What's missing and what's wrong in "How brands Grow"?

My last post looked at Byron Sharp's claim to have the definitive laws of brand growth in his book "How Brands Grow" (HBG) and his talk at the IPA, focusing on the things I think he's got right. Here, in this second post, we look at what I think what's missing.

Its another long-ish post. So, grab a cup of coffee, and here we go...

1. MISSING: there are more ways to grow

The biggest issue with HBG is how it over-simplifies marketing to a process of increasing penetration by "mental availability" (e.g. awareness, saliency, distintiveness) and "physical availability" (e.g. distribution, impact at point of sale).

These are indeed very important drivers of growth. But they are not the only ones. There are other ways to grow that don't get a mention in HBG:

- Creating new occasions: McDonald's offering breakfast

- Brand stretching: Special K going from cereals to cereal bars

- Increasing volume per usage occasion: Axe's "Spray More, Get More" campaign did this by getting blokes to spray all over, not just under their arms

- Premiumisation: Gillette have increased price and profit per razor over time by adding extra functionality

Clarifcation: HBG is in Byron's words about "Growth in market share within categories" and not about "Entering different categories, and attempts to expand the overall category." So, there is a need to manage your expectations on what you will get from HBG: a more accurate title would be "Why some brands have bigger shares".

2. MISTAKE: mixing up user profiles and brand positioning

HBG shows that the user profiles of brands are much more similar than we think. Looking at lots of categories, and different ways of segmenting markets (demographics, attitudes, values etc.), he shows brand profiles within categories are very close (with obvious exceptions, such as premium brands being bought by people with more money).

However, the dangerous leap Sharp then makes is to say that portraying a specific type of user is wrong, as it fails to talk to the spread of people using the brand. For example, he says Yorkie's "Not for girls" was bad marketing, as it missed out girls, who in fact eat a lot of Yorkie choc bars.

Sorry, but this is a basic error. Who we portray and who we want to use the brand are two different things.

Potraying a certain type of user helps create a distinctive brand story and mix, standing out and getting remembered, the very things that Sharp (rightly) urges marketers to do. Most ads by Coke portray young people drinking from a 330ml iconic bottle because this is: i) aspirational, ii) distinctive. Special K cereal shows ladies in red dresses, but this doesn't stop men in blue dresses eating the stuff as well. Again, its about being distinctive.

3. MISSING: how to actually grow penetration

There's loads of backward-looking data in HBG showing that big brands have more penetration. But there's bugger all practical advice on the trickier subject of how to actually grow penetration. Byron's focus is on academic analysis about why some brands have bigger market shares than others. Indeed, in commmenting on my last post he said "Experience (and case studies) can lead us astray".

Well here's a start on how to grow with some brand examples:

- Step-change in quality: Muller's creamier yoghurt vs. incumbent Ski

- New benefit: Pantene and shine, supported by Pro-Vitamin B5

- Innovative packaging: Muller's tub with separate youghurt and jam you mix

and of course

- Distinctive properties: O2's blue bubbles and Felix the cat

- Expanding distribution: Tesco

4. QUESTION MARK: loyalty thinking stuck in a time-warp

Modern technology and marketing means Sharp's laws on loyalty (all brands have same levels) can be broken or bent. Take TV series watching. Sharp shows that only a minority of people watch consecutive episodes of any TV series. But the data is from 2003. And since then there is a little thing called Tivo/Sky+ which means with a press of a button I can record a whole TV series if its watchable enough.

Then there is Nespresso. Their online membership data base and re-ordering system means that in premium coffee I have 100% loyalty to the brand.

And being a Times+ subscriber means I now get a Times newspaper 365 days a year. Again, 100% loyalty.

And so on.

5. MISSING: benefits of loyalty programs beyond loyalty

Another dangerous leap from data to conclusion is the one on loyalty schemes. Because loyalty levels are hard to budge, Sharp seems to suggest that all loyalty programmes are a waste of money.

