“We need more passionate engagement”“We need a Facebook Timeline”“No scratch that, one of those Instagramy Thingys”“No wait, a Pinterest Board”
It seems, somewhere along theway, marketers have forgotten about thefundamentals of marketing in favour ofthe next shiny object.Oooh. Ahhh.
And can you blame them? It’s a crazy worldout there. It’s become so easy to getdistracted.
Here’s a little secret.If you’re looking for the next big thing to solve yourmarketing woes – it doesn’t exist.Sorry.Might as well close this presentation now, the restfocuses on something fairly unsexy – marketingfundamentals.
Marketing fundamentals don’t change.It still is and always will be about attracting and retainingcustomers. This is the core function of every business.
3 Essential Marketing LawsEvery Marketer Should Know
Double Jeopardy Law of MarketingSmaller brands get hit twice – they have a smaller customer basecompared to their larger competitors and these customers areslightly less loyal.Seem obvious?
In theoryYou could have two brands of equal size: one with lots of buyers whobuy the brand occasionally while the other that has half the number ofbuyers who buy it twice as often. In theory, these two brands wouldhave the same market share.Never happens in reality.This is called the Double Jeopardy Law of Marketing.
ImplicationsDoes the Double Jeopardy Law of Marketing apply to yourbrand?(It probably does if you’re not the largest brand in your category)If it applies and your marketing objective is increasing loyalty inhopes of growing your brand you’re likely wasting your time.You should probably focus on market penetration instead.
TIME-OUT!What’s the difference between marketshare and market penetration?
Market ShareMarket share refers to that portion of the total market that is controlled by aparticular organization. Or in other words the number or value of units sold in agiven period for a manufacturer as a percentage of the total market size.Market PenetrationMarket penetration records how many people bought the brand (at least once)in a particular time period. Or in other words - the number of customers youhave as a percentage of the total customers in the market.
Purchase Duplication LawPurchase duplication law is also important because it tells you towhat degree your brand competes with other brands. All brandsshare a percentage of customers with other brands in a category.Seem obvious?
Buyers of Percentage of buyers who also bought brandBrand Breyers Breyers Ben & Haagen Nestle Mars Dessert Jerry’s DazsBreyers - 15 8 8 9 4Breyers 34 - 7 8 9 3DessertBen & 38 14 - 27 13 8Jerry’sHaagen 37 17 26 - 8 8DazsNestle 39 17 12 7 - 9Mars 41 12 18 17 22 -Average 38 15 14 13 12 6.5Source: Byron Sharp, How Brands Grow
Questions you should be asking:How much of your customers do you share with the largest brand?Are you losing more consumers than expected to a competitor giventheir market size?Are there any market partitions? In the example, its clear that HaagenDas and Ben & Jerry’s share a larger percentage of consumers than theindustry average.If you’re launching a new product, ask where the brand will steal sharefrom?
Most marketers know Zuck but few know the man on theright and that’s a shame…
You down with NBD?Negative Binomial DistributionIn 1955, Andrew Ehrenberg wrote “The Pattern of Consumer Purchases”which helped show how NBD can be applied to consumer purchases. NBDshows that the largest number of buyers buy with the lowest frequency.His work set the groundwork for what explains a number of empiricalgeneralisations including the Double Jeopardy Law of Marketing andPurchase Duplication Law.
It will help you understand how your consumers REALLY1 buy - almost every brand, regardless of market or size follows an NBD pattern.
2 Know what you can control vs. what you can’t – will help you avoid fantasy marketing strategies i.e. all we have to do is increase loyalty
R-E-S-P-E-C-T3 If we want marketing to have respect in the boardroom we need to stop jumping around when something new appears and apply the same rigor to marketing as other functions do. These laws can help.
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