How Brands Grow

  Given what we know about the double jeopardy law (see Chapter 2), Apple's repeat-buying level is slightly high; that is, more Apple owners make their next purchase an Apple computer than we would expect, given Apple's market share. A realistic explanation for this loyalty is that Apple owners would have to swap operating systems, and perhaps replace software, if they switch away from Apple. In comparison, a Gateway owner can switch to HP or Dell (or many dozens of other brands) and use the same operating system and software.

  This factor alone sufficiently explains Apple's slight loyalty advantage, leaving little room for the effect of passionate commitment. This is not to say that Harley-Davidson and Apple don't have brand fanatics, but these customers are a small group, and their numbers are not much larger than the number of passionate fans of competitor brands.

  UPDATE – When the first edition of How Brands Grow was published this computer repurchase data was already almost ten years old. I liked it because it was from a period where Apple was most certainly not a mass market brand and reports of its stellar loyalty were common, but like many people I wondered if anything had changed. Also, it’s never good to rely on a single set of data (even if it does fit well-established patterns). So with Katherine Anderson I undertook a simple survey asking people what brand of computer they currently had, and what was the brand of their previous computer. Katherine is an expert on the validity of on-line panels for different sorts of questions. We wondered if computer usage might vary between on-line panels; it’s quite reasonable to expect that online panels would skew to heavier computer users (this shows up in things like their Facebook usage). Then again this is complicated by the fact that panel providers may take deliberate steps to reduce this bias, and different providers may differ in their success in doing this. So we commissioned the data collection from three different online panels, each now reported separately.

  The results from all three surveys, using the three different US online panel providers, each show the same double jeopardy pattern as the original MetaFacts data ten years earlier. Apple is no loyalty leader.

  Table 7.6: Computer repeat-purchase loyalty rates, US consumers, Research Now panel

  Brand Share of survey sample Repeat (%)

  Dell 29 50

  HP/Compaq 30 36

  Apple 8 33

  Toshiba 6 22

  Gateway 5 28

  IBM/Lenovo 3 30

  Data source – Survey using Research Now online panel, n=400, December 2011.

  Table 7.7: Computer repeat-purchase loyalty rates, US consumers, SSI online panel

  Brand Share of survey sample Repeat (%)

  Dell 27 55

  HP/Compaq 26 40

  Toshiba 10 24

  Apple 9 24

  Gateway 5 28

  IBM/Lenovo 3 10*

  Data source – Survey using SSI online panel, n=518, December 2011.

  * low repeat-rate for IBM possibly sampling error (n=14, only 14 IBM owners in the sample)

  Table 7.8: Computer repeat-purchase loyalty rates, US consumers, Knowledge Networks panel.

  Brand Share of survey sample Repeat (%)

  Dell 26 67

  HP/Compaq 23 47

  Apple 10 36

  Toshiba 6 19

  Gateway 4 58

  IBM/Lenovo 2 29

  Data source – Survey using Knowledge Networks online panel, n=901, December 2011.

  What about Harley-Davidson then? In 2013 in AdAge their Chief Marketing Officer said that they weren’t in the transportation category but rather lifestyle. The implication is that they don’t compete with other brands of motorbike (like Triumph, Ducati, BSA and many others). Their marketing emphasis is on encouraging owners to feel that they are members of the tribe. They spend only 15% on traditional media, “The rest is spent on riding with customers and trying to create ‘epic’ experiences like the big bike party in Rome.” Harley invites its freedom-loving customers to share their own stories via the Fan Machine app on the company's Facebook page, where it has nearly 4.7 million ‘fans’. It then casts real riders, found among its 133,000 Twitter followers, in the ads.

  Yet a segmentation analysis of US Harley-Davidson riders (Swinyard 1995) shows that the largest segment (40% of owners) receive little psychological satisfaction from riding, nor are they tribe members or ever likely to be. More than the other owners of Harleys, people in this segment agree with statements such as:

  •most of the time my motorcycle is just parked

  •I like wearing a helmet when riding

  •I don't know many other people that ride motorcycles.

  These Harley riders are also least likely to agree that, “My bike is everything to me”. Yet this group represents almost 50% of Harley-Davidson's sales revenue.

  At the other end of the spectrum, stereotypically fanatical Harley bikers earn the least but spend the most money each year on accessories for their bike. They are also the Harley owners most likely to like tattoos and drink beer; and the least likely to read a book. These people represent less than 10% of Harley owners and they are the least likely to have bought their bike new, so they represent a mere 3.5% of Harley-Davidson's sales revenue.

  The 'Hog Heaven' segment is the other owner group that might be classified as passionate brand loyalists; they disagree with statements like “I like bikes with plastic farings and engine covers”, and are most likely to agree with “When I'm on my bike people seem to be admiring me”. While many Harley owners in this segment are well paid, they spend the least on accessories for their bike and buy the smallest models. Consequently, they represent less than 10% of Harley-Davidson's sales revenue.

