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I remember the days as a corporate researcher, working on brands like Hunts tomatoes and PAM cooking spray, where we would sit around a conference table during brand planning season every year, trying to find out where our brand growth would come from. Some would argue for penetration, others for buy-rate or loyalty but often we’d settle on going after brand “switchers” which sounded good to us. While our strategies made logical sense to us, they were often grounded in unproven marketing rules-of-thumb rather than science and facts about how brand growth really occurs.

Byron Sharp, professor of marketing science from the University of South Australia, has changed this need for guesswork-strategy with his seminal work “How Brands Grow, What Marketers Don’t Know.” This book has been widely popular among marketers, but from my experience most of the people I talk to haven’t read it or even heard of it, especially those outside the CPG industry. Because of this, I thought it would be beneficial to lay out some of the key principles of the book over my next few blog posts. I promise you it will change the way you think about brand growth and marketing strategy.

Sharp lays out a series of laws in his book that explain certain dynamics about brand growth and consumer buying habits. He calls these “laws” intentionally, because through his and his colleagues’ research, they’ve proven that these principles hold true in all types of businesses (both products and services, B to B and B to C), and across all countries, with few exceptions.

One of the most important laws he describes is the Law of Double Jeopardy. This law states that brands with less market share have so because they have far fewer buyers (first jeopardy), and these buyers are slightly less brand loyal (second jeopardy). In other words, as market share declines, both penetration and brand loyalty drop together. Furthermore, penetration drops at a much faster rate relative to loyalty. The chart below shows this dynamic. Notice that as market share declines, penetration drops at a much faster rate than purchase frequency.

Here is the same data shown in a different way, where each bubble is a brand, and the bubble size represents the size of the brand’s market share. Notice how little difference there is in the y-axis (purchase frequency/loyalty) versus the change in penetration in the x-axis. Sharp and his colleagues have shown that this relationship is consistent in all categories of products and services – grocery products, industrial brands, services, stores, newspapers, radio stations, etc.

Why is this important? This law holds true as brands both grow and decline. Thus, as a brand grows, it moves along this double jeopardy continuum, which leads to a several critical implications for how brands grow.

Probably the biggest implication is that brand growth comes primarily from penetration. The double jeopardy pattern, with modest changes in loyalty across brands, shows that you can’t have significant growth by growing loyalty alone. Thus, brand growth strategies need to emphasize penetration over buy rate or loyalty.

Double Jeopardy also implies that improving loyalty is a weak growth driver. In fact, the double jeopardy law shows that it is very difficult to grow loyalty without improving market share because they change together. Thus, loyalty gains are a result of improving market share, not the other way around! This is quite revolutionary, as it flies in the face of everything we’ve learned as marketing professionals – that it is always cheaper and easier to sell one more unit to an existing customer than to find a new one. It implies that spending money on loyalty building strategies will typically be a poor investment of marketing dollars. We will go into this in more depth in a later blog post.

The Double Jeopardy law is driven not so much by dramatic differences in product performance, positioning, or customer bases, which is what most marketers believe, but rather two key factors that Sharp calls mental and physical availability:

• Mental availability: the propensity for the brand to be thought of in buying situations
• Physical availability: how easy the brand is to buy and find

Large brands are higher in both mental and physical availability. They have stronger awareness and are sold in far more places than smaller brands. Additionally, they have wider assortments and more facings on shelf (for consumer products). These implications impact both penetration and loyalty. As consumers go to buy, they are more likely to see brands that have greater distribution, and the average consumer is more likely to consider brands they’ve heard of. Thus the larger brands will not only attract more buyers, but they will increase their chances of making it into the consideration set of the buyers which ultimately increases loyalty because they have greater physical availability. Large brands also have an advantage with light buyers because light buyers are less likely to have heard of the smaller brands and are less likely to see them when shopping. The net effect of these dynamics is the double jeopardy law, where both penetration and loyalty move in the same direction.

Sharp maintains that the implications of this law are that marketers should be spending less time and money trying to differentiate the brand and on loyalty programs, and more time trying to build mental and physical availability which are the foundation for growth. I agree but I think he leaves out how necessary good branding is for building mental availability, and that a poor brand strategy makes it an uphill battle. Additionally, he points out that physical availability doesn’t just mean distribution, it also equates to making your products as easy as possible to buy. This means addressing key barriers that your potential customers could have, having varieties that appeal to a broad audience or your target, making the price reasonable even if it means downsizing, and making the buying process as seamless as possible.

