by Temel Aksoy
Also, marketers should keep in mind that these analyses are very much dependent on the brands and attributes selected as research subjects. Results may change from one research to another, such as when removing from or adding to the analysis some attributes or brands. Each such change causes a change in the total correspondence among brands and attributes, creating “wavy results” in the metrics where none are expected. These analyses do not accurately represent reality.
Every marketer that evaluates their brand in light of the duplication of purchase law will be working with accurate metrics. For example, if their brand shares more with one of the rival brands than predicted by the law, this means measures must be taken. A competitor’s price promotion, new package design or product improvement might have caused this result.
36.
Limits of Marketing Laws
Many marketers classify the markets in an economy as product–service, durable–nondurable or B2C–B2B. But to examine people’s buying behaviors, it’s more useful to classify them into repertoire markets and subscription markets.
Supermarkets, clothing, travel and entertainment are repertoire markets. Every time they go shopping, shoppers in repertoire markets may purchase a different brand from the repertoire they’ve created for themselves. The brands that shoppers choose each time will vary, but their brand repertoire will remain the same for long periods of time.
On the other hand, markets like cell phone operators, banks and credit cards, electricity and gas utilities are subscription markets. Customers in these markets don’t switch brands from one billing cycle to another. When they do change, they generally drop the previous brand.
The marketing laws developed by the Ehrenberg-Bass Institute are laws based on repeat purchases. Ehrenberg and the researchers who followed in his footsteps developed the marketing laws by observing which brands people bought in a product category every time they buy and repeat buy.
A person may go shopping and choose one yogurt brand, but the next time they visit the store they may select the same or a different brand. However, when looking at subscription market categories like cell phone operators or banking, this same situation only applies over much longer periods of time. Consumers don’t choose a new bank or a new cell phone operator every month.
For these reasons, repeat purchases in subscription markets are a phenomenon that only takes place after a long period of time. Because of this characteristic of subscription markets, it’s impossible to observe in the short term the “distribution” of buying behavior exhibited by users in these markets or to apply the NBD-Dirichlet model.
However, these two markets still have similar characteristics. A researcher who examines a consumer’s buying behavior for 52 weeks will see that in the first week the person buys only one brand of yogurt (like subscription market behavior), but at the end of 52 weeks they buy within a repertoire that’s made of a few brands.
On the other hand, subscription markets in the long term exhibit repertoire market characteristics. If the cell phone operators market is examined for a sufficiently long period of time, it will be clear that this market also resembles the repertoire market. The more opportunities users have to choose a brand, the more this market will resemble a repertoire market. The longer the time period being studied, the more subscription markets will manifest the dynamics of repertoire markets.
While theoretically the NBD-Dirichlet model explains the dynamics of both subscription markets and repertoire markets, in real life, users in subscription markets face obstacles to repeat buying. Therefore, the marketing laws derived from the Dirichlet model are not observed in subscription markets in the short term.
BRAND MANAGEMENT
The ten marketing laws provide a scientific basis for understanding and predicting consumer behavior. Using these laws, marketers can manage their brands more effectively. In the chapters that follow, I’ll discuss numerous myths about brand management. As I have learned, many of the golden calves the field of marketing has worshipped are based on assumptions and belief, not empirical evidence. By correcting these misconceptions, marketers can learn to manage brands based on realities.
BRAND DIFFERENTIATION
37.
Brands Are Not an Important Part of People’s Lives
Company owners, marketing directors and advertising professionals think that brands in general, and especially their own brands, are an important part of people’s lives. That they believe this is no surprise; they make their living dealing with brands, day in and day out.
However, as far as the consumer (customer) is concerned, the brand is just one of many options in a product category. The most important decision a person makes when they have a need is whether or not to spend their limited money on a product or service. If they decide to spend the money, numerous choices are available to meet their need when they go shopping, and these choices will have characteristics that are all very similar to one another, as we all know from our own lives.
For a person who is deciding to spend money, selecting a brand is a piece of cake. After all, they have a repertoire: there are already several brands in this product category that they’ve previously purchased, heard of or trust. When people go shopping, they chose a brand, purchase it and that’s the end of the story. If they can’t find the brand they searched for, they purchase another brand from their repertoire. No one dies from disappointment when they’re unable to find the brand they wanted. People don’t agonize over their brand choices. They make their decisions with as little mental effort as possible.
People exhibit this same behavior not only for supermarkets, clothing, food, beverage and entertainment brands, but also for durable goods and luxury brands. The decision between bank A and bank B is not an important decision for them.