  The owners with the highest attitudinal loyalty (or ‘Harley zeal’) refers to the degree that respondents agreed with statements like, “I think Harleys are the best bikes in the world”, and disagreed with statements like “I like good bikes wherever they are made”, “I like the spacecraft look of bikes today”, and “All things considered, I think Japanese bikes are the best” (see Swinyard 1995). Owners who rated highest on attitudinal loyalty turn out to be worth the least to the company per customer. Additionally, they contribute little revenue because these passionately loyal segments are very small.

  Nice bike - it’s a BMW

  Nice bike - it’s a Honda

  Customer advocacy

  Even if these brand fanatics fail to turn their passion into sales revenue, it might be nice to think that they act as unpaid ambassadors for the company, broadcasting positive word of mouth. Certainly some brand fanatics do. But remember there aren't many of these people, and their capacity to spread positive brand messages by word of mouth is very limited (e.g. by the number of people they know).

  Capacity to spread positive brand messages by word of mouth is also limited by the degree of new information that is available. This is why research shows that new customers tend to tell more people about the brand than people who have been buying it for a while (East & Hammond 2005); for established customers, the brand is no longer news. So loyalty and propensity to give word of mouth are not strongly linked. Another myth gone.

  Conclusion

  We try to bring our attitudes in line with our behaviour. Since individual brands aren't very important to us, brand buying tends to have a strong effect on our rather weak attitudes – we like what we buy. Our attitudes reflect the divided nature of our brand loyalty. Attitudes also have a weak reinforcing effect on our current behaviour, so we feel comfortable with our repertoires. Within every brand's customer base there are a few people who feel much more attitudinally committed to the brand. It may be part of their self-image, used to signal what sort of person they are to themselves and to others. But the marketing consequences of these brand fan(atic)s turn out to be very limited. Most of a brand's customers think and care little about the brand, but the brand manager should care about these people because they represent most of the brand's sales; the brand needs these people if it is to increase its sales.

  These cons
umer insights fit, and help explain the discoveries about buying behaviour and the recommendations for brand growth in Chapters 2, 3 and 4.

  Chapter 8:

  Differentiation Versus Distinctiveness

  Byron Sharp & Jenni Romaniuk

  Rather than striving for meaningful, perceived differentiation, marketers should seek meaningless distinctiveness. Branding lasts, differentiation doesn't.

  Thou Shalt Differentiate

  Textbooks emphatically tell marketers that differentiation must be the centrepiece of their marketing strategy:

  “if marketing is seminally about anything it is about... differentiating ... All else is derivative of that and only that” (Theodore Levitt)

  “differentiation is the cornerstone of successful marketing” (Philip Kotler)

  “the differentiation must be meaningful to customers ... if a brand fails to differentiate then consumers have no basis for choosing it over others” (David Aaker)

  “without differentiation a loyal customer base cannot be created or sustained” (David Aaker)

  All of the above quotes are wrong.

  As is this one: “Differentiate or die” (Jack Trout)

  Practically every university marketing textbook is called something like Marketing Management or Marketing Principles, while almost every consumer behaviour textbook has the title Consumer Behaviour. The chapter headings in these books are also strikingly similar. These books hardly ever disagree with one another. Ironically, they are a very poor example of the differentiation they preach – textbook authors don't seem to take their own advice.

  In spite of nearly every textbook telling marketers to strive for differentiation, real world competition is largely about competitive matching rather than avoiding competitors by delivering differences. Furthermore, textbooks offer no evidence that differentiation leads to brand growth or profitability. This doesn't mean that there aren't meaningfully differentiated brands that are growing and profitable, but the empirical fact is that most category leaders have a great many very similar rivals.

  Every category has some brands (or variants) that are more expensive and higher quality. Sometimes there are brands that are vastly more expensive – but these up-market brands face many similarly high-priced competitors within their sub-category. Some brands are a bit faster, a tad sweeter, a touch more stylish, slightly trendier or provide a marginally better service. Yet, there is not much difference between them, and it's surprising how many similar brands a market will support. This leads to two interesting questions56:

  1.Can advertising imbue brands with special values? (In other words, can marketing differentiate functionally similar brands?)

  2.Do buyers need to perceive a meaningful difference to regularly buy a brand (i.e. to show a preference and/or loyalty)?

  The answers to these two questions strike at the heart of much modern marketing thinking and practice. The answers interest both practising marketers and their civic-minded critics. It's time empirical science was applied to these questions.

  Special values

  One explanation for the plethora of rival brands that exist is that advertising has imbued each brand with a different perceived meaning that consumers value.

  Marketers routinely measure brand perceptions. Sometimes for very practical reasons, for example, they want to find out how many people know their store is open on Saturday, or whether women perceive them differently to men. However, today it's common for marketers to measure more esoteric perceptions, like whether consumers imbue the brand with human personality traits. A significant amount of brand management time is spent developing huge batteries of highly subjective perceptual cues to measure. 57

  The data that such image (brand health/equity) surveys generate are often subjected to multivariate statistical techniques, or the even more obscure proprietary analyses that many market research agencies peddle. These are typically designed to highlight differences between brands, but usually fail to convey how big these differences really are – or how they relate to actual buying behaviour. By now this might strike you as odd (and not good practice), given that we saw previously (in Chapter 5) that buyers of one brand perceive that brand in much the same way as buyers of rival brands perceive their brand – the 'I love my mum' pattern.

