Excellent follow-up to the first book, answering many of the lingering questions I had. Another essential read for marketers.
“Brands grow by improvements to both penetration and loyalty, though typically far more sales growth comes from gains in penetration than improved loyalty. The question of whether strategy should therefore aim for loyalty or penetration has a very clear answer. Brands can enjoy higher loyalty, but only if they very substantially improve their penetration. A loyalty-first approach is simply not a growth strategy” (Page 3)
The law of double jeopardy affects all businesses: companies with fewer customers have customers with lower loyalty. The only way to move the dial is by acquiring more customers and getting them to buy from your brand more often.
This shows the importance of mental and physical availability:
“Large popular brands have excellent mental and physical availability amongst the buying population. This means more people will buy them (higher penetration). Small brands will have far less mental and physical availability. Indeed some people don't even know these brands exist, and many potential buyers seldom, if ever, notice them. Therefore fewer people buy them (lower penetration) in any time period.” (Page 11)
Reaching non-buyers does not exclude your current buyers. However, only reaching current buyers generally excludes non-buyers. Therefore, focus on improving mental and physical availability to acquire more customers/increase penetration.
“A growth-oriented strategy has to be a market penetration-oriented strategy.” (Page 16)
“Successful marketers are sophisticated mass marketers who have a deep and evolving understanding of both the commonalities and differences in their buyers, and use this understanding to appeal to a wide range of category buyers.” (Page 21)
The “heavy buyer fallacy” is important to grasp here: these buyers already buy a lot from you, therefore you probably can’t convince them to buy that much more from you.
This is why brand growth does not come from existing heavy buyers. The Pareto law here is more like 50:20. So if we don’t focus on lighter buyers we walk away from half of the potential customers.
Regression to the mean is also a consideration: your heavy buyers will, in time, become lighter. This also means that lighter buyers will, in time, also become heavier.
So, to become a big brand: reach everyone in the market, including the light buyers.
“This is one reason that an ROI focus can keep a brand from growing: it distracts brand managers from the main game. It seems counter-intuitive to reach out to people who don't buy the category much, and so would appear to deliver lower ROI. Ironically, focusing on ROI can prevent a brand from benefiting from scale and earning larger, more secure, profits.” (Page 34)
This is why “targeted marketing” can be shooting yourself in the foot. It closes off large parts of the market, shutting down the chance of growth from the outset. Think more instead about category needs and less about who is going to buy the brand.
Competing brands have similar customer bases across age, gender, etc. even with highly “targeted” brands.
Your customers are also “loyal switchers”: they are likely to be customers of other competing brands at the same time. People tend to be loyal, generally, but not exclusively. It’s somewhere in between; few people buy only 1 brand at all times, in the same way that few buy a different brand on every single occasion.
As people buy more of a category they buy more brands in that category.
Some key facts to consider here:
“How a brand is encoded, stored and retrieved from memory is similar across buyers, but what our memories contain varies, as it reflects our personal encounters with categories and brands. A key role of marketing activity is to shape buyer memories to the brand's advantage. To do this, we need to understand why and how memories are formed and used.” (Page 61)
Many have tried to define what brand is. Romaniuk and Sharp make it very simple: brand is memory. That is, being able to remember a brand at all is evidence that it is a strong brand.
Memory affects buying and buying affects memory. We rarely buy brands we don’t know, and we rarely think about brands we don’t buy.
The job of the marketer, therefore, is to build new memories in the minds of buyers in a market, and to refresh old ones.
Types of memory:
Buyers go to their memories to help them make choices. They are:
“What we (easily) think of largely determines what we buy. The key question is: what determines what we (easily) think of? … For successfully managing brands, this means: knowing what cues buyers use to generate options to buy; and building/freshening links to these cues” (Page 66)
Most of the time, memory is where we go first. (It seems redundant to say it, but it’s often forgotten by marketers who generally assume buyers are rational actors.)This is why salience and recency are incredibly important, but also what other brands have been up to as well.
An important concept they introduce at this point is the “category entry point” (CEP). These are thoughts that buyers have at different times and in different contexts, e.g. when starting a new job, or approaching a relative’s birthday, or when their car breaks down.
“We refer to these thoughts category buyers use (cues) to locate options to buy as category entry points (CEPS) because they signal when someone mentally enters the category buying process at that time, and therefore becomes a potential brand buyer.” (Page 67)
CEPs represent the buyer’s thoughts or influences before buying a given brand. Romaniuk and Sharp propose a “7 Ws” framework for generating them in your own category:
CEPs can vary between different countries, but not always. E.g. after-work drinks at the pub in the UK, or merienda (a snack around 5pm for kids) in Southern Europe.
