At last, How Brands Grow part 2
03/03/16 08:30
The follow-up book, instructively titled 'How Brands Grow part 2' has been released, and after selling out (thanks to Oxford University Press and their conservative print runs) is now available from Amazon.
Associate Professor Jenni Romaniuk is my co-author, and we've been helped out by our colleagues in the Ehrenberg-Bass Institute.
The new book answers the questions people have asked about B2B and industrial markets, durables and services marketing, emerging markets, and luxury marketing.
Associate Professor Jenni Romaniuk is my co-author, and we've been helped out by our colleagues in the Ehrenberg-Bass Institute.
The new book answers the questions people have asked about B2B and industrial markets, durables and services marketing, emerging markets, and luxury marketing.
Critics and Misconceptions
26/03/15 12:59
The original version of How Brands Grow was published five years ago. Over that period critics have been very kind, it's been lovely to read so many glowing reviews. To be honest I've been surprised at the lack of criticism because the book doesn't pull its punches, it doesn't go out of its way to avoid making enemies. The sub-title "what marketers don't know" is deliberately provocative, and faults are exposed in market theories and marketing theorists (both academic and consultant).
Yet criticism has been muted. Most is along the lines of "yes I agree with a lot of what he says" – with the implication…. "but not all of it". Yet very few have been willing to say which bits they dispute. I suspect this is from fear of embarrassment because they don't have evidence to support their belief, it just feels wrong. Fair enough, many of the findings in 'How Brands Grow' are confronting, counter to current beliefs, counter to what was learned at university. Those feelings of scepticism are perfectly healthy, so long as they encourage further thinking and data gathering. If you don't believe me please try to prove me wrong – only good can come of it.
I expected people involved in the direct marketing industry to be upset as they had been highly enamoured with myths of loyalty, targeting and customer engagement, yet they largely seem to have accepted the evidence and embraced the need for broad reach and evidence-based results. The same for those working in online media, while there are still plenty of people preaching the need to build deep customer relationships those who have read How Brands Grow seem perfectly happy to switch towards building physical and mental availability in big heterogeneous mass markets.
What little criticism there has been 'How Brands Grow' has come from marketing consultants, mainly those selling market research products. Of course, there are financial reasons, 'How Brands Grow' exposes that some of the things they say are essential to measure aren't very important. In some cases it exposes that their special proprietary metrics are equivalent to snake oil cures. There is also loss of pride, several have come out with critiques that are more along the lines of "it's not right, but if it is then I knew it all long ago".
Here are a couple of the things that have been said that are worth refuting:
Double Jeopardy says that brands can't grow – wrong. Actually, the whole book is about brand growth. The fact that brand metrics follow the DJ law tells us what will happen when a brand grows (i.e. how those metrics will change), it does not say that brands can't grow.
Double Jeopardy means there is no loyalty – wrong. Double Jeopardy clearly shows that loyalty metrics are predictable. In doing so it also shows that all brands get loyalty, that loyalty is everywhere. It just isn't the 'brand love' style loyalty that so many consultants love. Consumers are polygamously loyal.
Yet criticism has been muted. Most is along the lines of "yes I agree with a lot of what he says" – with the implication…. "but not all of it". Yet very few have been willing to say which bits they dispute. I suspect this is from fear of embarrassment because they don't have evidence to support their belief, it just feels wrong. Fair enough, many of the findings in 'How Brands Grow' are confronting, counter to current beliefs, counter to what was learned at university. Those feelings of scepticism are perfectly healthy, so long as they encourage further thinking and data gathering. If you don't believe me please try to prove me wrong – only good can come of it.
I expected people involved in the direct marketing industry to be upset as they had been highly enamoured with myths of loyalty, targeting and customer engagement, yet they largely seem to have accepted the evidence and embraced the need for broad reach and evidence-based results. The same for those working in online media, while there are still plenty of people preaching the need to build deep customer relationships those who have read How Brands Grow seem perfectly happy to switch towards building physical and mental availability in big heterogeneous mass markets.