Well, try telling that to Tesco, one Sharp's examples of successful brands. They pioneered loyalty schemes with Tesco Clubcard. And they think its so good they bought the company who created and managed it (Dunn Humby)! Two things missing on loyalty programs:

- Increasing value per shopper: Tesco use Clubcard to target relevant promotions and messages at different user segments

- Loyalty programs can drive penetration: O2 found that non-users were attracted to the brand by their O2 Rewards scheme, thinking "Oh, they seem like a nice company as they care for their customers". To quote Hamish Pringle in his book Brand Immortality: "O2 loyalty strategy turned out to be a highly effective recruitment one. Two-thirds of the very considerable growth came from new customers."

6. WRONG: Advertising is only about salience and memory structure

Sharp suggests that advertising should not seek to persuade and focus instead solely on reinforcing memory structure and keeping a brand top of mind. In HBG he says "Many brands are already successful. They do not have anything to say that the market does not already know". Nothing to say that's new? The flaw with this theory is that it is likely to lead to to wallpaper advertising with lots of brand properties (colours, symbols, slogans etc.) but no freshness.

I agree 110% that brands need to avoid chopping and changing and have posted on this several times. But they also need freshness. Walkers, one of Sharp's examples, has been able to do 72 adverts with ex-soccer star Gary Lineker over 16 years because a stream of new news has kept the campaign fresh. We've had countless new flavours and promotions such as Brit Trips and Do us a Flavour.

7. MISLEADING: The shape of frequency distribution is always the same

To support his case that frequency of usage is always the same he shows graphs of Coke usage in the US and the UK, and says "Look! Just the same." Well, the shapes are similar. But there is a big difference he fails to point out:

USA: 89% buy Coke, 14% buy once/twice a year = 16% of buyers

UK: 50% buy Coke, 40% buy once/twice a year = 40% of buyers

In other words, there is a huge difference in frequency between the two countries, reflected in a much higher consumption per capita in the US. So, one way for leading brands to grow is to change the rules of the category and increase frequency. As the brand leader, you will get most of this growth.

In conclusion, I love the way HBG brings some data to the party to help reinforce some key principles of brand growth, especially the need to create brand properties and build distinctiveness. But no-one, including Mr Sharp and his book of rules, has the definitive, all encompassing rules of how to grow brands. I wish it was that easy. But the reality is, thankfully, much more messy.

Comments

[Wiemer Snijders]

Not sure if you mean me (my name is Wiemer not Wesley) but 'no' it didn't show up. I'll send it via email.

[David]

Really sorry Wesley , it didn't show up?

David

[Wiemer Snijders]

David,
I posted a (rather lenghty) comment a few hours ago, but it doesn't show on your blog...

Did you receive it?

Regards,
Wiemer Snijders

[Pete]

David, think you are nit-picking on a lot of this to be fair.

Penetration vs loyalty in Bryon's book isn't to me about one or the other as opposed to one is better than the other to drive growth and the return is therefore better and linked to the finding on heavy & light buuer curves...and as you point out is proven out over many many examples.

Nespresso - isn't this still about penetration, much the same as mobile phone companies need handsets to sell their network time. I would bet that most of Nespresso growth is being driven by additional users (penetration) rather than getting existing users (loyalists) to have one more cup - which is still a potential strategy for growth, just one will deliver better results than the other.

I was on the other side of working inside a large mobile network who was competing with O2 at the time of the growth you mention. From my experience new users were driven by more competitive offers (O2 had some of the leading offers of the time) and these were the main reason for their increasing user base. We had a wonderful in house loyalty programme to retain existing users, the highest network satisfaction scores in the industry, people that loved the brand and claimed to be loyal users - the result we had higher churn than ever before in the networks history and ended up returning to a strong recruitment strategy through increasing the competiveness of our core offer (i.e. penetration based strategy of recruiting new users but still being appealing to existing ones).

The same for Lynx I would harbour a bet that whilst they probably increased consumption, they probably also increased the user base during the campaign...

As with your example on the Times does this just make you a heavy user and the point is recruit more users...how many more times can you subscribe to the Times? but as competiting newspaper brand I probably have the chance to recruit you...even as a light reader...

just some thoughts

[David Taylor (brandgym)]

Hey Richard, Thanks for commenting. Great to see this post has provoked some debate :-)

I wasn't trying to be flippant, sorry if it came across that way. I think this whole thing is pretty serious stuff.

