GLOBAL: It is often reported that large global brands are losing out to their smaller rivals and that customer loyalty to major brands is in decline, but these are myths unsupported by the evidence, according to a new academic study.
Led by Professor Byron Sharp, researchers from the respected Ehrenberg-Bass Institute at the University of South Australia used scientific research from published peer-reviewed journals to debunk a series of myths about the challenges facing big brands.
“The notion that large brands are dying is simply not true. Nor has the world fundamentally changed in a way that favours small brands over big,” they state.
“We conclude that there have been some shifts in the marketing environment that have created new opportunities for some new comers, but some of the current claims are over-stated and others are blatantly wrong.”
For example, analysis of the performance of leading brands across 21 categories in the US found 48% of the top five national brands increased sales revenue, while 40% lost some revenue.
And while some leading brands lost market share, others gained share. Importantly, the report found that most brands that lost share did so in growing categories, so while they lost share of category, their actual sales revenue often grew.
The research, entitled Are Big Brands Dying?, also rejected the notion that loyalty to established brands is in decline, particularly among young consumers.
Analysis of 1,950 sub-brands in 19 consumer-goods categories did find a “slight skew” toward younger consumers, but this disappeared if these sub-brands grew successfully.
And in more than 40% of category/year studies, the top five leading brands actually had greater market share among younger consumers than they did among older shoppers.
“Our analysis reveals that in more than 40% of cases, leading brands actually do better among under 25-year-old consumers than they do selling to older customers,” said Professor Magda Nenycz-Thiel, one of the report’s five co-authors.
“While there is certainly a trend for brands to signal virtues like being eco-friendly, the idea that young people increasingly distrust and reject big brands is not backed by the evidence. Hipster coffee shops attract both young and old – and the same is true for Starbucks,” she added.
Elsewhere, the study rejected a number of other common assertions, including the role of e-commerce and digital advertising.
For example, contrary to received opinion that digital media has enabled small brands to level the playing field and so big brands need to use more new media, the researchers asserted that big brands actually have been hurt by “wasted advertising spend on unproven new media”.
According to the study, one of the mistakes big brands have made over the past ten to 20 years has been to allocate “too much advertising expenditure to overly targeted new digital media with unproven abilities to reach consumers and build mental availability”.
Sourced from Ehrenberg-Bass Institute; additional content by WARC staff