Sep 29, 2025 | Marketing
Customers buy to relieve some sort of pain, or fill a need. Sometimes that pain is real, the need genuine, and sometimes it just takes the form of a psychological itch that needs scratching.
Whatever the form and source or type of the pain, nobody buys without it, so your product is medicine for that pain.
Why don’t you tell them that more often?
Be clear: ‘This product is for people who……..’
Many years ago I was marketing manager of the Dairy foods division of the then Australian owned Dairy farmers Ltd. We marketed Ski yogurt, and had been killed by Yoplait who launched with great advertising, packaging innovation, and a pretty good product that had massively increased yoghurt consumption, with them taking all the benefit.
The manufacturing process installed to produce Yoplait ensured that there was no discrete fruit pieces in the end product. It may have been strawberry yogurt, but the product was completely homogeneous. The process Dairy Farmers had installed was different, and we could produce a product with discrete and obvious fruit pieces.
The core of platform of our marketing and innovation processes become ‘Ski: for those who like to see pieces of fruit n their yoghurt. We never used this line, but it was implicit in everything we did.
5 years later, Ski was market leader in a market many times bigger than when Yoplait had launched. While it may not have been painful to buy a fruited yoghurt with no discrete pieces of fruit, when the offer was made, the preference of many became immediately clear.
Sadly, the innovative momentum that drove both Ski and Yoplait was dissipated by a presumed plateau in the market size in the mid nineties, and resultant transfer of resources and energy to kow-towing to retailers.
Sep 1, 2025 | Analytics, Marketing
Goodhart’s law tells us that when a measure becomes a KPI, it ceases to be a good measure. The full text of his observation appeared in the footnotes of his presentation at a conference in 1970 held by the Reserve Bank of Australia: “Whenever a government seeks to rely on previously observed statistical regularity for control purposes that regularity will collapse’
That observation is as relevant to every enterprise as it is to government.
Every dashboard produced by CRM systems I have seen makes the mistake of trashing Dr. Goodhardt’s insight.
Customers are subjected to all sorts of profiling as marketers do another iteration of their ‘ideal customers’ and ‘customer Journey’ maps using a different set of assumptions.
One set rarely used, at least rarely in my experience is the ‘inert’ customer.
Most analyses of customers I have seen use some variation of the pareto distribution. A few customers are deemed heavy users, with a decreasing level of usage down to light and occasional. The only alternative to one of these descriptions is ‘Lost’.
Any examination of ‘lost’ customers will reveal that a significant percentage of them are those that simply went ‘inert’ following a failure of customer service to meet their expectations.
For some, the expectations are unrealistic, for others, it is more like a metaphorical shrug of the shoulders. These customers are not lost, they may be just inert, and possibly able to be reactivated by a demonstration of the customer service they expected being available.
Figuring out who in your lost customers list is really just inert may just require asking. This is always far cheaper, and in my experience, more effective than hunting for new customers.
A former client had an extensive list of what they deemed ‘lost’ opportunities. They sold (and still do) a complex product that did a specific job much better than the alternative standard product. When they interrogated that ‘Lost’ data base they discovered that a sizeable proportion had not bought elsewhere. They had gone ‘inert.’ Some were just waiting for a ‘nudge’ which was often just the information and reassurance that the product they initially enquired about was the most appropriate for the job that they had put on the back burner.
Header: Charles Goodhardt speaking to a large audience.
Aug 22, 2025 | Analytics, Branding, Marketing, Uncategorized
The Pareto principle, the 80/20 rule with variation in the numbers, works in every situation I have ever seen.
Almost.
It is the exception that makes the rule.
Marketers use it extensively to allocate marketing budgets across competing arenas. Define your ideal customer, understand purchase cycles and habits, recognise different behaviours in different channels and circumstances, and allocate accordingly.
It always seemed to both make sense and work well.
Until it did not.
Research done by Andrew Ehrenberg, Gerald Goodhardt, and Chris Chatfield in 1984 produced a statistical model called the ‘Dirichlet Model‘. It is a statistical reflection of how consumers actually behave across FMCG categories. The model showed that rather than repetitive brand loyalty, most consumers buy from a small repertoire of acceptable options.
The model reveals that many people purchase a brand only now and then, yet collectively they represent a huge share of total sales. This counters the popular pareto model that assumes 80% of profit comes from the top 20% of buyers.