I hope this blog helps clarify one of Sharp’s building blocks for brand growth. In the next two blogs, I will expand on these principles and discuss in more depth the fallacy of loyalty building strategies and the importance of light buyers to growing penetration. If you have any comments or questions, feel free to chime in below.

Those pesky light brand buyers….who needs them? They hardly care about your brand, are disengaged with the category, and make carefree purchases with little loyalty. Plus, it’s much easier and cheaper to sell one more unit to your heavy buyers, right?

If you feel this way about light buyers, which is completely natural and seemingly logical, you may be overlooking the primary source of brand growth. In this post, drawing on findings from the “How Brands Grow” marketing science book series (Sharp and Romaniuk, Oxford Press, 2010 & 2016), I’ll explain why targeting heavy brand buyers for growth is a fruitless effort, and that it’s actually light and non-brand buyers that are the key to growth.

Everyone has heard of the 80/20 Pareto curve but when it comes to sales, Sharp’s research shows that in a one year analysis period, your top 20% of customers typically account for only 50% of sales, not 80%. Thus, your heavy buyers aren’t as important as you might think. Additionally, your bottom 80% of customers are bigger than you think, accounting for half your volume. Most marketers are surprised to find out how light their buyers are. As an example, 50% of Coke buyers in the UK buy only 1 or 2 cans or bottles of Coke per year while the majority of buyers purchase 3 or less units per year (Source: TNS Impulse Panel). The brand’s average is 12 per year, but that is magnified by an exceedingly small percentage of ultra-heavy drinkers.

Trying to generate growth from the heavy buyers is mathematically difficult considering their small numbers. If you define your heavy buyers as 20% of your customers, who are responsible for 50% of sales, and you’re able to increase their purchases of your brand by 10%, this equates to only 5% overall growth. Not bad for canned goods, but falls short for most of our ambitions.

It sounds like it would be easy to increase purchasing of your heavy brand buyers, but the research shows this is not the case. First of all, your heavy brand buyers are likely to be heavy category buyers, which are already heavily committed to the category and unlikely to buy more of it. Secondly, they are already loyal to your brand so there is little room for them to allocate more of their purchases to it.

How about targeting heavy category buyers that are loyal to your competing brands? This sounds reasonable, but the research shows that this is not a reliable growth strategy. Not only is this group small, like your heavy brand buyers, but they also are already loyal to other brands so to get them to switch requires a significant change in their behavior.

Sharp and Romaniuk have studied thousands of brands across different product and service categories and regions of the world to help understand how brands grow. Their research shows that when a brand grows, there is a big increase one-time purchasers and only a small increase in the number of customers that buy it multiple times. Thus, the growth of the brand is heavily dependent on gaining many additional light buyers.

Below is a perfect example, which shows a toothpaste brand in China that grew 1.5 percentage points from year to year. Notice that the biggest change happened among those buying the brand only once. These one-time buyers accounted for 65% of the total growth for this brand.

Sharp and Romaniuk show that this effect is repeatable and predictable across businesses of all kinds. In a nutshell, the reason why this happens is that light buyers are so numerous and have so much more room to grow their purchasing, so they become a primary source of growth.

This effect is also key in explaining the “double jeopardy” law, which I summarized in an earlier post. This law states that brands with less market share are smaller because they have far fewer buyers and these buyers are slightly less loyal. The dramatic difference in penetration between the large and small brands is driven primarily by light buyers.

To achieve growth, marketers should seek to expand their customer base by opening their marketing strategies to include light and non-buyers of their brands. In addition, marketers should use simpler messages with broad-reach, low-cost media that emphasizes reach over frequency and focuses on penetration over buy-rate. Keep in mind that this does not mean you have to ignore your heavy buyers, but be aware that marketing targeted toward light buyers will inevitably also reach heavy buyers due to their strong engagement with your brand and the category.

Market researchers need to ensure that their studies are not solely focused on heavy buyers, which is a common practice. Marketers are often reluctant to include light buyers in their studies so be ready for some push-back. In addition, include a light/medium vs. heavy buyers investigation in your analysis. Look for differences that could help you learn more about the light buyers – who they are, what their needs are, and what drives their purchase decisions.