Example: A woman wants to impress people with her attire at an event. The dress is very important for her at that moment. But no woman is restricted to a single brand when she wants to create this impression. Any one of the brands in the woman’s repertoire, or even a new one, will serve her purpose just as well. A wealthy woman won’t have a nervous breakdown if she can’t find Louis Vuitton and is forced to buy Chanel instead. A man might intend to buy Ford but end up with Chrysler. Contrary to what marketers think, people don’t exert much effort when evaluating brands.
Product and service categories are more important than the brand in people’s lives. The first thing people decide is what product or service they’ll buy. Then they simply buy one of the brands in the market segment that matches their budget.
The belief that people attach significant importance to brands is a marketing myth. Brands are just individual tools in people’s lives. People are preoccupied with their worries, such as being healthy and happy. They want to have good relationships, be successful, live well and entertain themselves. The fact that they choose one brand over another doesn’t mean that this brand is indispensable to them.
The prerequisite for successful marketing is the conception that brands are interchangeable in people’s life.
38.
Brand Positioning Is a Marketing Myth
While working on an advertisement campaign, almost every advertising agency asks the company’s marketing director why people prefer the company’s brand over the choices that the competition offers. And the director will explain how their brand is “different” from rival brands. Both the person asking the question and the one answering it assume that consumers actually have well-defined reasons for selecting a particular brand. Almost every marketer believes that brands must have differences that distinguish them from rival brands for people to buy them.
Brand differentiation is a concept that almost every marketer accepts without questioning from the first day they begin to learn about the field, and it unconsciously shapes their worldview.
The “Unique Selling Proposition” (USP), advanced in 1961 by advertising executive Rosser Reev
es, in line with the theory of differentiation put forward by Chamberlin and Robinson in the 1930s, is a method that almost all advertisers use today. To find out the USP, advertisers first list all the ways the brand is similar to or different from its rivals, then they put forward one of the characteristics they believe is “unique” to the brand. Finally, they craft advertising narratives that highlight this uniqueness.
Many others in marketing have been invested in the same belief. Economist Theodore Levitt, marketing professor Philip Kotler and brand strategy expert David Aaker argue that brand differentiation is essential to people’s brand decision, and that highly differentiated brands can demand a higher sales price. These marketing gurus claim that differentiation doesn’t absolutely have to be product differentiation; in a fiercely competitive environment where products are similar or even identical, differentiation can be achieved if a brand provides emotional or social benefits.
In 1972, Trout and Ries said that since there is an abundance of both brands and media channels, brands must own a difference in the consumer’s mind (a positioning) to be chosen over the competition. The marketing world embraced this concept enthusiastically, and the concept of positioning has been accepted dogma among marketers and advertisers since then.
I, too, held these views in high esteem at one time. Unfortunately, I can’t find any empirical evidence that justifies their truthfulness in real life. Evidence doesn’t support that brands competing in the same product category can differentiate from their competitors. As Jenni Romaniuk, Byron Sharp and Andrew Ehrenberg explain in their article entitled “Evidence Concerning the Importance of Perceived Brand Differentiation,” brands competing in the same market can’t achieve differentiation for the following reasons:
If brands competing in the same market were different from each other, their users would be people with diverse profiles. However, the users in every product category are the same type of people. Any brand director who researches the profile of people who buy their brand and rival brands can see that the people who buy their brand are the same kind of people who buy rival brands (details in chapter 31). Obviously, there is vertical differentiation between cheap and expensive brands in every product category. All automobile brands are not the same. Neither are all clothing brands. Expensive brands in every category compete among themselves, just as cheap brands do. However, all of the brands in market segments of each subcategory are practically identical in terms of price and quality, and the people who buy them are the same type of people.
What’s more, if brands were significantly differentiated, brands with similar perception in each category would necessarily create an isolated segment within the market and wouldn’t share customers (consumers) with other brands. However, according to marketing laws, all brands competing in the same market will share customers in proportion to their market share (details in chapter 35). Research conducted by Anne Sharp, Byron Sharp and Natalie Redford shows that brands positioned far away from other brands on perception maps still share customers (consumers) with other brands in proportion to their market share.
Every brand director who thinks their own brand is really different from the competition will find, if they’ll just study them, that their customers (consumers) actually buy several brands at the same time. Evidence shows that brands competing in the same market look more similar than different.
