The nub of it: Much current marketing practice can be likened to medieval medical bloodletting, full of, sometimes, harmful theories with no substantiation. Sharp uses empirical evidence to show that there are in fact some laws of marketing you can rely on. These laws indicate you can grow a brand by building its popularity through increasing physical and mental availability.

Byron Sharp likens much current marketing practice to the medieval equivalent of bloodletting. He clinically destructs theories like Kolterian thinking, Net Promoter Score, loyalty programmes and most forms of attitudinal segmentation.

In its place he suggests that there are some proven law like patterns we can rely on to build a marketing plan. He provides considerable empirical evidence to back up his assertions.

He notes the need for research to back up our marketing thinking, which he says marketers don’t do enough. Don’t simply assume you know. I wish more people would take that to heart.

The book is an excellent and thought provoking outline of the state of marketing as it applies to consumer brands. Although not terribly long, at some 217 pages, it is quite a dense read, covering a broad range of topics. If marketing consumer brands is your métier, I would regard it as essential material.

The tone of the book is generally calm and factual, although extremely controversial in some areas. He is quite cutting with respect to a number of models he disagree with, including Kevin Robert’s Lovemarks and Reichfeld’s loyalty metrics. He backs up his argument with a lot of evidence. If you disagree with his conclusions you may want to consider how much hard evidence is actually available for the counter view.

The essence of his argument is that one grows a brand through broad appeal. Popularity drives the brand and everything flows from that.

An analysis of consumer markets has revealed a number of replicable law like patterns which explain market structures and need to be taken into account. Key amongst this is the fact that brands compete against other brands which are only slightly differentiated. Growth of the brand boils down to managing two market-based assets, namely physical and mental availability.

Consumers think less and care less about brands, and usually buy less often than marketers realize or like to think. They tend to be behaviorally loyal to a small repertoire of brands in the category. Loyalty to single brands in the conventional sense is a myth, as is the idea that different types of people align themselves to different brands. Penetrating the repertoire of as many consumers as possible is key to any successful growth strategy. Marketers would do well to focus on this and eschew segmentation and loyalty based strategies.

The laws of marketing the book identifies are:

• Double jeopardy – brands with more market share have more buyers, and those buyers are slightly more loyal.
• Retention double jeopardy – brands lose buyers in proportion to market share (big brands lose more in absolute and less in percentage terms)
• Pareto law applies with a different ratio – it is more like 60/20. Slightly more than half the sales come from your top 20% customers. This makes the bottom 80% relatively more important.
• Law of buyer moderation – is a re-expression of the phenomenon of regression to the mean. Heavy buyers become light buyers in subsequent periods and vice versa.
• Natural monopoly law – means the more share a brand has the more it will attract the light buyer. The occasional purchaser will default to the market leader.
• Usage drives attitude – not the other way round. We grow to like what we use. Call it the “I love my mum” syndrome, which explains why all brands get good ratings in satisfaction surveys.
• Attitudes and brand beliefs reflect behavioural loyalty – consumers know and say more about the brands they use, which is why big brands score better in surveys. They have more users (who are slightly more loyal).
• The law of prototypicality – states that image attributes that describe the product score higher than less prototypical attributes.
• The duplication of purchase law –states that a brands customer base overlaps rival brands in line with market share. So a brand will share more of its customers with large brands and less with small brands. If a competing brand has 20% market share, then about 20% of your customers will also use that brand.
• All markets face a negative binomial distribution of heavy to light buyers – which means relatively few heavy and lots of light buyers. These purchase propensities are well described by the NBD-Dirichlet model, which faces the unfortunate headwind of requiring good quality longitudinal data, and statistics beyond the level of many marketing departments.

 

Understanding these laws will help your understand your market and stop you from chasing shadows.

He argues marketers are making a critical error in putting too much attention on retention and should focus instead on acquisition. A form of sophisticated mass marketing is the key to doing this.

Perhaps the most important part of the buying process is whether or not a brand is included in the repertoire or not. This is because most brands are excluded before one even gets to evaluating them.

The multiplicity of brands and the fact one cannot spend effort deciding on which brand to choose every time makes consumers cognitive misers. Once a brand is in the repertoire it has a sporting chance of being purchased. The real battle is to be in the repertoire in the first place. If you can’t get there you can’t even be evaluated or liked.

The rebalancing of the Pareto ratio points us to the fact that light buyers are more important than initially thought, and there are many more of them than heavy buyers. They are also more likely to forget the brand.

This means one should target the light or occasional buyer with advertising. One will probably reach the heavy buyer naturally, not least because they will have more opportunity to see the advertising and are more likely to notice it.

Sharp argues that we need to understand the difference between distinctiveness and differentiation. A brands customer profile is generally the same as the category profile, and thus differentiation is a marketing red herring. He sees psychographic segmentation largely as a marketing fantasy.

