This document summarizes 3 essential marketing laws that marketers should know: 1) The Double Jeopardy Law of Marketing states that smaller brands have smaller customer bases who are slightly less loyal, so smaller brands are affected twice. Marketers of smaller brands should focus on market penetration rather than increasing loyalty. 2) The Purchase Duplication Law shows the degree brands compete by sharing customers. Marketers should analyze what percentage of customers they share with the largest brand and if they are losing more customers than expected to competitors. 3) Consumer purchases generally follow a Negative Binomial Distribution pattern where the largest number of buyers purchase a brand with the lowest frequency. Marketers should understand how this applies to their consumers rather

1. SH&T
MARKETERS
(SHOULD) SAY

2. “We need more passionate engagement”
“We need a Facebook Timeline”
“No scratch that, one of those Instagramy Thingys”
“No wait, a Pinterest Board”

3. It seems, somewhere along the
way, marketers have forgotten about the
fundamentals of marketing in favour of
the next shiny object.
Oooh. Ahhh.

4. And can you blame them? It’s a crazy world
out there. It’s become so easy to get
distracted.

5. Here’s a little secret.
If you’re looking for the next big thing to solve your
marketing woes – it doesn’t exist.
Sorry.
Might as well close this presentation now, the rest
focuses on something fairly unsexy – marketing
fundamentals.

6. Marketing fundamentals don’t change.
It still is and always will be about attracting and retaining
customers. This is the core function of every business.

7. 3 Essential Marketing Laws
Every Marketer Should Know

8. Double Jeopardy Law of Marketing
Smaller brands get hit twice – they have a smaller customer base
compared to their larger competitors and these customers are
slightly less loyal.
Seem obvious?

9. In theory
You could have two brands of equal size: one with lots of buyers who
buy the brand occasionally while the other that has half the number of
buyers who buy it twice as often. In theory, these two brands would
have the same market share.
Never happens in reality.
This is called the Double Jeopardy Law of Marketing.

10. Implications
Does the Double Jeopardy Law of Marketing apply to your
brand?
(It probably does if you’re not the largest brand in your category)
If it applies and your marketing objective is increasing loyalty in
hopes of growing your brand you’re likely wasting your time.
You should probably focus on market penetration instead.

11. TIME-OUT!
What’s the difference between market
share and market penetration?

12. Market Share
Market share refers to that portion of the total market that is controlled by a
particular organization. Or in other words the number or value of units sold in a
given period for a manufacturer as a percentage of the total market size.
Market Penetration
Market penetration records how many people bought the brand (at least once)
in a particular time period. Or in other words - the number of customers you
have as a percentage of the total customers in the market.

13. OK! GOT IT.
Please continue with the next law…

14. Purchase Duplication Law
Purchase duplication law is also important because it tells you to
what degree your brand competes with other brands. All brands
share a percentage of customers with other brands in a category.
Seem obvious?

15. Buyers of Percentage of buyers who also bought brand
Brand
Breyers Breyers Ben & Haagen Nestle Mars
Dessert Jerry’s Dazs
Breyers - 15 8 8 9 4
Breyers 34 - 7 8 9 3
Dessert
Ben & 38 14 - 27 13 8
Jerry’s
Haagen 37 17 26 - 8 8
Dazs
Nestle 39 17 12 7 - 9
Mars 41 12 18 17 22 -
Average 38 15 14 13 12 6.5
Source: Byron Sharp, How Brands Grow

16. 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 given
their market size?
Are there any market partitions? In the example, its clear that Haagen
Das and Ben & Jerry’s share a larger percentage of consumers than the
industry average.
If you’re launching a new product, ask where the brand will steal share
from?

17. Most marketers know Zuck but few know the man on the
right and that’s a shame…

18. You down with NBD?
Negative Binomial Distribution
In 1955, Andrew Ehrenberg wrote “The Pattern of Consumer Purchases”
which helped show how NBD can be applied to consumer purchases. NBD
shows that the largest number of buyers buy with the lowest frequency.
His work set the groundwork for what explains a number of empirical
generalisations including the Double Jeopardy Law of Marketing and
Purchase Duplication Law.

19. Why should you care
about these
marketing laws?

20. It will help you understand how your consumers REALLY
1
buy - almost every brand, regardless of market or size
follows an NBD pattern.

21. 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

22. R-E-S-P-E-C-T
3
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.

23. THANKS FOR READING.
collidelabs.com | nish@collidelabs.com