Brands with larger market share are linked to a broader range of CEPs than smaller brands:
“The more links to CEPs a brand has, relative to competitors, the greater the chance is that it will be salient in any buying situation.” (Page 74)
Depending on your category, there’s not just one consideration set but many context-specific evoked sets.
“Top of mind awareness” (TOMA) cannot capture brand linkages and disproportionately favors only the largest brands.
“Everything category buyers know about a brand is a memory that is prone to decay. As time moves on from each encounter with a brand, buyer memories fade, and therefore links to rarely used CEPs need to be refreshed to avoid future retrieval failure. Many of your brand's customers also buy your competitors' brands (see Chapter 3), and so will notice their advertising. Seeing competitors' brands also make the brand's memories relatively harder to retrieve. Therefore, links to commonly used CEPS need to be refreshed to counteract/overcome exposure to competitor activity and usage.” (Page 78)
“Brand position” is therefore a function of how well your messages have cut through and been linked to buyer memory. So, in building a messaging strategy, we need to ask three things:
“Distinctive assets are non-brand name elements, such as colours, logos, characters and fonts that can trigger the brand for category buyers.” (Page 85)
There are many types of possible brand assets:
Building versus using:
In selecting a distinctive brand asset to build, choose those that can be widely used. That is, what environments are you going to be using them in? What has the brand built in the past?
There are two things every distinctive asset needs:
Positioning your assets on a 2x2 grid against “fame” and “uniqueness” can give you an idea as to what you need to do, e.g. high fame but low uniqueness would suggest avoiding solo use, whereas low fame but high uniqueness might indicate that there’s investment potential.
Then, use your assets:
Select assets from your “asset palette” based on the context in which you are using them:
Build with one or two assets maximum at any time alongside CEP and logo exposure.
“A useful exercise is to lay out, on one big table, all of the brand collateral that a category buyer is likely to see. Don't just confine it to printed material; print out web pages, presence in online stores, any variants that draw on the brand name—indeed, anything that the category buyer might see. What jumps out at you as you look across the table? Is it a sea of red? Or a mix of colours? Does a character continually jump out? An expression? A shape? Do all of the items look like they have come from the same family? Or do a few oddities look like they belong somewhere else? This is the first step to check your past execution and eliminate inconsistencies.” (Page 99)
“Marketing activities need reach. Why? Because brand growth depends on the brand increasing its penetration and recruiting light/infrequent category buyers. It's difficult to recruit category buyers you don't reach, which means you need to scale the reach in your marketing activities to move the needle on the brand's sales.” (Page 104)
Why reach? Brand growth demands market penetration, and greater market penetration comes from getting more light/infrequent buyers.
One of the best ways to do this is to minimize the time between each purchase occasion and the last advertising exposure.
Therefore, reach as many category buyers as regularly as you can afford.
However, this is easier said than done. Media is, today, incredibly fragmented. There are dozens of channels to choose from and use which makes reach harder. Brands therefore need careful media planning.
Reach is referred to with the following notation, e.g.: “40% 1+ reach” means that 40% of the market has had at least 1 “opportunity to see” (OTS).
“The importance of reach should be very obvious: a brand's marketing activity can only influence the category buyers it reaches. Marketing activity that reaches a large proportion of category buyers can have a large sales impact, while an activity that reaches only a small group of people can, even if it achieves its best result, only have a small sales impact.” (Page 106)
The above quote bears looking at. Lower reach requires higher conversion to reach the sames sales goals. If I reach 100% of the market with a 5% conversion rate, I get 5% of the market. But if reach only 50% of the market with a 5% conversion rate, my conversion rate has to double to get the same results.
We can make the assumption here that reaching more people is generally easier than being significantly more persuasive; the former only requires a greater budget, and the latter requires somehow convincing twice as many people (which is probably not going to happen, let’s be honest).
So, we must reach as many people as possible. Reaching them one time is more efficient and effective than reaching them many times. There is also no message so valuable and sophisticated that it needs sequential exposures to make a difference.
The authors recommend two things here:
But how do we plan for unduplicated reach?
If possible, survey your audience to understand what they are using more or less of.
Rules of the road (Page 118):
“WOM can be a useful addition to the marketing and media mix when harnessed correctly--but it is not the saviour that its (many) evangelists suggest. It's a small part of a big-picture brand-growth strategy.” (Page 120)
In short: WOM is not inconsequential, but it’s also not as powerful as you probably think it is either.
But what’s more important? Increasing positive WOM, or fighting negative WOM? It turns out that positive WOM is more common than negative WOM by about 3:2, so negative WOM is not as common or damaging as it was thought to be.
