Much like Kevin Robert’s critically acclaimed Lovemarks, Dr. Byron Sharp’s most recent book How Brands Grow is quickly becoming mandatory reading for marketing professionals across the globe due to its eleven controversial propositions, based upon analysis of over 40 years of consumer and market research, that go against the grain of many current theories in brand marketing. According to Sharp, modern marketing is at a similar level in theoretical development to medieval science, with many practitioner-developed theories based upon untested empirical observations or assumptions. Sharp even goes as far as to say that many of the well-known marketing laws taught in business schools and books are incorrect or inaccurate, some having been conceived for the sole purpose of selling books with new content!
Unafraid of controversy, Sharp sits as the director and key spokesperson for the Ehrenberg-Bass Institute for Marketing Science, a not-for-profit market research organization based out of Adelaide, Australia, sponsored by, and producer of abundant market research for, a handful of major corporations including Coca-Cola, Unilever, Proctor & Gamble, Mars, Colgate and Kraft. The Institute, consisting of approximately 70 research staff and students, aims to help marketing departments through uncovering the law-like patterns and relationships that govern the field. How Brands Grow is the culmination of Sharp and rest of the Institute’s findings on the ‘realities’ of brand marketing based upon their extensive evidence and critical analysis.
Three of their findings that I have found to be of particular interest are:
- Traditional marketing theory suggests that, based upon the Pareto principle, approximately 80% of sales come from 20% of the customer base. This 20% of loyal and heavy users are then the primary target of marketing campaigns, due to their relative perceived value to the brand. Sharp’s data analysis displays, however, that the ratio in reality averages nearer to 60:40, suggesting that greater value should be given to a larger proportion of the consumer base. He explains that contrary to current ideologies, brands should in fact be employing mass-marketing campaigns to target the broad range of light users, statistically the majority of a brand’s customers, or non-users rather than narrowly targeting the heavy user minority who will purchase from the brand anyway. Along this same line of thought, he recommends against the difficult and potentially expensive processes of converting consumer behavior from light to heavy consumption and to stop all resource-wasting loyalty programs targeting heavy users.
Whilst the market share and penetration levels of brands within a single product category varies, statistics reveal that on average every brand in the category will have a similar annual purchase frequency. This finding, according to Sharp, is present across a wide range of product categories and implies that, contrary to common marketing assumptions, all brands have similar levels of customer loyalty. His research finds that the all-important light brand users tend to be more “polygamous”, moving between brands based upon factors including availability and price. Furthermore, he claims that the majority of individuals have only a handful of brands that they would claim to “love” and remain entirely loyal to - with busy lives they are not looking for “relationships” with their everyday brands, wanting to simply purchase brands and products for their functional purpose. He thus suggests that brands focus not on the Lovemarks style consumer-brand relationship building, cautioning the usage of social networking until evidence for its effectiveness is identified, and instead focus on increasing gaining market share through market penetration and availability.
With equal consumer loyalty between competing brands, and the value of “polygamous” light users, Sharp’s research indicates the power of market penetration and availability in the building of a strong brand. He suggests that marketers focus on establishing as many both physical and mental routes of distribution to the consumer as possible to ensure that the brand is easily accessible and always at the top of the consumer’s mind. On a mental level, Sharp highlights the significance of consistency in marketing material - maintaining a consistent brand identity and message that can enable consumers to run on autopilot when in stores, providing a false sense of loyalty.
The extent to which Sharp’s propositions should be taken to heart by marketers and advertisers is debatable, yet we must acknowledge the implications of the Institute’s findings. However, even many of those who agree with Sharp’s findings still object to his over-objectification of an industry with many of its practices build upon creativity. As Sharp himself states: “Scientific laws tell us how the world is, but just in the same way that Newton’s laws don’t tell Boeing how to build a Dreamliner, empirical laws about marketing still mean there are billions of creative ways to build brands.”