Evidence-based research from Australia’s Ehrenberg-Bass Institute punctures received wisdom and should be required reading, according to a report in the latest Campaign Asia Pacific.
Based at the University of South Australia Business School, the 60 marketing scientists at the Ehrenberg-Bass Institute conduct research into how brands grow, with the aim of advancing marketing knowledge – and busting pseudo-science and marketing myths.
“Big brands are dying” reads the institute’s latest report. “Small brands are growing. Brand loyalty is declining. Young people distrust and reject big brands. Small brands command high loyalty. Digital media has levelled the playing field for small brands. Small brands don’t need advertising. Ecommerce makes it easy for small brands to grow.
“Wrong, wrong, wrong, wrong, wrong, wrong, wrong and wrong, according to the new report, authored by Byron Sharp, Magda Nenycz-Thiel, James Martin and Zac Anesbury.
“Businesses are allocating too much advertising expenditure to overly targeted new digital media with unproven abilities to reach consumers and build mental availability.”
It looks at peer-reviewed evidence to assess these beliefs, and concludes that they are seriously misguided.
“When someone shouts that big brands are dying they get a lot of attention, because big brands pay the salaries of many, and make up a large chunk of our pension funds,” said institute director Sharp.
“But the scary story that large brands are dying turns out to be wrong. These claims are dangerous because they are being used to justify hasty, ill-thought-out marketing strategy.”
The evidence shows (according to the report) that while some leading brands are losing share, some are gaining share, and most that have lost have done so in growing categories—so even though they are losing share of category revenue, their sales revenue is often still rising.
In addition, there’s no evidence to support a change in the success of new launches. “Introducing new launches and keeping them on shelf has always been difficult …. There is no evidence of an avalanche of successful new brands upending market shares,” the report states.
The youth factor – and the evidence
The discussion of whether young people favour newer brands while rejecting established ones is particularly worthwhile, the report says. “In essence, the research shows that any skew toward young consumers is not only slight but also transient—it seems that it barely rises above the level of ‘noise’ in the data.
“Research of 1950 sub-brands in 19 consumer-goods categories, found that new sub-brands had only a slight skew toward younger consumers, which disappeared if the sub-brands found ongoing success and growth.
“Meanwhile, in more than 40% of category/year analyses, the top five established brands had higher market share among younger consumers than they did among older consumers.”
The report cites Dorset Cereals, a small company with a green agenda” “In the first year of analysis it had a higher share among younger buyers, but then it skewed away from them for the next two years.
“But the largest skew it ever achieved was to have 1.2% share among 18-25 year olds, compared to 1.7% among the over-25s.”
“While there is certainly a trend for brands to signal virtues like being eco-friendly, the idea that young people increasingly distrust and reject big brands is not backed by the evidence,” Nenycz-Thiel said.
In fact, the report states, the user profiles of rival brands rarely vary by any significant degree. Therefore “brand growth requires recruiting all types of buyers”.
Byron Sharp on ‘the big mistakes’
The report concludes by arguing that large brands have made several “big strategic mistakes” over the last 10 to 20 years—all because marketers reacted in knee-jerk fashion to conventional wisdom and failed to take an evidence-based approach.
Those mistakes are:
- Increasing trade expenditure (mostly price discounting) at the expense of out-of-store advertising expenditure.
- Excessive SKUs proliferation cannibalising core offerings; overcomplicated and confusing ranges making it easier for consumers to buy rival brands.
- Allocating too much advertising expenditure to overly targeted new digital media with unproven abilities to reach consumers and build mental availability.
- Creating too much low-quality advertising content in an effort to cater for media fragmentation and capitalise on the (over-estimated) value of targeting. The effect has been to increase the percentage of non-working media spend.
- Failing to develop channel expertise and gain their share of physical availability in the fastest-growing distribution channels.
*Read more here
*And here: www.marketingscience.info
Share this Post
