How Brands Grow

How Brands Grow Plot Summary

Introduction

Why do some brands thrive while others struggle? This question has puzzled marketers for decades, often leading to strategies based more on intuition than evidence. In challenging conventional wisdom, the science of marketing reveals surprising patterns in how consumers actually behave and how brands truly compete in the marketplace. The empirical research reveals consistent laws that govern brand performance across markets, categories, and time periods. These laws contradict many marketing orthodoxies - from the myth of brand differentiation to the overemphasis on loyalty programs. The scientific approach illuminates how brands actually grow through mental and physical availability rather than emotional commitment, how customer bases are remarkably similar across competing brands, and why targeting strategies often fail to deliver growth. Through this evidence-based framework, marketers can finally understand the true mechanics of brand performance and build more effective strategies based on how consumers really behave.

Chapter 1: The Double Jeopardy Law: How Brand Size Impacts Loyalty

The Double Jeopardy law represents one of the most consistent patterns in marketing science, yet remains surprisingly unknown to many practitioners. This law describes how brands with smaller market shares suffer twice: they have fewer buyers, and these buyers are slightly less loyal to them than the buyers of larger brands. This phenomenon appears consistently across virtually all categories and markets. When examining brand performance metrics, larger brands consistently show higher penetration (the percentage of consumers who buy the brand at least once in a given period) and slightly higher purchase frequency among their customers. For instance, data shows that market-leading brands typically have both more customers and slightly higher repeat purchase rates than smaller competitors. The loyalty difference isn't dramatic - customers of smaller brands might buy them 3.5 times yearly while customers of larger brands buy them 4 times yearly - but this pattern holds remarkably consistent. The implications of this law are profound for marketing strategy. It suggests that brands grow primarily by increasing their customer base rather than by extracting more purchases from existing customers. When brands gain market share, they do so primarily by increasing penetration - attracting more buyers who purchase at least occasionally. The loyalty metrics follow as a natural consequence of this broader customer base. This explains why strategies focused exclusively on increasing loyalty among existing customers typically underperform compared to strategies aimed at reaching all category buyers. The Double Jeopardy law provides marketers with a reliable benchmark for brand performance. If a brand shows unusually low loyalty metrics for its market share, this indicates potential problems that need addressing. Conversely, attempting to achieve loyalty metrics that defy this law - such as trying to build small brands with intensely loyal customers - is typically futile. The empirical evidence shows that successful growth strategies must embrace the fundamental relationship between penetration and loyalty rather than fighting against it.

Chapter 2: Mental and Physical Availability: The Key to Growth

Mental and physical availability represent the two fundamental market-based assets that drive brand growth. Mental availability refers to the probability that a consumer will notice or think of your brand in buying situations. It's not merely awareness, but rather the richness and freshness of memory structures associated with the brand that can be triggered by various buying cues. Physical availability, meanwhile, concerns how easy the brand is to find and buy for potential customers across different buying situations. This extends beyond simple distribution to include factors like shelf position, packaging visibility, store locations, opening hours, and website accessibility. Together, these twin assets determine how many consumers will consider and choose your brand when making purchase decisions. The science reveals that successful brands build extensive memory networks that connect their brand to diverse category entry points - the various cues and contexts that trigger category needs. For instance, a beer brand might build mental connections to social gatherings, relaxation, sports viewing, and meal occasions. These connections make the brand more likely to come to mind across varied purchase situations. Similarly, effective physical availability means ensuring the brand is available wherever and whenever category purchases might occur. Building these assets requires consistent, distinctive branding elements that consumers can easily recognize. Distinctive brand assets - like colors, logos, characters, taglines, or packaging shapes - serve as mental shortcuts that help consumers notice and identify the brand with minimal cognitive effort. Nike's swoosh, McDonald's golden arches, and Coca-Cola's contour bottle are prime examples of assets that make these brands instantly recognizable across contexts. The most effective marketing consistently leverages these distinctive assets while reaching the widest possible audience of category buyers. Evidence shows that brands growing market share typically improve both mental and physical availability rather than merely enhancing product attributes or targeting narrow segments. Even innovations primarily work by enhancing these fundamental assets. This framework explains why broad reach, consistent branding, and wide distribution remain critical even in today's fragmented media landscape.