And finally, if brands could differentiate themselves sensibly, a brand that raised its price shouldn’t lose sales. As John Scriven and Andrew Ehrenberg demonstrated in their articles from 2004, all brands competing in the same product category are equally sensitive to price changes; they have similar price elasticity. As a result, every brand that raises its prices loses sales to its competitor. It’s very easy for a brand director to test this. If sales don’t fall after a price increase, the brand is truly differentiated from the competition. But I deem it very unlikely that most directors will even attempt this test.
In summary, in a product or service category consisting of competing brands with similar properties and prices, the following is true:
Different consumer segments consisting of different consumers don’t exist. Every consumer (customer) purchases from among all brands.
Isolated market partitions of brands don’t exist. Every brand shares consumers (customers) with every other brand.
The price elasticity of all brands is similar.
Differentiation is a myth that has become so deeply ingrained in the minds of marketers that they can’t even imagine a brand being able to achieve sales without it. But the truth is that a brand in a product or service category doesn’t have to be “different” from the competition to be bought. According to the Dirichlet probability model, the customer will choose your brand sometimes; the only questions are when and how many times.
The marketer’s job is not to persuade through differentiation. It is to instill a brand in the minds of people who make decisions almost without thinking, and to distribute the brand to all sales points to make it easy to purchase (details in chapters 57 and 69).
Brand positioning is a marketing myth. The difference between brands in a single product category is due only to the size of competing brands.
39.
Brand Personality Is a Marketing Myth
A brand’s identity consists of its logo, emblem, color and symbols. Every brand puts on its identity to meet the customer (consumer).
In addition to brand identity, there is also the issue of brand personality. Countless books have been written about brand personality—a very popular topic in the world of marketing. For example, social psychologist Jennifer Aaker groups brand personality into five main categories and then elaborates on these categories to define more than 300 personality traits.
Market research companies utilize research models that measure brand personalities and make comparisons with rivals. Advertising agencies in particular believe that brand personality has a significant effect on people’s buying decisions. They anthropomorphize brands, characterizing them as warm, charming and friendly or cold, distant and arrogant.
The reason marketers attribute personality to brands is because they treat each brand like a person. As Martin Weigel of the firm Wieden + Kennedy says, comparing a brand to a person is a grievous fallacy that skews the way marketers view their job. Any marketer that views a brand as a person will be misled by the following fallacies:
They think that brands have different genetic characteristics with different DNA, just like people.
They assume that people will want to develop a relationship with brands, just like they do with other people.
They think that consumers will value brands they feel close to, just like they value people who are close to them.
They surmise that people will be loyal to brands, similar to the way they’re loyal to other people.
However, consumers (customers) demonstrate no tendency to anthropomorphize brands. If a researcher were to ask me what kind of person an automobile would be if it were a person, to describe the brand I would use adjectives like graceful, attractive and nimble—words that describe both objects and people. If the researcher concludes from this that I am anthropomorphizing the brand, this is a reflection of the researcher’s thought processes, not mine. Just because I describe a car as graceful, attractive and nimble doesn’t mean that I am necessarily treating it as a human. Obviously, my vocabulary includes adjectives that describe both humans and objects.
Brands don’t differentiate based on their “personalities.” A summary of the evidence is as follows:
According to marketing laws, the reasons to buy for a certain category determine the images of all brands competing in that category (details in chapter 34). Therefore, all technology brands have image attributes such as “innovative” or “elegant design,” whereas all hospitals are “trustworthy” and “benevolent”—becau
se these are the generic attributes of the category; in other words, the reasons to buy.
If people are asked directly, they’ll say that brands in the same category are not different from each other. Even the numbers in the article in which marketing analyst Nigel Hollis claims that brands differentiate themselves prove that they don’t. The Millward Brown research company, where he works as an executive, posed these questions to consumers of 6,000 brands over ten years. Of the consumers responding, 82% were of the opinion that brands competing in the same category weren’t different, while only 18% concluded that there were significant differences between the brands. The study didn’t examine whether or not the difference claimed by the 18% had any effect on their shopping behavior. This isn’t the only research supporting this point. Studies by Elise Gaillard, Jenni Romaniuk and Anne Sharp found that people rarely (3%) attributed a single personality trait to a single brand.
As Martin Weigel says, if brands had different personalities, brands competing in the same product category would necessarily create different levels of loyalty. However, we know from Marketing Law 1 (details in chapter 26) that brands that compete in a category aren’t very different from one another in terms of loyalty.
If we add to this list the reasons I gave in chapter 38 (“Brand Positioning Is a Marketing Myth”), it’s easier to understand why brands competing in the same category aren’t differentiated based on personality. If brands can’t differentiate themselves in terms of function or perception, then they can’t acquire their own unique personalities. Consumers don’t see them that way.