SH&TMARKETERS(SHOULD) SAY

“We need more passionate engagement”“We need a Facebook Timeline”“No scratch that, one of those Instagramy Thingys”“No wait, a Pinterest Board”

It seems, somewhere along the way, marketers have forgotten about the fundamentals of marketing in favour of the next shiny object.

Oooh. Ahhh.

And can you blame them? It’s a crazy world out there. It’s become so easy to get distracted.

Here’s a little secret. If you’re looking for the next big thing to solve your marketing woes – it doesn’t exist.

Sorry.

Might as well close this presentation now, the rest focuses on something fairly unsexy – marketing fundamentals.

Marketing fundamentals don’t change.

It still is and always will be about attracting and retaining customers. This is the core function of every business.

3 Essential Marketing Laws Every Marketer Should Know

Smaller brands get hit twice – they have a smaller customer base compared to their larger competitors and these customers are slightly less loyal.

Double Jeopardy Law of Marketing

Seem obvious?

You could have two brands of equal size: one with lots of buyers who buy the brand occasionally while the other that has half the number of buyers who buy it twice as often. In theory, these two brands would have the same market share.

In theory

Never happens in reality.This is called the Double Jeopardy Law of Marketing.

Does the Double Jeopardy Law of Marketing apply to your brand? (It probably does if you’re not the largest brand in your category)

If it applies and your marketing objective is increasing loyalty in hopes of growing your brand you’re likely wasting your time.

You should probably focus on market penetration instead.

Implications

TIME-OUT!What’s the difference between market share and market penetration?

Market share refers to that portion of the total market that is controlled by a particular organization. Or in other words the number or value of units sold in a given period for a manufacturer as a percentage of the total market size.

Market Share

Market PenetrationMarket penetration records how many people bought the brand (at least once) in a particular time period. Or in other words - the number of customers you have as a percentage of the total customers in the market.

OK! GOT IT. Please continue with the next law…

Purchase duplication law is also important because it tells you to what degree your brand competes with other brands. All brands share a percentage of customers with other brands in a category.

Purchase Duplication Law

Seem obvious?

Buyers of Brand

Percentage of buyers who also bought brand

Breyers Breyers Dessert

Ben & Jerry’s

Haagen Dazs

Nestle Mars

Breyers - 15 8 8 9 4

Breyers Dessert

34 - 7 8 9 3

Ben & Jerry’s

38 14 - 27 13 8

Haagen Dazs

37 17 26 - 8 8

Nestle 39 17 12 7 - 9

Mars 41 12 18 17 22 -

Average 38 15 14 13 12 6.5

Source: Byron Sharp, How Brands Grow

Questions you should be asking: How much of your customers do you share with the largest brand?

Are you losing more consumers than expected to a competitor given their market size?

Are there any market partitions? In the example, its clear that Haagen Das and Ben & Jerry’s share a larger percentage of consumers than the industry average.

If you’re launching a new product, ask where the brand will steal share from?

Most marketers know Zuck but few know the man on the right and that’s a shame…

In 1955, Andrew Ehrenberg wrote “The Pattern of Consumer Purchases” which helped show how NBD can be applied to consumer purchases. NBD shows that the largest number of buyers buy with the lowest frequency.

His work set the groundwork for what explains a number of empirical generalisations including the Double Jeopardy Law of Marketing and Purchase Duplication Law.

You down with NBD? Negative Binomial Distribution

Why should you care about these marketing laws?

It will help you understand how your consumers REALLY buy - almost every brand, regardless of market or size follows an NBD pattern. 1

Know what you can control vs. what you can’t – will help you avoid fantasy marketing strategies i.e. all we have to do is increase loyalty 2

R-E-S-P-E-C-TIf we want marketing to have respect in the boardroom we need to stop jumping around when something new appears and apply the same rigor to marketing as other functions do. These laws can help.

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THANKS FOR READING. collidelabs.com | nish@collidelabs.com