by Byron Sharp
How brands compete for sales
In the long run, brands essentially compete in terms of mental and physical availability. Even product innovation largely works (when it works) by enhancing mental availability and gaining further physical distribution. Building mental availability requires distinctiveness and clear branding, while brands seldom compete on meaningful differentiation. This means that marketing attention should be focused on building these assets so that a brand is easier to buy, for more people and in more buying situations. No marketing activity, including innovation, should be seen as a goal in itself, its goal is to hold on to or improve mental and physical availability.
Profits that last
One of the things that makes established brands so valuable is that mental and physical availability take a long time to build and a long time to fade. This stability is worth money. Brands, whether large or small, are able to survive, often for very long periods, because they are able to maintain their market-based assets of mental and physical availability. Growth depends on enhancing these assets. Even temporary advantages (such as advances in products or services) can enhance these potentially sustainable assets. Advantages that do not enhance these assets have no long-term value. For example, price promotions, because of their lack of reach, do little or nothing to enhance mental and physical ability, even though such promotions cause increases in sales. When the price promotion ends, everything returns to normal largely because price promotions reach so few buyers, and are particularly poor at reaching new buyers. 94
Mental and physical availability – a brand's market-based assets
Over the past twenty years there has been growing appreciation for the intangible assets that underpin the financial value of corporations (Sharp 1995; Srivastava et al 1998). These assets can be sold, and they are generally worth far more than a corporation's tangible assets. Mental and physical availability, and the brand's distinctive iconography (discussed in Chapter 8) are assets that can be sold. They are brand equity.
These are market-based assets, in that they come about through trading activity. They are created by marketing. They are assets because they cost money to build, and other companies may purchase them rather than spending the money and time (and taking the risk) to build their own. They are valuable because they provide some surety of future profit.
These market-based assets deliver productivity. Advertising works better when there are existing memory structures in viewers' heads – so long as the advertising works with these memory structures. Advertising also works better when the brand has plenty of physical availability. Advertising falls on barren ground when it reaches consumers who aren't near a brand's sales points.
To corporations (and their investors), these market-based assets provide security – next year's sales will be not too dissimilar to this year's. This is very valuable, though it also creates problems in evaluating marketing actions. Every action is moderated by these assets, so marketplace reactions become sluggish. We see this in price elasticities where larger brands have lower elasticities (see Chapter 10); it's the same for other marketing stimulus like advertising; it's harder to see anything happening when you turn it on and off. For particularly large, old brands like Snickers (launched in 1930), what they are doing this month advertising-wise pales into insignificance compared to its established mental and physical availability.
To clearly see or statistically model the effects of a marketing strategy, look at a small brand with little mental and physical availability. In particular, this will show a nice, neat sales reaction to increasing distribution. Measuring marketing is less simple for established brands. 95
When marketing support has been absent for a long time for a brand that retains considerable market-based assets, tremendous gains can be made by sprucing up the marketing mix – particularly mental availability in the minds of consumers and retailers. This is one way to make your fortune: find a brand that was popular, with substantial mental and physical availability, but that has been neglected and so has lost much market share. Fix the product quality, or lower the price, start advertising again, and if necessary, work to regain breadth and depth of distribution.
McDonald's is a good example of this. As the twenty-first century-began, McDonald's growth in developed countries slowed and it was being regularly criticised for selling unhealthy food. While companies like Subway and Starbucks rolled out stores across the world, it looked like McDonald's marketers were 'asleep at the wheel'. In hindsight, it was a terrible blunder to have missed the trend towards drinking espresso-based coffee, which hit America fast as it started to catch up with the rest of the developed world. McDonald's eventually looked outside its stores and saw that people were eating and drinking (a little) better. So they introduced 'innovations' like salads, sandwiches, soft chairs and the McCafe, which served proper coffee. The sales results were superb; McDonald's bounced back. Nothing McDonald's did was innovative; it was completely a 'me too' catch-up exercise, the sort of thing that is frowned upon by marketing texts. My favourite McDonald's 'innovation' in Australia was the introduction of a toasted cheese and tomato sandwich. This is something that is available at nearly every deli and cafe in the country. McDonald's didn't do anything radical; it just got competitive again. But thanks to its existing mental and physical availability it can sell a lot of coffee and toasted sandwiches.
Essentially, McDonald's took away a 'reason not to buy', which was undermining its market-based assets. Remember, much of the marketing battle is to get into the usually very small consideration set; when this happens, which is far less often than any marketer would like, the last thing you want to be is rejected for some reason (e.g. it contains trans fat, is too expensive, too salty, the store is too far, Sarah won't like it).