What little criticism there has been 'How Brands Grow' has come from marketing consultants, mainly those selling market research products. Of course, there are financial reasons, 'How Brands Grow' exposes that some of the things they say are essential to measure aren't very important. In some cases it exposes that their special proprietary metrics are equivalent to snake oil cures. There is also loss of pride, several have come out with critiques that are more along the lines of "it's not right, but if it is then I knew it all long ago".
Here are a couple of the things that have been said that are worth refuting:
Double Jeopardy says that brands can't grow – wrong. Actually, the whole book is about brand growth. The fact that brand metrics follow the DJ law tells us what will happen when a brand grows (i.e. how those metrics will change), it does not say that brands can't grow.
Double Jeopardy means there is no loyalty – wrong. Double Jeopardy clearly shows that loyalty metrics are predictable. In doing so it also shows that all brands get loyalty, that loyalty is everywhere. It just isn't the 'brand love' style loyalty that so many consultants love. Consumers are polygamously loyal.
New iBooks version
05/10/14 15:29
The first ebook version of How Brands Grow has been released on iBooks. It’s a revised 2014 edition with new data and new material. Read More...
AdAge votes How Brands Grow best marketing book of Summer 2013
17/09/13 14:05
Readers of Advertising Age have voted “How Brands Grow” the best read of Summer 2013. Read More...
How to buy the new textbook Marketing: theory, evidence, practice
09/01/13 12:08
At last we’ve written an evidence-based University marketing textbook, and it’s now on sale. Here’s how you can buy it... Read More...
Branding and Mental Availability - the distinction
19/10/11 10:39
A brand needs to build relevant memory structures that make it easier to notice, recognise, recall and hence.... of course...buy. This is the brand’s mental availability.
Branding helps build mental availability, it’s like a coat-hanger on which memories can hang. It’s like a Dewey decimal number which tells the brain’s librarian which memories to access and/or refresh.
The branding in itself rarely communicates anything else, nor does it need to. McDonald's scottish name is a brand, it communicates nothing about usage situations, food types etc - no haggis served at McDonalds.
Branding is branding - full stop.
So what memory structures does a brand need? This is a useful question to ask when launching a new brand (and this example is a good reminder for existing brands too).
Launching new brands is very risky, it's very easy for things to go wrong. The question a marketer needs to ask is "what are the CRUCIAL memory structures that I need to get into as many heads as possible?". In other words, what memories, if they were missing would massively reduce the chance of purchase? These usually turn out to be rather prosaic (and hence easily missed by those marketers who don't tend to be the most down-to-earth people)... things like…. what does the brand do (e.g. it is a car), what does the pack look like, where is it likely to be found, where will it be used/bought, who will buy it and so on.
If this sounds too simple then how come so many marketing campaigns seem to neglect this?
Branding helps build mental availability, it’s like a coat-hanger on which memories can hang. It’s like a Dewey decimal number which tells the brain’s librarian which memories to access and/or refresh.
The branding in itself rarely communicates anything else, nor does it need to. McDonald's scottish name is a brand, it communicates nothing about usage situations, food types etc - no haggis served at McDonalds.
Branding is branding - full stop.
So what memory structures does a brand need? This is a useful question to ask when launching a new brand (and this example is a good reminder for existing brands too).
Launching new brands is very risky, it's very easy for things to go wrong. The question a marketer needs to ask is "what are the CRUCIAL memory structures that I need to get into as many heads as possible?". In other words, what memories, if they were missing would massively reduce the chance of purchase? These usually turn out to be rather prosaic (and hence easily missed by those marketers who don't tend to be the most down-to-earth people)... things like…. what does the brand do (e.g. it is a car), what does the pack look like, where is it likely to be found, where will it be used/bought, who will buy it and so on.
If this sounds too simple then how come so many marketing campaigns seem to neglect this?
