Musing on How Brands Grow?

Brands have been managed for years. Some brands outlive others, not because of their history but by the proper growth strategies. Growth of the brand is undoubtedly the most important thing for a Brand Manager. They would run several campaigns, spend bucks on mass advertisements to get double-digit growth in their sale. But have you wondered why do some brands fail even after using the best strategies they have? That might be because of a few misbeliefs and unknown facts about the art of branding itself. 

Few months back, I read the book 'How Brands Grow' by Byron Sharp. It was a very insightful read and it sheds away few of the misconceptions from our minds on the relevance of different practices involved in the growth of a brand.

I would like to share a few points from the book that interested me.

Law of Buyer Moderation: 

Light-Medium buyers for a brand are more in number but their frequency for buying is less. They still result in a huge chunk for the brand’s growth.

Pareto’s 80-20 principle, which says your 80% of the sale comes from your 20% customers and vice versa is too simplistic for this. Instead, the ratio is 20: 30: 50 (20%- heavy, 30%- medium, 50%-light) where 20% heavy buyers result in 50% of sales & 80% Light-Medium buyers accounting for the rest 50% of sale (which we can’t ignore).

Brands with more market share have a greater proportion of light category buyers in their customer base.
When such a large market share is unattended, a shift in market share cannot be achieved through only targeting heavy buyers.

This clearly means mass marketing is highly imperative in today’s digital world as well.
 

Usage drives Attitude: 

Buyers of different brands in the same product categories express very similar attitudes and quite similar perceptions about their respective brands. 

It is like I love my mum and you love yours. 

Hence, it is quite a tedious task if you are willing to differentiate your brand from the competitors.

Duplication of Purchase Law: 

A brand’s customer base overlaps rival brand’s customer bases in line with their market share (i.e. in a time period a brand will share more of its customers with larger brands and fewer with smaller brands). 

If 30% of Brand A buyers bought Brand B in a time period, then 30% of Brand B buyers also bought Brand A products.
Long story cut short - Guaranteeing loyalty from your frequent customers is not wise.
 

Purchase Reinforcement Effect

Price Promotions have an immediate positive effect on sales, but it fails to last and compel people to buy in the future. 

Think about the Myntra Sale that you had a few days back. You purchased in bulk during the sale, but will you be willing to buy again on Myntra in the upcoming 30 days? No, at least in my case.

They only bring back infrequent buyers through Purchase Reinforcement Effect. To avoid the negative effect of Price Promotions, brands must bring them only temporarily and on an infrequent basis.

Rather, Advertisements, though, do not have an immediate effect on sales, but they are thinly spread into the future. Brands can leverage from ads by being consistent across their media and campaigns in the long run.

Hence, the learning that we got was that advertisements are imperative for continuous growth while price promotions should be ‘once in a blue moon’ event.

Loyalty Programs don't work

Loyalty programs rewards the and encourage loyal buying behavior. They provide points each time a buyer buys and and they add up and may be redeemed for rewards later. 

It is an incentive for increasing the frequency of purchase and discourage defection.

The effect of loyalty programs are meagre and leads in biased results to loyal customers only who will buy anyway. Let me show you how.

Category Purchase Level	Level of Loyalty
		Low	High
	Light	1 Unlikely to join Not Desirable Customers	2 Likely to join Not Desirable Customers
	Heavy	3 Very Unlikely to join Desirable Customers	4 Likely to Join Undesirable Customers

For having growth in the buying behavior of customers, I would need new customers to turn up to my store. These will be the customers who are not loyal to my store. They lie in the Quadrant 3 of the above matrix shown. These customers are heavy buyers but not loyal to my brand. 

But what happens due to loyalty programs is that the loyal buyers to my brand who are already in my store to redeem the loyalty programs end up getting benefitted. They do not need to change their behaviors to redeem loyalty benefits because they are already loyal.

It is because of this factor that Loyalty Programs have negative effects. 

Moreover, to make matter worse, these loyal buyers know when the loyalty programs will be offered and they wait for them to make heavy purchase for themselves leaving the rest of the year a barren land for the brands.

 

Two sides of the same coin- Physical and Mental Availability

Suppose you heard about the new ‘Tandoori flavored Chips’ from an advertisement (Mental Availability). You wished to taste it, and you went to your nearest Kirana shop to buy one, but there was no packet of the brand available (No Physical Availability). The awareness that the brand created went futile, and it might not generate any leads at least in your area.
Let’s look it vice versa. You went to the shop for your everyday grocery shopping and had a look at the new chips brand (Physical Availability). Since you have not heard about it before (No Mental Availability) and no memory structure is created about the brand, you will be less willing to try it.  

The simultaneous presence of Mental and Physical Availability of a brand are important. Mental Availability (Brand Salience) is the propensity for a brand to be noticed, and Physical Availability is the breadth and depth of the distribution in space and time. Both of them are a Brand’s Equity. The absence of either of them will be detrimental to the brand.

These were a few of the interesting facts that I found from the book. Though they may look obvious but often in hindsight, we neglect these basics. I hope this blog was an enjoyable and knowledgeful read to you.