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Sunday, May 09, 2010

How Brands Grow: First Read

Correspondent Byron Sharp, Professor at the Ehrenberg-Bass Institute, University of South Australia, has a new book: How Brands Grow: What Marketers Don't Know. Here is the book's web site. I have mentioned the Ehrenberg-Bass Institute's work in this blog a number of times. My former enterprise was one of the companies that commissioned some of the studies used in this book.

This is a remarkable book that shakes the underpinnings of marketing science. When I first started to look at the application of analytics to marketing I found many loose connections. Marketing books just did not have solutions to questions being asked, and answers that marketers used often came out of thin air. This book examines a number of key issues and using existing data, changes your views and suggests that marketers may be bleeding the companies that employ them.

The book starts fundamentally, exploring the differences between large and small brands and why each of them are large or small, and why they grow.

Useful findings from the book abound. For example, that loyalty among brands varies little and is mostly an artifact of other simpler aspects of the structure of the market. Along the way Sharp develops a number of simple and easy to understand 'laws' that describe what is happening in the real world. For example the double jeopardy law states that smaller brands get hit twice: their sales are lower because they have fewer buyers who buy their brands less often.

The idea that our brands are different and can be specifically targeted is also deftly criticized. In recent years the emergence of online interactions has led to the claim that brands can be micro differentiated to directly target consumers. Sharp suggests that the variations among consumers can be artifacts of sampling and it is better to mass market intelligently than try to carve the market into increasingly small segments.

In his chapter on passionate consumer commitment he enlists brain scan research to show how real world loyalty is everywhere, and the extreme loyalties apparently shown by examples like Apple Computer and Nike Sports Equipment are not what they seem. You can find radical commitment, but you can find switching even in apparently passionate advocates. Extreme loyalty is not what it seems, based on actual empirical data, not just stories from extreme fans of a product. The Saatchi LoveMarks program is particularly strongly criticized.

Differentiation is also discussed. Sharp suggests that differentiation does exist, but the degree of differentiation is weak and varies little between rival brands .... He suggests it is more important to develop distinctive assets that allow a consumer to notice a brand and ultimately buy it.

In a chapter on how advertising works Sharp positions the importance of noticing and processing the message. If the consumer won't do this, and ultimately at a conscious level, a purchase cannot be concluded.

Another chapter concludes that price promotions do not work the way we expect them to, and that Loyalty programs have at best a very weak effect. All of these conclusions are supported by empirical studies, not wishful thinking.

This is a very good book, deserving of several close reads. It has already made me think about the 'science' of marketing more carefully. It will make me ask for more real data before accepting a popular conclusion about the behavior of consumers in the future. Start here and then be vigilant about what you accept.

Another view: "all marketers need to read this book...or be left hopelessly behind"
- Joseph Tripodi, Chief Marketing and Commercial Officer, Coca-Cola Company.

1 comment:

KB's BLOG said...

Thank-you for the suggestion. I have put the book on order and I am looking forward to the read.