Hovering around supermarket shelves in the eighties, observing consumer behaviour, and interacting where possible, the truth of this counter intuitive behaviour was clear. However, the pull of Pareto was powerful, so we often had a foot in both camps.
It is the mid 1980s, and yogurt is the new category growth star. Ski and Yoplait dominate store shelves. Shoppers have their personal preferences, some lean strongly toward Ski, others swear by Yoplait, and many have their flavour favourite across both. (they prefer Ski Strawberry to Yoplait, but the Yoplait apricot to Ski) A few smaller regional players also vie for attention, but if there’s a promotion, most consumers happily mix it up.
As the marketing manager that included Ski in the brand portfolio of responsibility during these heady growth days, it was easy to assume the Pareto principle held: 80% of profits come from 20% of devoted buyers. Focus on those heavy consumers, turn the moderate fans into loyalists, and watch the profits roll in, right?
The Dirichlet model exposed the paradox, although at the time I had not heard of it. However, the numbers coming from store sales data and simple observation of consumer behaviour in stores confirmed the consumers disassociation from the theory of Wilfredo Pareto.
So, how does the Dirichlet model suggest fast moving consumer marketers build their brands against competitive brands and the power of retailer ‘pirate’ brands?
Acknowledge Mixed Brand Buying.
Even if you’re proud of your loyal fans, don’t be blinded by them. Ski-lovers might switch to Yoplait for a flavour your brand doesn’t offer, or vice versa. The data shows people happily shop around, even if they have a ‘Favorite.’ Acknowlede that behaviour while creatively giving consumers reasons to buy yours in preference to others.
Look for Wider Reach.
Heavy users are part of the story, but broad availability is often the bigger deal. If your products aren’t visible, buyers won’t remember you at that decisive moment.
Keep Things Distinctive.
You’re not just building brand awareness, you’re building mental availability. That’s how you stay top-of-mind when the shopper sees a new promotion or wants a unique flavour. Whether through catchy ads, recognizable packaging, or fun limited-edition variants, it’s all about creating mental triggers.
Rotate and Refresh.
Both leading yoghurt brands tested new flavours and replaced underperformers regularly. This strategy not only sparked interest among loyal buyers but also tempted the light or occasional buyer who came for the novelty, and might just pick you again next time. It also pleased retailers to have a supplier that explicitly had a ‘one in one out’ brand policy.
Ultimately, the Dirichlet model teaches us that brand loyalty isn’t an all-or-nothing affair. Even with strong preferences, people jump around.
Consider that next time you’re rethinking a marketing campaign. It might feel odd to invest in those who buy you only once in a while, but that large group can deliver a collective boost that keeps you on top.
Header by AI
Pareto killed by Dirichlet in blogs
The pareto principle holds in every domain I have ever seen, except one.
To build a brand, you must keep existing customers, increase their preference for your brand, and attract new customers.
A pareto allocation of marketing funds would imply that most of your budget should be aimed at the 20% of customers that produce 80% of your profit.
That allocation would work against you.
Truly loyal customers are less likely to go elsewhere than light or occasional buyers, and such an allocation does nothing to attract new users.
In this case, Pareto was wrong.
Aug 1, 2025 | Branding, Marketing
‘Loyalty’ means that a consumer has internalised the value promised.
The purchase becomes automatic.
This is different to habit, which is easily disrupted. Loyalty comes from the ‘gut’ and confirms there is no alternative.
The only choice for a loyal consumer is to go without if their store is out of stock, or go down the road to another retailer.
Marketers often (usually) mistake preference and habit for loyalty. Market research usually makes the same mistake, acting as confirmation to marketers.
I drink a fair bit of coffee, working from home, and doing the ‘thinking’ stuff in the morning. To feed the habit, I buy a particular brand of coffee beans, almost always when it is on special. I also tend to ‘pantry-stock’.
The ‘normal’ shelf price is close to $40 a kilo. On special, it is usually $20 -$25.
Is my buying habit loyalty, or is it better described as regular or preferred?
If I was truly a loyal consumer, I would buy my preferred brand at ‘full’ price, but I never do.
On occasions when I have run out, I buy an alternative brand closer to the now benchmark price of $20. it is my opportunity to check out other brands, usually one I am in some way familiar with, that happens to be on special that week.
No loyalty shown there, only preference when the circumstances are right for me. Subject to the performance test of now and again, buying a competitor, I stick with my preferred brand, for now.