A classic example of exploiting neglected, market-based assets occurred near my office in the 1990s. A large wine company, Seppelt, purchased a small, old, run-down Barossa Valley winery by the name of 'Queen Adelaide'. The Queen Adelaide winery had begun in 1858; its wines had once been popular, but were now mostly seen in dusty bargain bins. The Seppelt winemakers took this brand and combined their modern, quality wine (nothing flash or expensive but clean with clear fruit) with the Queen Adelaide label. Almost overnight, Queen Adelaide became the largest-selling chardonnay in Australia. I don't think the old Queen Adelaide even had a chardonnay in its range, but chardonnay was now popular and Queen Adelaide was still a very well-known brand. A decent marketing mix and already established market-based assets re-created a big-selling brand very quickly. This gave Seppelt a fabulous financial return on its purchase of a run-down, old winery.
The Ehrenberg-Bass Institute recently analysed submissions for the advertising effectiveness awards in Australia (similar to the Effies in the US). It's well known that such awards tend to attract new product campaigns, because it's easier for them to show the effects of their advertising when they start from sales of zero (and the advertising gets the credit for the success of the new product). Similarly, we found that more than half the submissions from established brands were cases of advertising being started again after a very long hiatus.
For marketers of established brands, everything they do is moderated by the brand’s market-based assets. Their job is not so much to stimulate current sales but to maintain and build the brand's market-based assets. Such marketers should be less concerned with producing sales blips with short-lived campaigns, and much more concerned with building mental and physical availability.
Thomas Bayne, CEO of Mountain View Learning, suggests marketers should adopt a balance sheet-style document to assess their marketing efforts. The balance sheet lists what is most likely to reinforce or build mental and physical availability and what is least likely. Table 12.4 is an example of such a document (to which you might like to add). Remember, any marketing activity that skews to part of the customer base (particularly to the heavier, more loyal customers) is unlikely to build mental or physical availability.
Very likely to reinforce or build mental and physical availability Low reach. Unlikely to reinforce or build mental and physical availability Unknown or risky
Broadening distribution Coupons and price promotions Advertising that contains new information
Gaining a new distribution channel Packaging changes Temporary (e.g. limited edition) product variants
Consistent use of a brand’s distinctive assets Loyalty programs Comparative advertising
Consistent advertising Competitions Suspense advertising (i.e. the brand name is hidden)
Broad-reaching media Bursting/pulsing advertising
Gaining shelf space in another area of a store
Broad range of product varieties and pack formats and sizes
What about product and price?
In the main, the battle for custom is largely about mental and physical availability. Of course product and price matter - especially if they fall behind the competition.
Sometimes we have an advantage over many of our competitors and we deliver superior value, but this seldom lasts in competitive markets. Unless we are protected by some government monopoly our competitors notice what we have done and copy us.
Innovation when it works does so by expanding mental and physical availability - and rewards us by letting us earn returns after competitors have nullified our product or price advantage.
But market research says people buy us because we are [kinder, in tune with women....] ?
Let’s clear up a myth that catches a lot of marketers. Just because some consumers see you as having a particular little difference (e.g. friendlier staff, purpose, ethical stance) doesn’t mean that this is your path to success. Differentiation just doesn’t matter that much.
Say you have a breakfast cereal that has more raisins than other brands. Your market research reports that you achieve somewhat higher (for your brand’s size) on image attributes like “raisins” or “fruity”. And in motivational research consumers who buy your brand say that they do so because they like the raisins. That’s all good and expected. The same can occur if you have spent many years running advertising that stresses raisins. Or it could have been more nuts, or coconut, or fresher ingredients - whatever. Consumers feel like, or remember to feel like more raisins occasionally, just as we sometimes we remember we like nuts, and sometimes coconut and so on.
So product features matter but the mistake to make, when looking at your market research, is to think “if only we can get more people to realise that we have more raisins then our brand will grow”. That’s only sort-of-right but not in the traditional marketing theory sense. If you grow mental and/or physical availability then more people will know your brand has more raisins because more people will be buying it more often - so it will be easier for them to remember your brand has more raisins. And easier for them to remember they like raisins. Trying to convince existing buyers that you have more raisins will do little - they already know what the brand is like. Trying to tell non buyers about the raisins is fine, but in this case it’s largely a talking point to win more mental availability - that’s the real driver of growth (not the persuasive effect of the raisins themselves).
Yes you are a bit differentiated, all brands are. But your main marketing battle is to win more mental and physical availability – not to be more differentiated. Nor to convince more consumers that raisins are better than nuts, or fruit, or chocolate, or whatever is in other brands. Never lose sight of the big picture. Raisins just don’t matter that much (nor does almost any claim you can make).
