Oct 14, 2024 | Analytics, Marketing
Against my better judgment, I recently engaged in a conversation about the ‘Law of Purchase Duplication’ with a young marketer. He seemed quite convinced that he was delivering a groundbreaking insight to a marketing dinosaur.
In essence, the law argues that the larger a brand’s market penetration, the more likely a consumer is to purchase alternative brands within the same category. Smaller brands, on the other hand, struggle with loyalty, relying primarily on occasional or incidental purchases when they fall within a larger brand’s ecosystem.
This concept, while not new, remains fundamental to understanding brand dynamics in the marketplace.
Back in the day, we referred to it as the purchaser’s ‘acceptable pool of brands.’
This young hot shot expanded on the advantages of being the dominant brand, and how it becomes self-sustaining through positioning, weight and quality of advertising, brand salience, product accessibility, and consumer perception. While this may all be true, the notion of it being ‘self-fulfilling’ is a step too far.
The reality is that maintaining market dominance requires constant effort and adaptation to changing consumer preferences and market conditions.
During our discussion, the topic of brand loyalty surfaced, leading to several useful questions about what brand loyalty truly means in today’s fast moving consumer markets:
- Does it mean that no other brand will ever be purchased under any circumstances?
- Does it only matter when a preferred brand is unavailable?
- Is there a sliding scale of brand loyalty that correlates to price differences?
- How does this law of duplication apply to sub-categories within the same brand?
- What are the varying impacts of demographics and psychographics of consumers?
- Could brand loyalty simply be a combination of awareness and preference, disconnected from actual purchasing behaviour in-store?
These questions highlight the complexity of consumer brand loyalty and the need for an understanding of the nuanced drivers of consumer behaviour in every market.
Over the years, I’ve been intimately involved with several instances where this so-called ‘Duplication of Purchase Law’ played out in real-world brand battles:
Meadow Lea Vs all comers. The rapid ascent of Meadow Lea margarine in the late 70s and early 80s was astonishing. The brand evolved from one of many competitors to a market leader, at its peak dominating with three times the market share of its nearest rival. Although it was driven by exceptional advertising, there were several alternative brands consumers could have turned to. However, consistent availability, competitive pricing, and in-store sampling helped cement its position. These instore marketing activities supported the brand advertising that built long term brand salience and loyalty.
Yoplait Vs Ski. The yogurt wars between Yoplait and Ski during the 80s and 90s are another example. Yoplait initiated huge market growth by making yogurt mainstream when it launched. This left Ski, the previous leader, floundering and scrambling to recover. Both brands became largely interchangeable despite product differentiation. Yoplait strawberry was an acceptable alternative to Ski strawberry, and vice versa. However, this dynamic didn’t extend evenly across other flavour categories or packaging formats. If Ski strawberry was unavailable, Yoplait strawberry was more likely to be purchased than an alternative ski flavour. These inconsistencies across the product categories and pack sizes, highlighted how nuanced and context-specific the Duplication of Purchase Law can be.
Having reliable data from the likes of Ehrenberg-Bass provides the statistical credibility necessary to sell what to date have been qualitatively understood wisdom, to the boardroom. However, it’s crucial to remember that this qualitative wisdom, built over time, should never be discarded or obscured by academic multi-syllable descriptions or management jargon. One-dimensional data cannot replace the wisdom accumulated by thoughtful marketers over time.
Oct 11, 2024 | Analytics, Operations
Real-Time Feedback is the objective of any effective performance management system. We instinctively knew how to generate and leverage feedback as kids. Remember that cricket scoresheet a parent kept during a Saturday morning game? It could just as easily have been netball, hockey, soccer, or footie.
Every ball bowled was accounted for in real-time: a run, a wicket, who bowled the ball, and who was the batsman. This real-time recording enabled tactical choices at every ball. This is a ‘box score.’
By contrast, typical accounting systems look at what’s happened up to a point in time, often monthly, in arrears.
Translating real-time game results to a commercial context makes perfect sense. It enables decisions on a short-term basis that maximises outcomes.
Adapting to this change isn’t easy, as our accounting training, established processes, and regulatory systems are geared to historical data, not real-time. They use ‘standards’ and reporting templates that obscure real-time detail.
Successful businesses find ways to translate the outcomes of their actions into visible measures of real-time performance from which they can learn, iterate, and improve.
Following are six tactics you might consider implementing to improve your performance.
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- Break down your processes into their component parts, as far down as you can.
- Identify the bottlenecks in those processes. These usually become obvious the further you break the processes down.
- Choose the two or three key metrics that track performance of that part of the process, make them transparent via dashboards, and give the operators the power to adjust and improve.
- Leverage technology to both do the measuring, and providing the real time feedback. This can be a simple as a digital display of unit movement down a production line, or sales orders received.
- Start small, and build as the ‘performance bug’ bites those involved. Achieving this sense that there is a ‘performance bug’ around is a function of the leadership and resulting culture that is built.
- Integrate the dashboards in a process I call ‘Nesting,’ so that each board builds on the ones that contribute to it. For example, a dashboard that reflects the units going past a specific point in a manufacturing process, build to one that reflects the output of that specific production line, which builds to a factory wide dashboard.