Share of wallet is not the key to growth - a loyalty myth
05/10/11 15:33
I was surprised and disappointed to see that the authors of the book “Loyalty Myths”, TIm Keiningham et al, themselves promote an old loyalty myth in the latest Harvard Business Review (Oct 2011).
The article reports a "discovery" of a relationship between verbal attitude reports and Share of Wallet/Purchases (measured in a period of panel data). This is re-discovered every so often, indeed Jan Hofmeyr even won an award for it a few years ago. This re-discovering (and misinterpretation) over and over says a lot about the sad state of our discipline given that the relationship was very well documented in the 1960s by Bird, Channon, and Ehrenberg (see references below).
Like Hofmeyr & colleagues (2008) the HBR team have done a rank order correlation which, in this case, guarantees high correlations of around 0.9. Correlation is not a good way of assessing predictive ability (which I illustrate here). Yet they report that their analysis is “to our knowledge the largest and most rigorous of its kind”.
The article goes on to imply that great financial returns can be gained from improving loyalty of existing customers. They recommend that managers move from a focus on the drivers of satisfaction to focus on share of wallet rank. This takes a leaf out of Reichheld’s book, when he said forget about satisfaction and focus on willingness to recommend (Net Promoter Score). In this case it’s true that larger market share brands do have higher share of wallet rank. What they fail to mention is that such loyalty metrics move only a little, and do so when a brand's penetration increases dramatically – the Double Jeopardy law.
In effect they rely on an old “wouldn’t it be great” argument that goes along the lines of “if those customers who give us very little of their spending became near 100% loyal, then we'd earn X more money”. It’s like saying “if you win the lottery then you’ll be richer”, all logically/analytically/theoretically true but it’s easy to make theoretical statements that clash with the empirical world, as this does. It's all beautifully academic, but not scientific nor practical. It’s not how brands grow.
Note how costs are also conveniently ignored. In the same way that Reichheld ignored them when promoting his retention and profitability myth.
The authors recommend finding out the motivational reasons why people give only a small amount of their spending to your brand and lots to others. But this ignores the weak link between claimed motivations and behaviour.
In the article they present a grocery store as an (fictional, hypothetical) example - why they didn’t (couldn’t?) show a real case is rather telling. In their hypothetical example the store drops prices on staple items to encourage low share of wallet customers to give them more of their supermarket shopping trips. Now supermarket repertoires have what is called high "1st store loyalty", in that the top store in anyone's repertoire tends to dominate, with the remainder of their repertoire being divided amongst several others. From the store's perspective then, it has a large group of customers who are very loyal in the sense that they do most of their grocery shopping there. And then another group of customers who largely do their shopping at another store. The former group tend to live close by, the latter further away (a fact that is ignored in the article).
So TIm Keiningham & co are on sound ground in recommending a focus on the people with low SCR - sales growth does indeed largely come from the latter group (since obviously it's hard to get more out of people who already give you nearly all their custom). But the real story for growth is, target your light and non-customers. Go for reach. Increase your mental and physical availability (e.g. open longer hours, open another store, make it easier for people to shop and shop faster...).
That's a very different story than the old-fashioned loyalty one (re)presented in the HBR article. And the promise of riches to be gained from a share of wallet focus…..that’s a chimera.
Professor Byron Sharp
October 2011
BIRD, M. & EHRENBERG, A. 1966. Non-Awareness and Non-Usage. Journal of Advertising Research, 6, 4-8.
BIRD, M. & EHRENBERG, A. 1966. Intentions-to-Buy and Claimed Brand Usage. Operational Research Quarterly, 17, 27-46.
BIRD, M. & EHRENBERG, A. 1970. Consumer Attitudes and Brand Usage. Journal of the Market Research Society, 12, 233-247.
BIRD, M., CHANNON, C. & EHRENBERG, A. S. C. 1970. Brand image and brand usage. Journal of Marketing Research, 7, 307-314.
BIRD, M. & CHANNON, C. 1969. Brand Usage, Brand Image, and Advertising Policy - Part I. Admap, 6, 27-46.