Chapter 3: Marketing to Light Buyers: Beyond the Heavy User Fallacy

The science of consumer buying patterns reveals a counterintuitive truth: most customers of any brand are extremely light buyers. This pattern, following what mathematicians call a negative binomial distribution, appears consistently across categories and brands. For even dominant brands like Coca-Cola, the typical buyer purchases the brand just once or twice per year, while only a tiny fraction buy weekly or more. This distribution of buying rates challenges the conventional marketing wisdom that prioritizes heavy buyers. The "Pareto principle" is often misquoted as stating that 80% of sales come from 20% of customers. In reality, research across numerous categories shows the relationship is closer to "60/20" - the heaviest 20% of buyers typically account for about 50-60% of sales volume. This means the remaining "lighter" 80% of customers still contribute 40-50% of sales, making them far too valuable to ignore. Furthermore, customer loyalty fluctuates naturally over time due to a phenomenon called "regression to the mean." Heavy buyers in one period tend to buy somewhat less in subsequent periods, while light buyers tend to buy somewhat more. This occurs not because their underlying preferences change, but simply due to random variation in purchase timing. Marketers who target only those who were heavy buyers in a previous period inevitably waste resources on customers whose purchasing is naturally declining. The practical implication is that growth requires reaching all category buyers, not just current heavy users. Brands grow when they increase their mental and physical availability to light category buyers who might purchase occasionally. This explains why mass marketing remains essential despite the fashionable emphasis on targeting and personalization. Growth strategies must reach beyond the heavy-buying minority to the mass of occasional buyers who collectively represent the majority of sales potential. Companies that understand this pattern design marketing activities that reach and appeal to all category buyers, maintain consistent presence over time, and avoid the temptation to over-invest in loyalty programs for heavy users at the expense of broader reach. This scientifically-grounded approach to customer strategy offers substantially greater growth potential than narrowly targeted loyalty initiatives.

Chapter 4: Differentiation vs. Distinctiveness: Building Brand Assets

Marketing orthodoxy has long held that brands must be meaningfully differentiated to succeed. This belief stems from influential theorists like Theodore Levitt and Jack Trout who claimed "differentiate or die" as marketing's central imperative. However, empirical evidence reveals this assumption to be largely unfounded. When researchers examine how consumers actually perceive brands, remarkably few view their chosen brands as meaningfully different from competitors. Studies across numerous categories show that typically only about 10% of a brand's users perceive it as "different" or "unique" - even for supposedly iconic brands like Apple. This holds true even when brands have objective functional differences. Most consumers simply don't perceive or value these differences in their everyday purchasing decisions. What's more important is distinctiveness - the ability to be quickly and easily identified as a particular brand. Distinctiveness operates through the development of unique brand assets that facilitate recognition. These assets include visual elements (logos, colors, packaging shapes), sonic cues (jingles, sound signatures), characters (mascots, celebrities), and verbal devices (taglines, naming patterns). Nike's swoosh, McDonald's golden arches, and Coca-Cola's distinctive bottle shape are quintessential examples. These assets function primarily by making the brand instantly recognizable in cluttered environments rather than by communicating superiority. The practical implication is that marketers should invest more in creating and maintaining distinctive brand assets than in pursuit of meaningful differentiation. These assets make a brand easier to notice, recognize and recall across diverse situations. They allow advertising to be correctly branded, help consumers find products in stores, and create mental shortcuts that facilitate purchasing. Most importantly, they can be legally protected through trademarks, unlike most forms of functional differentiation which competitors can quickly copy. This shift from differentiation to distinctiveness represents a fundamental recalibration of marketing priorities. Rather than striving to convince consumers that a brand is meaningfully different, marketers should focus on making it instantly recognizable through consistent use of distinctive assets across all touchpoints. This approach aligns with how consumers actually make purchase decisions - through quick recognition based on familiar memory structures rather than through extensive comparative evaluation.

