different from the more traditional business textbooks. Sharp successfully tears strips off current marketing practices and likens marketing managers to “medieval doctors, working on impressions and myth.” He pushes this analogy further when he compares much of our modern marketing theory to the practice of bloodletting, which was once regarded as a particularly effective way to “cure” medical ailments.

You get the feeling that Sharp really enjoys challenging every single marketing assumption we all have; from the taken as given need to differentiate your brand to the fact that a brand’s consumers are a distinctive type of person, in fact, even the pareto law gets a kicking, gone are the assurances that 80% of sales come from the top 20% of your buyers – according to Byron only slightly more than half of sales come from the top 20% of the brand’s customers, the rest come from the bottom 80% .

It’s true to say that by and large this book is somewhat of a manifesto for what he calls his new world model:

Past World Model Positioning Differentiation Message Comprehension Unique Selling
Proposition
Persuasion Teaching Rational Involved
Viewers
New World Model Salience Distinctiveness Getting noticed,emotional response Relevant Associations Refreshing and
building memory structures
Reaching Emotional
Distracted
Views

 

And this new world model rests on a very simple premise that ALL brands grow by increasing their market penetration, forget about loyalty and/or anything else.  He proves this hypothesis through what he calls the Double Jeopardy Law.  Sharp argues that the Double jeopardy law tells us what our marketing metrics will look like – if we are successful in gaining sales and market share.

Here’s an example:

Shampoo Brands Market Share (%) Annual market Penetration (%) Purchase Frequency (average)
Suave Naturals 12 19 2.0
Pantene Pro V 10 16 1.9
Alberto VO5 6 11 1.6
Garnier Fructis 5 9 1.7
Dove 4 8 1.4
Finesse 1 2 1.4
Average 1.7

 

Note: Smaller US shampoo brands suffer from only slightly lower loyalty.

If Finesse were to catapult up to the sales levels of Suave Naturals or Pantene Pro V, it would be substantially more popular with millions more households buying it each year. But these households would not, on average buy it much more often than current Finesse households buy the brand.

Finesse’s brand manager could plan to reach market leadership by getting current customers to buy eight times a year.  That would be enough to do it – in theory. But in practice it’s impossible.  As Sharp goes on to point out Finesse buying households currently only buy shampoo six times a year; therefore Finesse would need to command 100% loyalty just to achieve six purchases per year per customer. But no shampoo brand in the US commands 100% loyalty. Such a marketing plan is a fantasy.

Double jeopardy, therefore, tells us what is, and what isn’t achievable – sort of a practical guide to strategy formulation.

Make your brand famous, make your brand popular.

The book continually delivers a strong case for mass marketing, as attested above, Sharp continually hammers home that growth in market share comes by increasing your brand popularity or fame.  You do this by gaining many more buyers (of all types), most of whom are light consumers buying the brand occasionally. This allows Sharp to controversially define brands as “undifferentiated choice options of varying popularity.”

It’s an easy read, a lot of it planners probably already know as it’s based on the work of Andrew Ehrenberg who in 2003 proved, albeit with shorter term dynamic analysis, that both rising and declining brands displayed more change in their penetration than in their purchase frequency.  Sharp adds a level of metric data to the debate which makes Ehrenberg’s theories easier to substantiate.  This argument also fits well with the more recent IPA analysis by Binet & Field in 2007 which showed that effectiveness award winners were far more likely to have set targets to increase market penetration.

 

Penetration % Loyalty %
Gold Winners 21 2
Silver Winners 20 6
Bronze Winners 18 3
No Medal 41 89

Source: Binet & Field, 2007.

Sharp’s work is also consistent with the latest evidence coming from neuroscience (i.e. that the way brands and advertising get remembered is via imprinting strong emotional associations) but he uses the more familiar source of sales and market share data from lots of categories and countries. Nielsen and TNS, in particular, have provided him access to vast amounts of data covering hundreds of product categories and a number of countries.

I do like the iconoclast in Sharp, I laughed out loud at his characterisation of loyal fans as uncaring cognitive misers; the book certainlyachieves more than just making you think. How brands grow fires bullets at commonly accepted marketing nostrums such as concentration on loyalty, customer retention, brand differentiation and tight targeting; it’s his view that these are just modern marketing myths and that they go against the flow of real customer behaviour and the dynamics of market share growth. His witty irreverence bolstered up by hard hitting numbers makes for a thorough, well-argued thought provoking read. For anyone who has ever worked within the FMCG category it’s a total must read and believe me you’ll certainly understand where he’s coming from.

Take a look at the official blog: http://marketinglawsofgrowth.com/blog.html and you may also want to take a look at this http://ftmf.info/2010/05/05/how-brands-grow-book-review/

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