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Set of laws and principles on how brands grow & compete. And how marketing works and people buy.
Unlock Brand Growth: Balance Penetration and Loyalty, Validated by Empirical Data and NBD-Dirichlet Purchase Patterns
To decode consumers’ mind, recognize the unique DNA of consumers and the collective consistency in purchase behavior
Brands thrive by enhancing mental availability and using category entry points, but beware of hyper-segmentation pitfalls
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Marketing strategy starts with a fundamental question: How to grow? Focus on improving loyalty of existing customers? Or focus on trying to win new customers?
Marketing science gives a clear answer: Brands grow by improving both penetration and loyalty, though typically more sales growth comes from gains in penetration than improved loyalty. Brand can enjoy higher loyalty, but only if they very substantially improve their penetration.
Penetration-led growth pattern is widely empirically validated and supported by law-like purchase patterns such as J-shaped purchase distribution, natural monopoly law, or law of buyer moderation.
NBD-Dirichlet is a powerful and comprehensive model on category and brand purchase patterns, and can be used for setting marketing objectives and performance benchmarking.
Extensive knowledge about what consumer do, think and feel is important to correctly interpret and derive right decisions from marketing analytics.
Like the DNA, every person is special with a unique demographic, psychographic, lifestyle profile, and needs and desires. Though it is harder – but not impossible – to explain and forecast behavior for an individual person, we find a lot of consistency how people purchase in aggregate and what peoples’ attitudes are towards brands.
Marketeers love to think that people care about brands they consider and purchase. In most cases, though, consumer do not. Most often, people take little effort when purchasing a brand, and they pay little attention to what brands communicate in advertising and social media.
Brands grow by winning new customers, driven by increasing mental and physical availability, resulting in behaviorally loyal buyers. Brands build mental market share in refreshing and building Category Entry Points related brand memories.
Category Entry Points are the cues that category buyers use to access their memories when faced with a buying situation and can include any internal cues (e.g., motives, emotions) and external cues (e.g., location, time of day) that affect any buying situation.
Hyper-segmenting market and hyper-targeting consumers can limit brand’s growth potential. Category partitions are mostly functional rather than positioning driven. Brands sell to very similar customer base.
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