I applaud Byron bringing data to the table - I'm an engineer and ex-P&G-er, so this is in my blood. And I think the challenge to CRM programs is a fair one.
However, I still believe there are creative ways to bend some of the rules and be less narrow-minded.

I think you miss the bigger point on Nespresso... its not just the capsules, which as you say are being copied. Its a membership based system using online selling, exclusive boutiques and aids to drive re-purchase. The annual value per user of Nespresso would be way above that of other premium, in-home coffees. The frequency of buying may be similar, but value per occasion much higher.

Also, try telling Terry Leahy that Clubcard is a waste of Tesco's time and money. Do you think they would have paid £60million to buy the company who created this CRM system if it didn't work?
And there is the example I quoted of O2's loyalty scheme building recruitment.

And don't you think its a bit naive to think that Byron is not in this game for the money as well - although perhaps he would tell us differently? Most people flogging books and consulting aint doing it out of the good of their heart - they're selling ideas like other people sell soap.

I try to be pluralistic and think broadly, as you suggest, when it comes to ideas and avoid thinking there is one ultimate solution.

David

[Richard Thorogood]

David - I do not think you are doing yourself any favours adopting a rather flippant approach to criticisng Byron Sharp's work. Some of your arguements have merit, but at other times you need to think more broadly.

For example, you rightly note that Nespresso only accepts Nespresso capsules (though once patents expire, Nestle will lose 100%. which is why gillette launches a new razor, in additon to trade up), HOWEVER I am very sure that there are still many occasions when you drink coffee that you don't use the Nespresso machine. So in fact what you have is 100% loyalty at home, not in total universe.
Chasing increased loyalty is a very dangerous concept that will suck many $$$s of corporate investment. We may be loyal to football teams (for my sins West Ham will be with me to my grave), but that is not how it is for brands or services. How many different beers have I drunk since New Year? Or restaurants eaten at, or clothes from different retailers purchased.

Byron Sharp's work is a good counterpoint to the weight of "facts" from the multiple CRM companies! Who are in the business to make money - something not a prime focus of Byron and his team

[Chris M]

Ooooh - handbags at dawn?!?

I was impressed with your twin poists on this, David. Just drawing on a couple of examples from one of my past lives (Barclaycard) and my current Pepsico (UK) client also reiterates the strengths and weaknesses you've highlighted.

Brand memory structures are important (Tropicana packaging) but brands need to be careful if those structures are based on advertising campaigns.
- Walkers is the exception to the rule in that it has succeeded in taking Gary Lineker from the 'character' to the real person, and to communicate both functional (sunseed oil, comic relief) and emotional (irresistablity) messages.
- Barclaycard struggled for years to replace Rowan Atkinson's famous campaign, perhaps because it lacked sausage to support the sizzle.
- Tropicana has struggled to bring sizzle and genuine warmth to its undoubted product quality.

It's not all about penetration.
- Tropicana grew penetration in the UK from 15% to 30% in a few years, but learned that a good deal of this growth was unsustainable. Many new buyers only ever bought the brand on promotion, they had little or no real brand affinity and never paid full price.
- Walkers has understood that a mums/families are their key supermarket user group, buying A LOT of crisps. Their more recent BritTrips promotions and associated campaigns have all been focused on their (admittedly quite broad) key user group
- 10 years ago Barclaycard turned down over 50% of new applicants. Under pressure from the new American credit cards they took them on in the '0% Balance Transfer' game which has since become the norm. They succeeded in gaining lots of new customers, but many customers who brought in an unprofitable balance transfer, then took it away again as the promotion term expired. At the same time they drove aggressively into sub-prime markets. They're still a hugly successful brand, but I'd have my doubts about their 'share of wallet'...

[Byron Sharp]

David

I do not admire you saying I said things that I did not.
=> not looking for your admiration.. but which are the things you did not say?