BIRD, M. & EHRENBERG, A. 1972. Consumer Attitudes and Brand Usage - Some Confirmations. Journal of the Market Research Society, 14, 57.
HOFMEYR, J., GOODALL, V., BONGERS, M. & HOLTZMAN, P. 2008. A new measure of brand attitudinal equity based on the Zipf distribution. International Journal of Market Research, 50, 181-202.
The article reports a "discovery" of a relationship between verbal attitude reports and Share of Wallet/Purchases (measured in a period of panel data). This is re-discovered every so often, indeed Jan Hofmeyr even won an award for it a few years ago. This re-discovering (and misinterpretation) over and over says a lot about the sad state of our discipline given that the relationship was very well documented in the 1960s by Bird, Channon, and Ehrenberg (see references below).
Like Hofmeyr & colleagues (2008) the HBR team have done a rank order correlation which, in this case, guarantees high correlations of around 0.9. Correlation is not a good way of assessing predictive ability (which I illustrate here). Yet they report that their analysis is “to our knowledge the largest and most rigorous of its kind”.
The article goes on to imply that great financial returns can be gained from improving loyalty of existing customers. They recommend that managers move from a focus on the drivers of satisfaction to focus on share of wallet rank. This takes a leaf out of Reichheld’s book, when he said forget about satisfaction and focus on willingness to recommend (Net Promoter Score). In this case it’s true that larger market share brands do have higher share of wallet rank. What they fail to mention is that such loyalty metrics move only a little, and do so when a brand's penetration increases dramatically – the Double Jeopardy law.
In effect they rely on an old “wouldn’t it be great” argument that goes along the lines of “if those customers who give us very little of their spending became near 100% loyal, then we'd earn X more money”. It’s like saying “if you win the lottery then you’ll be richer”, all logically/analytically/theoretically true but it’s easy to make theoretical statements that clash with the empirical world, as this does. It's all beautifully academic, but not scientific nor practical. It’s not how brands grow.
Note how costs are also conveniently ignored. In the same way that Reichheld ignored them when promoting his retention and profitability myth.
The authors recommend finding out the motivational reasons why people give only a small amount of their spending to your brand and lots to others. But this ignores the weak link between claimed motivations and behaviour.
In the article they present a grocery store as an (fictional, hypothetical) example - why they didn’t (couldn’t?) show a real case is rather telling. In their hypothetical example the store drops prices on staple items to encourage low share of wallet customers to give them more of their supermarket shopping trips. Now supermarket repertoires have what is called high "1st store loyalty", in that the top store in anyone's repertoire tends to dominate, with the remainder of their repertoire being divided amongst several others. From the store's perspective then, it has a large group of customers who are very loyal in the sense that they do most of their grocery shopping there. And then another group of customers who largely do their shopping at another store. The former group tend to live close by, the latter further away (a fact that is ignored in the article).
So TIm Keiningham & co are on sound ground in recommending a focus on the people with low SCR - sales growth does indeed largely come from the latter group (since obviously it's hard to get more out of people who already give you nearly all their custom). But the real story for growth is, target your light and non-customers. Go for reach. Increase your mental and physical availability (e.g. open longer hours, open another store, make it easier for people to shop and shop faster...).
That's a very different story than the old-fashioned loyalty one (re)presented in the HBR article. And the promise of riches to be gained from a share of wallet focus…..that’s a chimera.
Professor Byron Sharp
October 2011
BIRD, M. & EHRENBERG, A. 1966. Non-Awareness and Non-Usage. Journal of Advertising Research, 6, 4-8.
BIRD, M. & EHRENBERG, A. 1966. Intentions-to-Buy and Claimed Brand Usage. Operational Research Quarterly, 17, 27-46.
BIRD, M. & EHRENBERG, A. 1970. Consumer Attitudes and Brand Usage. Journal of the Market Research Society, 12, 233-247.
BIRD, M., CHANNON, C. & EHRENBERG, A. S. C. 1970. Brand image and brand usage. Journal of Marketing Research, 7, 307-314.
