Professor Koen Pauwels wrote a LinkedIn post commenting on 10 key points from the book How Brands Grow Part 2. (A review of the first How Brands Grow volume can be found here.)
1) Appeal to the full market: Focus on light versus heavy category buyers
« A key lesson from HBG is that you should appeal to the full market, which requires a focus on light category buyers. Ensure they see and understand your brand and its advertising. HBG holds that heavy category buyers will notice you anyway: they are more involved into the category and thus much more likely to attend to advertising and try a new brand… “Niche brands should be pitied because of their lack of potential, rather than celebrated. Small brands are in a better position than niche brands- they can become big” (p.25) »
2) Aim for reach in media
« The double jeopardy law also applies to media: the media with the highest penetration (eg online, then TV) also tends to be the most frequented (over e.g. magazines and cinema). Aim for the biggest reach medium first, and only add if you can get more unduplicated reach than duplicated reach… If your budget is small, get as much reach as your money will buy »
3) Focus on mental availability, not ROI of your marketing actions
« maximizing ROAS should NOT be your objective – instead reach as many (potential) category buyers for a ROAS you can live with. Your ads should be easy enough to understand and identify your brand for the light and new to category buyers. ‘Advertise where you sell: plan for reach where you have, or want, physical availability. Ads should not require work by new to category buyers to understand it or identify the brand’ »
4) Anyone Anytime Sales Approach instead of advertising bursts
« Look for mass ways of reaching consumers both physically and mentally. Category Entry Points (CEPs) are mostly (70%) similar across the world, allowing you to develop global campaigns around them. A good test is whether your brand is associated with more CEPs than its size implies. A good example of a brand linking itself to a new CEP is Snickers in India for 4pm hunger. ‘The strength of any positioning is a function of how well these advertising messages have cut through and become linked to the brand in buyer memory, particularly among the brands’ very light or non-buyers.’ »
5) Ensure physical availability
« Both offline and online, your brand should be easy to find. »
« The next 5 tips are especially relevant to jumpstart growth for your new brand »
6) Start with Point of Parity instead of Point of Difference
« A new brand has to build ‘essential memories’, which are not about the brand superiority or differentiation, but simply what it is (eg a soft drink) and what is looks like (so it can be found). Therefore, it is key to define the category you are in, and that you are a plausible option in it. People aren’t looking for the difference, they are looking to understand the brand and whether it is worthwhile to commit to long-term memory”. »
7) Change your message over time instead of keeping it to the same positioning
« Once you have established at least one Category Entry Point (CEP) with your brand (e.g. a great afternoon pick-up), you want to increase that number to grow your brand (e.g. great to wake up in the morning). Therefore, your message and thus the ‘positioning’ attribute should change over time… Younger brands should stay on message, but older brands should vary it with the times (we also investigate the impact of ad execution of the same message). ‘If your advertising is working, as the campaigns change, so should what the brand is known for’ »
8) Continue to advertise to build distinctive assets that can be widely used
« Partly explaining that younger brands ‘stay on message’ longer is that they have to build their distinctive assets. To make it usable, your distinctive asset has to be consistent, reach all category buyers (fame), and prominently link to your brand (uniqueness)… HGB recommends launching in 2 stages:
- Get enough initial sales to safeguard distribution. Minimize frequency to keep funds for
- Be continually on air to convince light and medium category buyers »
9) Don’t rely on word-of-mouth alone
« ‘Both positive and negative WOM can have a big impact, but both tend to fail to reach the right people to do this’ »
10) Focus on trial instead of loyalty
«HBG holds that potential is limited, as defection reasons are mostly NOT under company control. »
Professor Pauwels then discusses four related research topics.
· Consistent attribute positioning versus changing focus on Category Entry Points
[related to #7 above]
« Research Question 1: Which brand grow fastest: the one with a consistent positioning over time (e.g. on 1 Category Entry Point), or the one that changes focus to add Category Entry Points? »
· Advertising pulsing or always on? [related to #4 above]
«The advertising budget can be spent evenly over time or in ‘pulses’ of a certain frequency, length and predictability. The review by Vakratsas and Naik (2007) shows that early studies consistently find that an even advertising spend is better… However, copy wearout and repetition wearout imply that pulsing is best. Interestingly, following HBG’s advice implies both wearouts are unlikely to apply:
- Advertising mostly moves light users, which are unlikely to pay attention to the ad in the first place, let alone get annoyed by it;
- The budget should maximize reach, so a frequency of 1 means no repetition wearout.»
«RQ2: Under which conditions is even marketing spending better than pulse-with-maintenance and how large should maintenance be as a % of the total budget?»
· Only reach or also frequency of ad exposure? [related to #2 above]
« On how to spend your advertising budget, HBG is clear ‘as much frequency as your budget can buy’… This is consistent with my research that the highest purchase happens for consumers exposed 15-20 times to online ads. So there are diminishing returns to frequency, but no supersaturation (consumers lowering their purchases because of excessive ad exposure). »
« Hence the $ 64M question: is it best for your company to spend the next dollar on reaching the same customer again or to reach a new customer? … According to HBG, there are no diminishing returns to reach: as long as you are touching a category consumer, the behavioral impact is similar. That’s not my experience in consulting companies: they get less behavioral impact per exposure once they go beyond their identified target segment. So let’s test this. My hunch it depends on category involvement. For a new chewing gum, 1 exposure suffices and reach is king, For a device, such as the Echo, consumers have to be touched several times before purchase, and some consumers are more likely to respond than others. »
« RQ3: How strong are diminishing returns in advertising reach and frequency, and which category and brand characteristics does it depend on? »
· Distinctive assets vs attitudes and differentiation [related to #6 above]
«While HBG rejects building consumer attitudes in general, and brand differentiation in particular, as an achievable and desirable goal, the book promotes building distinctive assets (such as characters, colors and archetypes) that link your brand to category entry points and thus give it mental availability. »
« In our forthcoming ‘Why Brands Grow’ paper, Oliver Koll and I find that consumers do report meaningful differences between brands, and that this differentiation is the main driver (among the studied variables) of penetration and of satisfaction, and a key driver of market share. Interestingly, the differentiation impact is larger for emerging markets (we studied Saudi-Arabia, Thailand and Indonesia versus UK and Germany) and for smaller brands »
« RQ4: Is it better to build differentiation or to build distinctive assets for your brand and how does it depend on country, category and brand characteristics? »
Koen Pauwels is the author of It’s Not the Size of the Data — It’s How You Use It: Smarter Marketing with Analytics and Dashboards (2014).
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