This lesson is largely lost among services providers like hotels, retail stores, banks, and travel agents. They are very enamoured by the idea that if they can offer better service than rivals they will enjoy astonishing loyalty and huge market share gains. There is nothing wrong with striving to improve service, indeed it’s almost essential just to prevent slipping behind, but we need to be realistic about the small potential gains.
Seven simple rules for marketing
The purpose of science is to simplify the enormously complex world we live in; to allow us to glimpse some of its regularities; to give us the power of prediction; and to provide insight into why things are the way they are.
The marketing world is extraordinarily complex, but textbooks fail us when they suggest that this complexity can never be mastered. As we've seen, there are regularities in buying behaviour and sales performance. So it is possible to come up with some simple rules for 'branded competition for sales' (i.e. competition to build a sales base with considerable lasting capability). This is, almost without exception, competition between brands (entities whose sales are underpinned by both mental and physical availability). 96
Within this area there are strategic guidelines:
1.Continuously reach all buyers of the brand's service/product category, with both physical distribution and marketing communication.
2.Ensure the brand is easy to buy.
3.Get noticed. Often.
4.Refresh and build brand-linked memory structures that make the brand easier to notice and buy.
5.Create distinctive communication assets.
6.Be consistent, yet fresh and interesting.
7.Stay competitive, keep up the mass appeal; don't give customers reasons not to buy the brand.
Rule 1: Reach
Reach all consumers of the brand's service/product category, both with physical distribution and marketing communication. All these people are potential buyers of the brand. Examine marketing options in terms of their ability to cost effectively reach as many customers as possible. Avoid strategies that fail to reach non-buyers or light buyers of the brand – most of the brand's sales potential lies with these customers. Reach across geographical space, time and situations. Avoid going 'off air'. Avoid narrow descriptions of the brand's target market that are out of sync with who really buys the brand. Understand who buys, when, and how the brand fits into their lives. Stop talking about your average buyer – there is a wide variety of consumers.
Rule 2: Be easy to buy
Physical and mental availability drive market share because they make the brand easier to buy, for more people, in more situations, across time and space. This requires research to appreciate how consumers buy, and how they fit the brand into their lives. You also need to look out for emerging 'reasons not to buy', barriers to building penetration like missing pack types or sizes, or prices that are too high.
It's often flippantly stated that the reason for a particular brand's high market share is 'convenience'. This is a shallow explanation; it requires considerable research to work out what convenience is for one product category compared with another. For example, it's been said that Wal-Mart was initially laughed at in the early 1980s when it built large stores outside of city centres. Some said this was too inconvenient, without appreciating the American trend (of the time) of shopping by car and the convenience of having a large range of merchandise in one location. Similarly, Laura and Al Ries predicted the early demise of the iPhone (“after a short period where Apple would sell quite a few iPhones ... to early adopters and elites”). They said it would fail because the convenience of an all-in-one device was over-rated97. In 2007 Apple surprised the world by selling one million iPhones in the first 74 days of its release. A year later, the second generation iPhone sold one million units in just two days: the weekend of its launch. Well more than 500 million have now been sold, obviously to more than just ‘early adopters and elites’! Not far away the tenth birthday of its launch is likely to coincide with the milestone of the billionth iPhone sold.
Marketing 'gurus', it seems, often completely misjudge what is, and is not, convenient and important to consumers. I recommend relying on empirical market research to understand what can make the brand easy to buy. Consider how poor so many web sites are, and how poorly laid out so many stores are. This clearly isn’t being given enough marketing attention.
Rule 3: Get noticed
Reaching consumers with advertising and physical distribution amounts to little if the brand is not noticed. Brands that are not seen on the shelf (or not seen when gazing down the street or driving past a store) cannot be bought. Advertisements that are not noticed cannot affect memory structures.
Consumers regularly actively avoid advertising. They use new technologies to do so, as well as old techniques like leaving the room during the television commercial break or flicking past the full-page ad. But even more importantly, consumers don't pay much attention to the advertising they are exposed to.
Little attention is not the same as not processing. We notice more than just the things we actively attend to. Otherwise how on earth could we be ever be prompted (e.g. distracted) to shift our attention? Our 'supervisory attentioning system' (du Plessis, 2005) adjusts our focus from one thing to another, but to do this our brain is processing more than just the object of our current attention.
Robert Heath (2001) has written a book on the fact that advertising can affect memory structures even if it is given very little attention. This is true, but it is still better to gain some attention. Heath argues quite well (although from limited data) that emotionally oriented advertising, in particular, can still work with low attention processing. Heath is on solid ground when he uses this to argue that measures of advertising recall are poor measures of advertising effect.