BIRD, M. & CHANNON, C. 1969. Brand Usage, Brand Image, and Advertising Policy - Part I. Admap, 6, 27-46.
BIRD, M. & EHRENBERG, A. 1972. Consumer Attitudes and Brand Usage - Some Confirmations. Journal of the Market Research Society, 14, 57.
HOFMEYR, J., GOODALL, V., BONGERS, M. & HOLTZMAN, P. 2008. A new measure of brand attitudinal equity based on the Zipf distribution. International Journal of Market Research, 50, 181-202.
Millward Brown replication - successful brands have low perceived differentiation
27/06/11 01:49
Almost all successful brands have very low perceived differentiation, yet they have loyal customers, they earn profits, and many of them have done so for many decades.
Read More...
Read More...
Is digital media the new price promotion
24/05/11 06:08
Is digital media the new price promotion ?
I just heard a marketing mix modeller say that every project he has done in recent years has resulted in the conclusion that the advertiser should move some money out of TV and into digital (i.e. banner ads, social media).
Now marketing mix modellers have been telling clients similar (brand damaging) things for a long while about price promotions, i.e. take money out of TV and spend it in-store. Is this another chapter?
I just heard a marketing mix modeller say that every project he has done in recent years has resulted in the conclusion that the advertiser should move some money out of TV and into digital (i.e. banner ads, social media).
Now marketing mix modellers have been telling clients similar (brand damaging) things for a long while about price promotions, i.e. take money out of TV and spend it in-store. Is this another chapter?
Marketing is not an applied discipline
17/05/11 10:06
Calling marketing science an applied discipline is just sloppy logic. Read More...
Loyalty/Engagement scores do not predict sales growth
11/05/11 10:22
I took the full list of Brand Keys 2011 Engagement Award ranks and correlated them again sales gains. What a surprise! A correlation of 0.4 but not in the direction that the people selling this claim, the data says the better the Band Keys rank the less the sales gain ! Read More...
Brands and logos don't have meaning
29/04/11 15:08
Consumers rarely stop to think about whether the logo looks nice, trustworthy, or conveys any other connotation. Read More...
How to measure mental availability
29/04/11 15:02
Dr Jenni Romaniuk and I developed the concept we originally called Brand Salience as "the propensity of the brand to be noticed or come to mind in buying situations".
So how do we think this construct should be measured ? Read More...
So how do we think this construct should be measured ? Read More...
People don't like changing their beliefs
28/04/11 14:08
I like this quote (we all know some poor academics and consultants who rely on this phenomenon):
"It is more comfortable to have one’s existing beliefs and skills reinforced.......students give high ratings to outside speakers who tell them to rely on their gut instincts because techniques taught in school are of no value in the real world"
From J.Scott Armstrong (1998) “Are Student Ratings of Instruction Useful?” American Psychologist, vol. 53, p.1223-1224
"It is more comfortable to have one’s existing beliefs and skills reinforced.......students give high ratings to outside speakers who tell them to rely on their gut instincts because techniques taught in school are of no value in the real world"
From J.Scott Armstrong (1998) “Are Student Ratings of Instruction Useful?” American Psychologist, vol. 53, p.1223-1224
Mental Availability is not awareness
27/03/11 01:02
A brand's mental availability refers to the probability that a buyer will notice, recognize and/or think of a brand in buying situations. It depends on the quality and quantity of memory structures related to the brand. See chapter 12 of "How Brands Grow". Read More...
Unlearning textbook myths
18/03/11 17:43
Watch the YouTube video here. It’s the trailer for my talk at BrandWorks University, May 23-25, 2011. Madison, Wisconson, USA. Read More...
How Brands Grow in Brasil
18/03/11 15:53
Some press coverage of How Brands Grow in Brazil. I’m not sure what it says. Read More...