If you are going to criticise someone you need to take care to get your facts right.
=> pretty confident on my facts, but open to be corrected... please do share your concerns
=> BTW, feel free to email me if you'd rather we carried on our handbag bashing in private ;-)

Your readers can watch videos of my presentations, and read the many academic articles that are available - and make up their own minds.
=> They're of course free to do that, and you've already added a link to your TedX talk...but most readers like the fact that I do the hard work and create a summary of what they need to know

David, If you'd like to discuss substantive marketing issues then send me an email with your questions.
=> The many issues I have, all substantive, are on the blog post. I'd love it if you would give them some proper consideration, with an open mind, and reply

Byron

[David Taylor]

Byron,
As mentioned in the comments on post number 1, my posts were based on the book AND your talk at the IPA. In this you were gloves-off in attacking some pretty important people in the world of marketing, accusing them of being charlatans practicing medieval blood-letting. You attacked Kevin Roberts saying he dreamt up Lovemarks when he was drunk on red wine, and so on.
When you throw so many stones, get ready for some to come back your way mate ;-)

Also, in your talk you did come across as thinking you have the ultimate truth. All the questions from the floor to open up a debate were rejected. I say is that I am in fact not clever enough to have this.

Some replies to your comments below.
David

[Byron Sharp]

Sigh... I appreciate you are trying to sell how clever you are David (which is fine) but the personal put-downs were unnecessary.
=> How would you classify your calling leading marketers like Kotler as "medieval blood-letting, ignorant con artists"? Pretty personal, no?

You put up a straw-man argument saying that I present absolute laws of growth; you portray me as saying "thou shalt do marketing only this way". But I didn't write this. On page 201 I write that decades of research leads to 7 priorities for marketing action. But then you agree with these, so where's your beef?
=> You said in in your talk though.
My book, "How Brands Grow" (Oxford Uni Press, 2010), presents 11 scientific laws. The result of decades of research by many hard-working researchers. Scientific laws don't say "you must do marketing exactly like this", - but they tell us this is how a (known) part of the world behaves - the implications for strategy flow from that. That's really valuable knowledge, such laws have transformed other disciplines (like medicine).
=> That's why the first post was on what is good in the book - lots of it. BUT it aint the whole picture, and it has lots of holes

I hope you learnt at least something new from the book, or enjoyed the read.

Dr Byron Sharp, Ehrenberg-Bass Institute. 2011

PS As for the 'mistakes' that David has discovered:

- Does brand growth largely depend on growing mental and physical availability ? Yes (and there are many ways of doing this).

- Do rival brands sell to very similar profiles of customer base ? Surprisingly yes.
=> You miss the point. They have similar profiles, your mistake is saying that portraying a tight target is wrong (e.g Yorkie)

- Does penetration growth depend on increasing mental & physical availability for all customers (especially light/ non customers) ? Yes.. reach is essential.
=> Agreed with this

- Do the patterns of loyalty shown in the book apply in 2011 ? Yes. Don't take my word, ask Nielsen, Kantar, or BARB for data and they will show you.
=> Would love to see it. If you had this, why show data almost a decade old?

- I didn't write that all loyalty programs are rubbish. I explain how and why they are poor mechanisms for growing penetration (and limited for loyalty). See page 175 "why don't loyalty programs work better".
=> In your talk you pretty much said they were a waste of money

- Does advertising largely work by refreshing and sometimes building memory structures ? Yes.
Why does David say this must lead to boring advertising ?
=> Because the approach is mechanical, and give no credit at all to creativity. In your talk, again, you were pretty disparaging about creatives in ad agencies saying they were only interested in creative awards.
Why does David say this would lead to inconsistency ?!?!?
=> Sorry, didn't mean to suggest this

- Are there other ways advertising can work? Yes, see page 150.

- Do brand purchase rates, for different brands, all follow the same shape distribution (Negative Binomial Distribution) ? Yes. With profound implications. See page 41
=> Yes, but you fail to point out that the Coke US curve is higher than the UK, so the number of 1/2 times a year buyers is less... so as a leader you could work to increase consumption per capita

http://marketinglawsofgrowth.com/