This is all easy to say, but very hard to do. However, if it was easy, everyone would be doing it
Header credit: Wikipedia. The scoresheet in the header is the scoresheet of Australia’s first innings in the Ashes test against England at the Gabba in 1994. Michael slater scored 176, mark Waugh 140, and Glenn McGrath did not disturb the scorers, shooting another duck. A perfect example of a ‘Box Score’.
Oct 8, 2024 | Analytics, Innovation, Strategy
Have you ever been in a situation where you just ‘know’ a course of action is right?
No data, no detailed scenario planning, you just know.
I have.
Where does that confidence come from, and is it justified?
Have you distinguished between genuine intuition, based on experience and knowledge, and the overconfidence that can arise from a lack of awareness of one’s limitations?”
In my experience which includes choices that have been both very good, and very poor, there are two qualitative drivers of those good choices.
Significant domain experience.
This experience does not come from being around for a while, it comes from taking action many times, and learning from the outcomes, resetting, and trying again.
For example: a seasoned chess grandmaster can often intuitively anticipate the best move without consciously calculating every possible outcome, drawing on years of experience and pattern recognition.”
Learning from analogy.
When you see a course of action succeed in other domains that have some similarity to your own, you can infer that the success may be repeatable in yours.
For example: The introduction of disc brakes in cars came from their development for use in stopping aeroplanes when landing.
In a world increasingly dominated by data, it’s crucial to remember that while numbers provide valuable insights, they should not be blindly trusted. True wisdom often lies in the delicate balance between data-driven analysis and the intuition honed through experience and learning from mistakes.
Chess is a game where a grand master has a store of intuition gathered and sorted by years of practice that is leveraged instinctively when playing.
Oct 2, 2024 | Communication, Marketing
Marketing is about stories, and most stories start with an event, situation, or circumstances recorded in narrative form.
Being a marketer, I write frequently. Some of my musings are published on the StrategyAudit blog and often elsewhere. I also keep extensive files on ideas, snippets, URL’s of interest, anecdotes, and potentially useful metaphors. Usually it feeds my own interests, ‘ideas bank’ for this blog, and serves my clients.
Writing provides clarity, it helps give ideas substance, and form, and reveals holes. It also makes them stick in memory. Writing well will become even more critical as we spend more time prompting machines to give us answers. Machines are literal, failing to interpret the nuances of language we usually do not see.
When a piece is evolving towards publication, there are 4 basic rules of editing gleaned from experts I set out to follow.
- As short as possible, no shorter
Short, simple words make writing clearer and provide a better base for the reader’s imagination. I keep in mind Ernest Hemingway’s challenge to write a complete story in 6 words. His famous contribution was: “For sale: Baby shoes. Never worn.”
Remove words that do not add meaning. Words such as just, very, and so.
- Strong and simple words only
Using a weak verb with an adverb is both weak and adds unnecessary words. Find strong verbs to replace weak verbs and adverbs.
E.g. “Susan sprinted to the gate” instead of “Susan ran quickly to the gate.”
Similarly, use strong nouns.
E.g. Use “mansion” instead of “grand house,” or “athlete” instead of “outstanding runner.”
Ditch the thesaurus, those long, flowery words impress only you, not the reader.
- Replace passive voice with active
Passive voice is an engagement killer. It removes room for the reader’s imagination.
E.g. “The bully stole the boy’s bike” instead of “The boy’s bike was stolen by the bully.”
E.g. “The storm destroyed the garden” instead of “The garden was destroyed by the storm.”
Along with adding unnecessary flowery words, using passive voice is my most common error.
- Edit and edit again
No first draft is ever perfect. Ensure the basic stuff like spelling, grammar, capitalization, and comma placement are correct. Make sure each sentence is as short as possible and contains only one thought. Then read the copy aloud, or have a tool read it to you. I use the read function in Word to avoid the trap of reading aloud what should be there rather than what is there. It is amazing how many simple mistakes are revealed by having copy read back aloud.
Application of these four rules does improve the understanding and readability of your copy. This post has been edited, and re-edited numerous times with these 4 rules applied.
How did I do?
Sep 30, 2024 | Branding, Marketing
Pareto’s 80:20 principle applies universally, though its proportions vary across markets and circumstances. While media choices have proliferated over the past 25 years, the core drivers of consumer behaviour remain largely unchanged. However, brand loyalty has eroded as information became ubiquitous, and price promotions ‘trained’ buyers to prioritize ‘value,’ often misinterpreted as the lowest price available.
In Fast-Moving Consumer Goods (FMCG) markets, the Pareto curve is typically flatter than in Business-to-Business (B2B) sectors. The rise of house brands has further flattened this curve, resulting in a significant percentage, often a majority of sales, occurring at discounted prices.
The work of the Ehrenberg-Bass Institute has refined Pareto’s rule into the ’20:30:50′ rule. This suggests that the heaviest 20% of buyers contribute around 50% of total purchases, the middle 30% account for 30%, and the lightest 50% of buyers account for 20% of purchases.
Market variations significantly impact purchase behaviour, influencing marketing strategies. For example, household laundry detergent is a category with near-universal penetration but relatively low purchase frequency, driven by household size and composition. In contrast, the disposable diaper market has low penetration but high purchase frequency among households with babies.
The choice of media, weight of media, and the nature of the message delivered will vary significantly between these two different categories. This is before considering the different behaviours and preferences of individual buyers in these markets.
These complex and interrelated success factors are often overlooked by amateur marketers, but are always considered by experienced professionals.
