Name: How Brands Grow
Rating: 4.4 (99 reviews)
Author: Byron Sharp

What’s in it for me? Find out the reality behind successful marketing practice.

How do marketing professionals decide how to market a particular brand?

Do they look at the empirical evidence to see what has been proven to work? Or do they simply do what they’ve been doing for decades?

As Byron Sharp argues in How Brands Grow, they mostly do the latter, i.e., they work on the basis of long-held, conventional beliefs rather than up-to-date empirical evidence. How Brands Grow aims to correct this by providing the reader with answers to the questions that marketers ask themselves every day, e.g., whether to put a product on sale, or whether to focus all efforts on retaining existing customers or getting new ones?

In these blinks, you’ll find out why people would rather “satisfice” than optimize their purchasing decisions (you’ll even learn what that means).

You’ll also learn why advertising isn’t necessary to hold onto loyal customers, but is crucial for acquiring new ones.

Finally, you’ll find out why, whenever you need a coffee, there’s probably a Starbucks close by.

Marketing practice should use evidence provided by marketing science, not rely on traditional beliefs.

For thousands of years, it was very common for medical doctors to practice bloodletting on their patients: just a few centuries ago, it was used as a cure for every health problem imaginable. Then, as science advanced and empirical evidence mounted, we came to learn that bloodletting is largely ineffective.

Similarly, marketing practice has long operated on the basis of beliefs that have no empirical foundation.

One of these established beliefs is that brands need to have an equal amount of loyal customers and customers who switch between brands (“switchers”).

Take, for example, the toothpaste brands Colgate and Crest. In 1989, a market analysis revealed that Colgate’s consumer base was made up of 21 percent loyal customers and 68 percent switchers, while Crest’s comprised 38 percent loyal customers and just 46 percent switchers.

For the marketing managers at Colgate, this data was worrisome enough to convince them that they should produce more persuasive advertising to keep their customers loyal.

However, like many maxims of marketing, this belief is wrong.

In marketing, there is a scientifically proven pattern known as the double jeopardy law which states that brands with a smaller market share have fewer customers and, what’s more, that those customers are less loyal than those of bigger brands.

This reveals that the buying behavior of customers is related to a brand’s size, and that it’s therefore only natural that Colgate, with its 19 percent market share, has fewer loyal customers and more switchers than Crest, which has a market share of 37 percent.

Thus, these figures shouldn’t concern Colgate’s marketing department, as they aren’t the consequence of a weak marketing strategy, but simply of the brand’s relative size.

As the above example illustrates, in order for it to be effective, marketing practice should ground itself in the findings of marketing science. That’s because marketing science can reveal the actual causes and effects of marketing.

To grow your customer base, focus efforts on getting new customers, not on stopping existing customers from leaving.

If you’ve ever considered how brands grow, you probably came to the correct conclusion that it all comes down to how many customers they have. But how exactly do brands increase their customer base?

In general, a customer base grows in two ways: acquiring new customers and holding on to existing ones.

Just under half of a company’s sales come from non-frequent users.

How often do you buy Coca-Cola? Every day? Once a week? Once a year?

In terms of consumption, there are two kinds of buyers: light and heavy. Light buyers purchase a given item only occasionally, while heavy buyers purchase it more frequently.

Attitudinal commitment to brands is weaker than marketing mythology makes it out to be.

One of the more popular marketing strategies that brands deploy is creating a relationship with customers to increase their loyalty. Behind this strategy is the belief that branding has a massive influence over customer preferences.

For example, in a famous study that focused on consumer preferences, subjects participated in a blind taste test to determine which drink they preferred, Coca-Cola or Pepsi.

Marketing should focus on making brands noticeable instead of trying to differentiate them.

Most of us have wandered the streets of an unfamiliar city with our stomachs rumbling and gone to eat at the nearest fast food restaurant. But have you ever considered why you choose a particular brand over others?

Marketers focus on capturing your attention by making their products and services different from all the others.

Advertising works thanks to its effect on memory and should target mainly light buyers.

The previous blinks suggest that advertising isn’t as effective as commonly thought. But is that reason enough to abandon it completely?

To answer that, let’s first look at how advertising works on consumers.

Marketers should be careful when using price promotions as a strategy.

We’ve all seen “ON SALE!” signs in store windows throughout our lives. But have you ever wondered why brands use these price promotions?

Because their effect on sales is directly visible, usually resulting in a short-term spike in sales.

Brands increase their sales when more people find them easier to buy.

Since profit increases are dependent on an increased customer base, good marketers focus their efforts on attracting new customers.

But getting consumers to notice a brand isn’t easy.

Final Summary

The key message in this book:

Marketers shouldn’t just blindly follow marketing myths because they’re conventional or because they might’ve worked out at some point in the past. Instead, they should consider the empirical evidence of marketing science and do what’s already been proven to work, as this will increase their chances of success.