Positive WOM is usually given by brand buyers who:
Negative WOM is usually from customers who:
NPS therefore underrepresents negative WOM from lapsed customers.
In summary: the amount and prevalence of WOM is correlated with market share and positive WOM has a greater effect if they are already likely to buy anyway. So it’s good to have in the mix, but it’s not something you can have working on its own.
“Advertising is often considered WOM's less attractive sibling-less memorable, less effective. But WOM has the same cut-through issues as advertising. Even WOM via social media suffers from this. Just try it sometime: post something about a brand on whatever social network you use, and then find out how many people in your network actually saw it. And WOM reaches a biased audience. When audience biases are corrected, WOM and advertising have similar effect sizes, but advertising has much more effect overall because it reaches more brand buyers, particularly light and non-buyers” (Page 138)
“Building physical availability is about identifying and removing as many speed bumps to purchase as you can, no matter how small. The aim is to make the path between having the brand mentally available and actual purchase as smooth as possible, in order to realize the revenue promise of built mental availability.” (Page 139)
Physical availability is about making a brand easy to find, and easy to buy. It has three main pillars:
“Brands are surrounded by competitive clutter from other brands; and shoppers experience situational clutter, such as other people in stores, advertising on websites, notifications and other apps on phones, or distractions in a mall or street making it difficult to find a retail outlet.” (Page 160)
“The cold reality is that, when a new brand enters a category, most category buyers just continue buying the brands they always have.” (Page 175)
When building memory structures in the minds of buyers, product/brand launches don’t do all that much. They are just the start. “New” brands grow in much the same way as existing ones.
Therefore, you can’t just have a single burst of energy. You must keep things consistent over time.
“The first, most essential memories to build are simply what this brand is and what it looks like (so that it can be found). Often this is a case of saying 'we are an(other) accounting service' or 'we are an(other) soft drink'and this is our name, this is what we look like, and this is where and how you can buy us.” (Page 182)
If you are new to the market, talking about how “we’re different/better vs X” is missing a fundamental step: what we are and who we are for in the first place. After this is established, we can then move onto true CEPs.
The first CEPs should be more common ones first. But there’s usually strong competition for this so it’s important to prioritize branding quality across all touch points.
“Remember that the first buyers of a new launch are likely to be heavy category buyers who use many brands and so notice the advertising of these brands. These buyers could easily think of and buy many other brands if the advertisement reminds them only of the category (and not also the new brand). Strong branding requires using smart execution tactics to make the brand a prominent and noticeable part of the advertisement (or indeed any other marketing activity.” (Page 185)
“It is easy (and common) to focus on the differences between B2B buying and B2C buying, such as the contracts, switching costs and more structured purchase cycle rather than the similarities, such as customers having a wide range of competing options and little time to process all the information available. However, remember it is the same B2B customer, with the same brain, who is also buying toothpaste, cars, weekends away, chocolate, whisky, a luxury watch and home insurance.” (Page 190)
The fundamental laws of growth still hold, and apply, in a B2B context, just as they do in B2C. This includes both double jeopardy and duplication of purchase. As in B2C, B2B brands do not grow through loyalty, they grow through customer acquisition. This is not a license to ignore or underserve current customers, but it’s still not where growth comes from.
“Double jeopardy is not about ignoring current customers; it is about being realistic about your capacity to control their behavior. Therefore, to mitigate risk, you need to make sure there is always a pipeline of new customers ready to replace those that do defect, and hopefully grow.” (Page 193)
Duplication of purchase shows that B2B buyers will often buy from multiple companies in a category. You may have multiple departments in a business buying different things, so they will all need to be treated as different customers.
“All businesses that sell to other businesses face the familiar mental challenges of transient, partial, divided buyer attention, fading memories and competitive interference. It's an ongoing struggle to be a contestant in the race to be bought. This is the battle of mental availability.” (Page 199)
There are three components of mental availability: reach, branding, and messaging.
Reach: mistakes are easy to make.
Branding steps:
Messaging considerations:
The authors admit to there being little research here, so the stated goal is to reduce the odds the brand will not be bought:
Presence: how do they shop? Through RFPs? Preferred lists? Trade shows? In person? Online?
Prominence: stand out, visually, with distinctive assets. This means everything from ad campaign videos, to expo booths, to slide decks.
“In the B2B sector this means mapping the sales environments where B2B buyers 'shop' and identifying the level and nature of competitor or situational clutter that is likely to hamper the brand being found.” (Page 207)
Portfolio: do you cover the main areas in the category? Now? In the future?
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