ADNews - Sharp Gets to the Point
12/03/11 16:27
Tedx talk at the Royal Institute Aus - before marketing there was no science
01/02/11 17:55
Byron talks to a room full of scientists about marketing. Hopefully this is more interesting than it sounds. Watch the video... Read More...
Apple's drive for penetration
24/01/11 05:53
It’s easy to forget just how much Apple has expanded its customer base Read More...
Sainsbury's exploits physical availability (using salt)
24/01/11 05:39
UK supermarket chain Sainsbury’s (a sponsor of the Ehrenberg-Bass Institute) has been doing rather well. And over Christmas they astounded financial analysts with their performance compared to other retailers. Like-for-like sales over the Christmas 2010 quarter were up 3.5%, and they overtook Asda to become the 2nd largest supermarket.
How did they do it? Read More...
How did they do it? Read More...
Innovation to avoid differentiation
20/10/10 00:45
The mantra within marketing and R&D departments is that innovation is for delivering differentiation. But the reality is that much of the purpose of innovation is to avoid differentiation. It's largely about keeping the brand competitive and where it is. Read More...
Emotional versus Rational Advertising
22/09/10 14:53
On page 134, table 9.1 of "How Brands Grow" I write that rather than saying thinking is emotional OR rational we should realise that most thinking is emotional And rational.
I question the value of the emotional rational dichotomy. It's based on an out-dated view of emotions, and thinking. Read More...
I question the value of the emotional rational dichotomy. It's based on an out-dated view of emotions, and thinking. Read More...
Provocateur
07/06/10 11:39
Rupert Murdoch’s The Australian newspaper interviews Byron about the book “How Brands Grow”. Read More...
Kraft tries to discourage its marketers from swimming upstream
26/05/10 11:31
A Kraft study confirmed one of the laws of growth presented in How Brands Grow, while the majority of Kraft brand plans run counter to the law Read More...
Back in Stock
25/05/10 11:37
My book is back in stock in the UK, selling in a number of places including Amazon UK. Still sold out in the USA, but stocks are arriving soon.
Read More...
Read More...
Customisation, is not the ultimate form of target marketing
25/04/10 03:03
Brands compete largely as mass marketers, textbooks are being dumb when they cite examples of customisation as “the ultimate form of target marketing”. Read More...
Sold Out
13/04/10 20:10
How Brands Grow sold out, but Oxford University Press have printed more. Read More...
Do viewers pay less attention to emotive advertising, and does it matter?
21/12/09 14:19
For advertising to work consumers have to notice it. And the more processing they do the better, though for an awful lot of advertising very little processing is needed – it’s only advertising after all, the message is very simple, and this is particularly true for emotion oriented advertising – whereas persuasive, information oriented advertising suffers from the requirement to gain a degree of processing including rational conscious processing.
In the latest issue of the Journal of Advertising Research there is a characteristically interesting article by Robert Heath (with colleagues Agnes Nairn and Paul Bottomley). It somewhat controversially shows that viewers pay slightly less, not more, ‘attention’ to emotion oriented (as opposed to rational persuasion oriented) TV commercials. The authors (who are huge fans of emotion-oriented advertising) speculate that perhaps emotion oriented ads work by inducing less rational thinking and hence stimulate fewer counter arguments – I think such an effect would be trivial, there is a much more simple plausible explanation of how and why emotion oriented ads work. Read More...
In the latest issue of the Journal of Advertising Research there is a characteristically interesting article by Robert Heath (with colleagues Agnes Nairn and Paul Bottomley). It somewhat controversially shows that viewers pay slightly less, not more, ‘attention’ to emotion oriented (as opposed to rational persuasion oriented) TV commercials. The authors (who are huge fans of emotion-oriented advertising) speculate that perhaps emotion oriented ads work by inducing less rational thinking and hence stimulate fewer counter arguments – I think such an effect would be trivial, there is a much more simple plausible explanation of how and why emotion oriented ads work. Read More...
Detroit does not have a retention problem
29/10/09 01:46
Myths continue to abound that US car brands have suffered a collapse in loyalty. Read More...