The key is to focus on distinctiveness which will help remind buyers that you exist in buying situations more often. Distinctive assets should measured.

The aim of most advertising is to maintain rather than grow market share. He contends advertising works by refreshing memory structures. Advertising is critical but the effects are hard to see because its effects are thinly spread over a long time period (in contrast to a price promotion where the effect is immediate, but with little long term effect).

He notes any successful marketing intervention works by increasing the probability that customers will purchase a product. Successful advertising does this by reaching all category buyers, getting noticed, refreshing and building memory structures, being relatively continuous and having clear brand links.

Emotion is an important factor in driving our decisions (There is a huge body of literature pointing us to the fact that we make decisions in a more emotional and less rational way than we would like to think, despite us wanting to be rational beings). Liking of advertising is important because it helps get us to notice it. The extent to which advertising affects purchase probabilities, occurs through the effect on memories, and the fact that memories have some ability to last.

Loyalty programs just don’t work. One of the reasons for this is because they skew towards existing heavy loyal buyers, causing you to do little more than cannabalise profit margins. They do have benefits in building a database of consumers, monitoring buying and creating a channel to communicate. One needs to be sure the cost is worth it though. Usually it isn’t.

Sharp looks at possible ways to grow a brand and comes to the conclusion that there are only a few ways to do this.

Lowering the price or improving quality can work but the result can kill margins. It is not hard to look for examples and think of the effects of ruinous price wars. A second option is to innovate, but he believes the advantages seldom last long.  Some may feel he under estimates the impact of continuous innovation and the advantages this can bestow.

His preferred approach is to invest in what he terms market-based assets, viz. physical and mental availability. There is no magic to this, the best option is to make the brand easier to buy for more people in more buying situations. Sounds easy, doesn’t it? Until you try doing it.

Physical availability includes logistical issues such distribution and being in stock. This should not be confused with just being available if the consumer chooses to seek it out, but being right there at the time of the buying decision, just an arms length away.

Mental availability is more than awareness. It is the propensity of the brand to be thought of or noticed in buying situations. The brand must be salient.

This may arise through cues that make us think of the brand. Everyone may have different cues. So feeling tired, may cause you to think of Red Bull as a energizer. The more cues, the more chance of salience in the buying situation.

Advertising that gets noticed is necessary. Brands form a very small part of the consumer’s life and you are fighting to get a tiny piece of attention.

Most brands are subconsciously screened out by buyers before they even think of evaluating their choice.  Marketers focus too much on evaluation. It is not that it is unimportant, it is just that a brand can get hurt most at the screening out level.

If you consider that the typical supermarket has 30,000 brands or variants, you will understand why consumers need to screen things out. Consumers have to ‘satisfice’ as a coping mechanism.

From their small consideration sets, buyers become polygamously loyal to their personal repertoire set.

To build the twin availabilities, and grow your brand, Sharp suggests 7 rules for marketing, while noting that there are regularities to buying behaviour and brands almost always compete with other brands.

 

The rules are:

 

Rule 1: Reach – make sure your marketing has as much reach as possible within the category. Focus on light and non-buyers. Understand who buys, when and where. Do this with research.

 Rule 2: Be easy to buy – be mentally and physically available. Understand how consumers buy and how the brand fits into their lives. Research what is important and convenient to consumers. Don’t just assume. This amounts to being thought of in the right place at the right time, all the time.  It’s not easy to do.

 Rule 3: – Get noticed – reach is useless if you aren’t noticed. That is why likeability of advertising works, it nudges our attention. Critically memory affects our behaviour without us even realizing it, the brands we see on the shelf are affected by our memories.

 Rule 4: – Refresh and build memory structures. Even if noticed, an advert doesn’t help if it doesn’t refresh and build on the memory structures for the brand. This is why consistency is so important in marketing. Wonderful heart tugging adverts don’t help if it doesn’t tie to the brand.

Rule 5: Create and use distinctive brand assets. – branding matters.

• Branding allow consumers to be loyal to a particular brand. Without branding you have to be guided by something else like price or place on shelf.
• Brands allow the advert to be tied to the correct brand.
• Distinctive assets facilitate the brand being noticed.

Rule 6: Be consistent yet fresh – brands that dominate for decades do so by being consistent, not repositioning. This is why packaging changes so often fail.

 Rule 7: Stay competitive & don’t give a reason not to buy. It is important to remember your biggest loss of custom comes from being excluded from consideration. That is why it is important that you don’t damage the effect of being in the consideration set by giving people a reason not to buy. (which may be high prices, trans fats in food etc…etc…). To paraphrase Rory Sutherland, be very good at not being awfully bad.

 

While this may sound theoretically quite simple it is likely to prove very hard to do in practice, especially if you are a small brand with limited resources. Nonetheless brands are valuable assets, so it is worth the effort.

 

If you’d like to discuss this note, please feel to contact the author on +271 21 671 8653 or Duncan@researchlamppost.co.za