  Bigger brands have many more customers (see Chapter 2), and so they have more people who are likely to respond to an image survey question. Consequently, larger brands tend to score higher on any image question, because they will have more customers among the survey respondents. Their buyers are also slightly more loyal (i.e. they buy more frequently), which enhances their propensity to think/say things about the brand. So, even in survey data that only reports on the perceptions of each brand's buyers, brands with larger market share will score higher.

  To understand if a brand really is perceived differently by the market you have to remove this usage (i.e. more buyers) effect. What is not well known – or is rarely discussed by market researchers – is that once the usage effect is removed there is little sign of brands having unique images. For example, Table 8.1 lists the percentage of respondents (who are familiar with a brand) who associate a brand (e.g. FedEx) with a particular image attribute (e.g. trusted). This data was published in a market research journal (Whitlark & Smith 2001) to show how complicated image data are supposed to be. However, Professor Martin Collins (2002) subsequently showed that if you are familiar with the law-like patterns you can 'see the wood for the trees' without complicating things with multivariate statistics. In Table 8.1, brands are simply ranked in order of the number of respondents who were familiar with them, it's only a rough proxy for usage, yet the ranking still produces the sort of patterns seen when only users of each brand have their perceptions measured. These main patterns are:

  •Some attributes always score higher than others (e.g. more than 90% for 'trusted' compared with only 30% for 'essential'). 58

  •All brands gain very similar scores – with a slight double jeopardy sub-pattern (i.e. smaller brands score slightly lower).

  Therefore, all brands are seen in much the same way by those familiar with them. Even small brands get a similar endorsement from their few buyers.

  Table 8.1: Association of brands with attributes

  Attributes

  Company Trusted Efficient Rapport Relevant Solution Innovative Essential Average

  FedEx 95 94 84 79 69 60 39 74

  A 96 95 85 81 72 63 37 76

  Nokia 96 83 75 67 65 89 22 71

  B 97 87 82 76 75 47 32 71

  C 94 78 72 70 75 54 46 70

  Oracle 93 83 73 53 60 85 19 67

  D 94 90 85 58 81 66 23 71

  Average 94 87 79 69 71 66 31 71

  Source: Collins 2002.

  Once these patterns are known, it is easy to spot the few exceptions; for example, Nokia and Oracle (two technology brands) are considered more 'innovative'. This is not an unexpected or exciting story.

  This is not to say that some brands aren't perceived differently to their rival brands, but any sizable differences in perception usually reflect very obvious functional aspects; for example, American brands are perceived as American, French as French and expensive brands as expensive. Perceptual surveys are still useful – they are just far less deterministic and mysterious than they are typically portrayed. Their utility lies in marketers using them to ensure that all their advertising is truly branded (i.e. to look like you, you need to know how the market already sees you).

  Brand personality

  It's very difficult to find exotic image attributes (i.e. not related to obvious functional features) that substantially differentiate rival brands. Brand personality is a recent attempt. Long ago, marketing researchers began investigating the impact of a buyer's personality on their brand choice. This was quickly shown to be inconsequential. The famous study into Ford versus Chevrolet buyers by Franklin B Evans was one of the first to challenge this notion: the study found no difference in the personality traits of
the different brand buyers (Evans 1959).

  However, personality researchers persisted. The goal became to identify the human personality a brand is reflecting. Interest in brand personality heightened with the publication of Jennifer Aaker's (1997) 'brand personality' scale, which measures the human characteristics that consumers associate with brands, such as charm or ruggedness.

  However, it turns out that personality perceptions are like all other image attributes (i.e. users of different brands see their respective brands in much the same way). But brand personality perceptions score very poorly – it turns out that consumers are reluctant to view brands as people (i.e. only 5% think brand X is rugged)59 – see Romaniuk & Ehrenberg 2012. These perceptions, that are weakly held by the population, are also weakly held by individuals (of the 5% who think the brand is rugged in one interview, only about a quarter of these people (about 1%) will repeat the assertion when re-interviewed). Yet a number of marketers adopted the brand personality concept without asking for such empirical evidence first – like medieval doctors (see Chapter 1).

  Unique associations

  If brands were really differentiated in the minds of consumers, we might expect successful brands to have unique image attributes (i.e. consumers associate an image with only one brand). It's long been argued that brand equity rests on strong and unique associations. But a thorough examination of the image data of 130 brands in 13 product and service categories shows that people rarely (about 3% of the time) see a single brand as being exclusively associated with a particular image (Gaillard & Romaniuk 2007). More successful brands do not have proportionally more unique associations, nor do customers with greater preference for a brand hold more unique associations than those with less preference. Instead, the level of brand uniqueness – as designated by the proportion of associations customers hold for one brand only – has been shown to be simply negatively correlated with the number of brands in the category. A brand is more likely to be perceived as the only brand with a particular quality if it has few competitors.