Writing in the current issue of Admap, Byron Sharp, director of the Ehrenberg-Bass Institute for Marketing Science, and his colleagues Magda Nenycz-Thiel, James Martin, Zac Anesbury and Bruce McColl, address some of the myths that have arisen around big brands in an age of digital disruption.
In their article, Are big brands dying?, they report that some leading brands are losing share, some are gaining share – and most of those losing share have done so in growing categories, so while they are losing share of category revenue, their sales revenue is often still rising.
Loyalty is largely unaffected: an examination of 26 FMCG categories in the US and UK over a period of 6–13 years found no general decline in brand loyalty, although in categories where there had been an increase in the number of SKUs, a small decrease in loyalty was observed.
“Contrary to popular belief, the well-established Double Jeopardy Law tells us that smaller brands have lower loyalty than larger brands – fewer buyers and slightly lower loyalties among those who buy the brand,” they note.
Even allowing for this, Ehrenberg-Bass Institute research has shown that only one in ten small brands (excluding private labels) have loyalty levels higher than expected, and none higher than large brands.
Meanwhile, the influence of younger consumers on trends is exaggerated, the authors say, “at least when it comes to brand buying”.
The customer base of new, small brands may skew towards younger category buyers but “there are minimal differences in how many consumers aged under 25 purchase leading brands compared to older people,” they report.
“In over 40% of category/year analyses, leading (top five) brands actually have a higher market share among younger consumers’ sales than among older consumers.”
Big brands have made strategic mistakes over the past couple of decades, they say – including price discounting at the expense of out-of-store advertising and allocating too much advertising expenditure to overly targeted new digital media – but “the future looks to be benign to bright for large brands with proven consumer acceptance, and valuable mental and physical availability”.
Sourced from Admap