Chapter 5: Advertising and Price Promotions: Evidence-Based Effects

Advertising and price promotions affect sales through fundamentally different mechanisms, contrary to how they're often evaluated in marketing mix models. Understanding these differences is crucial for effective resource allocation and measurement. Advertising primarily works by refreshing and occasionally building memory structures that make a brand more likely to be noticed or recalled in buying situations. Its effect on any individual consumer is typically small - perhaps nudging their probability of buying from 1-in-300 to 2-in-300. However, when multiplied across millions of consumers, this small shift can significantly impact sales. Importantly, advertising's effect is dispersed over time because most consumers won't buy the category immediately after exposure. This explains why advertising effects are difficult to detect in weekly sales data, even when the advertising is working effectively. Price promotions, by contrast, operate through a completely different mechanism. They temporarily alter the value equation for consumers already considering the brand, primarily affecting those already in the market during the promotion period. This produces the characteristic sales spike during promotions, followed by an immediate return to baseline when the promotion ends. Research consistently shows that price promotions rarely attract new customers to a brand; instead, they primarily reward existing buyers who happen to be buying during the promotional period. The evidence reveals that advertising builds long-term memory structures while price promotions produce short-term sales without building brand equity. In fact, excessive price promotion can erode brand equity by training consumers to buy only when discounted. The data shows that brands with higher promotional intensity typically experience greater price sensitivity over time as consumers learn to wait for deals. For advertising effectiveness, research demonstrates that creative quality matters more than message persuasiveness. Advertisements that get noticed, generate emotional engagement, and are clearly branded tend to be most effective regardless of their persuasive content. Continuous advertising at moderate levels typically outperforms intermittent bursts of higher intensity, as this pattern better counteracts natural memory decay. Ultimately, the scientific evidence suggests that balanced marketing investments should favor brand-building advertising over tactical price promotions for long-term growth. While promotions can address short-term sales needs, they rarely contribute to building the mental and physical availability necessary for sustainable brand growth.

Chapter 6: Scientific Laws of Brand Performance and Growth

The collective evidence from decades of research reveals consistent patterns that can be formulated as scientific laws of brand performance. These laws hold across product categories, countries, and time periods, providing marketers with reliable principles for strategy development. The most fundamental law concerns how brands compete for mental and physical availability. Brands that are easier to buy - for more people in more situations - achieve higher market share. This simplifies the complex world of marketing into a clear strategic imperative: make your brand as easy to notice, recall, and purchase as possible for the widest array of potential buyers. Everything else, including product innovation and communications, should serve this central objective. The Natural Monopoly Law further clarifies competitive dynamics by showing that larger brands have a disproportionate share of light category buyers. When consumers only make occasional category purchases, they gravitate toward the largest, most mentally available brands. This creates a reinforcing cycle where greater size leads to greater mental availability, which attracts more light buyers, further increasing size. Breaking this cycle requires substantial investment in building mental and physical availability. Another critical law concerns brand growth mechanisms. Analysis of brands that successfully grow market share shows they primarily do so by increasing penetration (attracting more buyers) rather than frequency (extracting more purchases from existing buyers). Even when loyalty metrics improve during growth periods, the majority of sales gains come from penetration increases. This pattern emerges from the skewed distribution of buying rates, where attracting new occasional buyers offers more growth potential than increasing purchases from existing ones. The NBD-Dirichlet model mathematically captures these patterns, allowing marketers to predict expected performance metrics for brands of different sizes. This sophisticated model provides benchmarks against which actual brand performance can be evaluated, helping identify both strengths and opportunities. These scientific laws provide marketers with a reliable framework for strategy development. Rather than pursuing untested theories or marketing fads, professionals can build strategies aligned with how consumers actually behave and how brands actually grow. The evidence consistently points toward broad reach, distinctive branding, physical accessibility, and consistency over time as the key drivers of sustainable brand growth.

Summary

The science of brand growth ultimately reveals a powerful truth: successful brands compete by being mentally and physically available to all category buyers, not by being meaningfully different to targeted segments. The empirical laws demonstrate that brands grow primarily by increasing penetration - attracting more buyers who purchase at least occasionally - rather than by extracting more purchases from existing customers. This evidence-based framework transforms marketing practice from an intuitive art to a scientifically-grounded discipline. By understanding the fundamental laws that govern buying behavior and brand performance, marketers can make more effective strategic decisions that align with how consumers actually behave. The future belongs to sophisticated mass marketers who leverage scientific laws to build mental and physical availability across the widest possible customer base, creating brands that are distinctively recognizable and easy to buy for more people in more situations.

About Author

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Byron Sharp

Byron Sharp is Professor of Marketing Science, and Director of the Ehrenberg-Bass Institute at the University of South Australia.His research is supported corporations around the world including Coca-Cola, Mars, Kraft, Nielsen, British Airways, CBS, ESPN, Kellogg's and many others.Dr Sharp has published over 100 academic papers and is on the editorial boards of four journals.

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