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Small vs. Large Brands: How to Become a Market Leader

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This is the first in a five-part series meant to take an empirical approach to marketing. We challenged the most dominant marketing myths out there, using data to explain why they are wrong. In busting some of these myths, we hope to show you how you can grow your own brand.

Published in: Marketing
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Small vs. Large Brands: How to Become a Market Leader

  1. 1. Smallvs.LargeBrands: HowtoBecomea MarketLeader
  2. 2. Marketingrequirescreativity andthoughtfulness,butitalso requirescertainstandards.
  3. 3. Insystemizingthesestandards, marketerscanachieve
 greatercreativityandfurther reach,whilecraftingmore impactfulmarketing.
  4. 4. Youcan’tachievethis systemizationwithout understandingthe sciencebehindmarketing. Check out our blog post here.
  5. 5. We’llusedatatoexplainwhatit takestogrowyourbrand.
  6. 6. Let’sbegin.
  7. 7. BRAND SIZE
  8. 8. Whatmakessmallbrandssmall, andlargebrandslarge?
  9. 9. the size of a brand’s buyer market CUSTOMER LOYALTY MARKET PENETRATION Theanswerliesin: the average purchase rate per customer
  10. 10. “Largerbrandshaveslightlyhigher customerloyaltyandmuchgreater penetrationthandosmallerones.” — Byron Sharp, How Brands Grow
  11. 11. Sosmallerbrandshavefar fewerbuyerswhoareless loyal,helpingexplaintheir smallersize.
  12. 12. SMALL BRANDS LARGE BRANDS LOYALTY slightly lower slightly higher PENETRATION much lower much higher The“DoubleJeopardy”Law
  13. 13. Thisphenomenonisknownas the“doublejeopardy”law.
  14. 14. Let’sseewhatthedouble jeopardylawlookslikein action,usingthe2005UK shampoomarket.
  15. 15. 4% 8% 12% 16% Brands Head & Shoulders Pantene Herbal Essences L'Oreal Elvive Dove Sunsilk Vosene Market share Annual market penetration Purchase frequency (average) TheImpactofthe“DoubleJeopardy”Law Shampoo Market, UK 2005 Source: TNS.
  16. 16. Thegraphtellsustwomajorthings 1. Loyalty doesn’t vary dramatically between brands But it is higher for those with greater market share. 2. Annual market penetration varies with market share Larger brands have far larger penetration than smaller ones.
  17. 17. CUSTOMER LOYALTY
  18. 18. Let’stakeacloserlookat customerloyalty.
  19. 19. Arecustomersmoreloyaltosome brandsoverothers?
  20. 20. Yesandno.
  21. 21. Customersdoadoptacertain levelofloyaltybehaviorinthat theydon’tswitchbetweenall brandsavailable.
  22. 22. Butsomedegreeofbrand switchingwillalways occuracrossallkindsof marketcategories, consumers,andbrands.
  23. 23. Analyticaltime framematters Consumer loyalty also starts to look different when assessed over a shorter time frame versus a longer- term one.
  24. 24. Marketerstendtofocuson short-termengagement metrics,ratherthanlonger- termones.
  25. 25. Thishasimportantimplications forcustomerloyalty.
  26. 26. CustomerLoyaltyOverTime Weekly Analytics Yearly Analytics #oftimespurchased 1 2 3 4 5 Tide All Gain Arm & Hammer #oftimespurchased 1 2 3 4 5 Tide All Gain Arm & Hammer
  27. 27. Thegraphtellsustwomajorthings 1. A one-week time frame will show little customer disloyalty Customers usually don’t have the time or need to buy multiple brands in just one week. 2. A year-long time frame will show far greater disloyalty. Customers have the time and need to buy a product multiple times, making it very likely they bought from a couple different brands.
  28. 28. “Sohowloyalacustomerappearsis largelyananalyticalmisattribution, unrelatedto‘true’loyalty.” — Byron Sharp, How Brands Grow
  29. 29. THE WRAP-UP
  30. 30. Whathavewelearned? 1. Smaller brands have far fewer buyers who are less loyal Brand growth lies in increasing market penetration, or buyer market
  31. 31. Whathavewelearned? 1. Smaller brands have far fewer buyers who are less loyal Brand growth lies in increasing market penetration, or buyer market 2. Customer loyalty is largely out of your control: it will always occur Most loyalty measures are skewed by the time frame, resulting in analytical misattributions
  32. 32. Youcanreadthefullstoryonhowtogrow yourbrandonthePercolateblog: Small vs. Large Brands: How to Become a Market Leader
  33. 33. Percolate is The System of Record for Marketing. 
 Our technology helps the world's largest and fastest-growing brands at every step of the marketing process. Want to learn more? Contact learn@percolate.com for more information or request a demo today at percolate.com/request-demo Kat Gebert Kat Gebert is on the Product Marketing team at Percolate.

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