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Building new brands: addressing some common misconceptions and questions

Opinion, 23 February 2016

This post is by Professor Jenni Romaniuk, Associate Director (International) at the Ehrenberg-Bass Institute for Marketing Science, the world’s largest centre for research into marketing. Jenni is co-author, with Professor Byron Sharp, of How Brands Grow Part 2 (Oxford University Press, 2015).

Successfully launching a new brand is one of the toughest challenges in marketing. New insights from the Ehrenberg-Bass Institute for Marketing Science draw on one of the chapters in the book How Brands Grow Part 2, Emerging Markets, Services, Durables, New and Luxury Brands. In this blog, I will address some of the common questions and misinterpretations that emerged.

Q) Aren’t heavy category buyers the most loyal buyers of particular brands? If that is the case, why are they the early adopters of new brands as well?

In the first part of the webinar, I talked about how buyers of new brands tend to be heavy category buyers, and that they tend to become light buyers of a new brand.

In this context, loyalty is a confusing term. If you take loyalty as a purchase frequency measure, then, yes, most frequent (or loyal) brand buyers are also frequent category buyers, because there is a threshold to meet the requirement to be “loyal”. Say the heavy brand buyer threshold is set at five purchases to be loyal to the brand. In that case, someone needs to have bought, at minimum, five purchases from the category to have any chance of being a loyal brand buyer.

But if you look at heavy (frequent) category buyers, they actually buy from more brands in the category. Consequently, they typically qualify to be heavy buyers for one brand, but light buyers for many other brands.

Just to make it more confusing, if you define loyal brand buyers in terms of share loyalty (i.e. the portion of all category purchases that buyers dedicate to one brand), then highly loyals (giving 100% purchases to one brand) tend to be light category buyers, as if you only buy the category once, then you are – by default – 100% loyal to that brand!

So when we use the term “loyalty”, we need to be very clear to refer to a specific loyal behaviour. It helps minimise confusion.

Q) If we should concentrate on attracting heavy category buyers, does it mean our R&D phase for new brands should also focus on heavy category buyers?

The first point to clarify is that I didn’t mean you need to go out and find heavy category buyers to buy your new launch, but rather that every new brand – irrespective of how successful it is – will have an initial customer base that skews to heavy category buyers. More successful new brands don’t do any better or worse at just attracting heavy category buyers; more successful brands attract more of all types of category buyers.

In the R&D phase, you want to make sure heavy category buyers find the product acceptable, and media channels that reach them more efficiently might be useful in this phase. However, heavy category buyers are not enough to sustain a new brand. You need an offering that will appeal to medium and light category buyers if you want to grow. So it would be sensible to test both the product and advertising on all category buyers, not just heavy ones.

Q) How do you determine what stage a new launch is in? Is it time-based or is there a metric that you need to achieve as a new launch to "graduate" from Stage 1 and into Stage 2?

During the webinar, I referred to two stages of new launches. The first stage is about building mental availability to help build physical availability, and the need to be careful not to burn through funds and therefore be left with long periods of advertising silence. The second stage is about reaching out to the wider market and attracting medium and light category buyers. This generated questions about the time frame when shifting from Stage 1 to Stage 2.

There is no hard and fast rule for moving from Stage 1 to Stage 2, but I would err on the side of reaching out sooner rather than later, and always keeping continuity in mind, particularly when you have got sufficient physical availability that you can take your communications to the wider market. If you are struggling to get physical availability, then work out how to fix that problem first.

Remember: you don’t have to work hard to get heavy category buyers, as they are more likely to notice your new launch. In Stage 1, it’s about not unnecessarily burning through resources, which will make it more difficult for you to sustain mental and physical availability efforts in Stage 2.

Q) Could you elaborate on the role of persuasion, as it is often measured in advertising pretesting for either new or existing products?

This final question is about the role of persuasion as a pretesting metric for new brands. This is an important question as it speaks to the underlying assumptions we hold about the type of behaviour change that new brands generate.

Measuring persuasion shifts assumes that “road to Damascus” conversions happen. This is contrary to the evidence about what new buyers of brands think and feel about the brand they just bought. The evidence calls into question the value in measuring persuasion shifts for new products; instead, we need to think about metrics that capture if a brand has slipped into someone’s repertoire.

I would change the conversation to category entry points (CEPs). These are the thoughts people have as they enter the category which a brand needs to attach to in order to be mentally available.

We just recently had a good example of the difference between mental availability via CEPs and awareness on Australia Day. If you generally ask people which meat/protein they are aware of, then chicken, beef and even pork are usually higher on the list than lamb. But if you ask people what meat to serve on Australia Day, lamb jumps up in salience. In the context of Australia Day, lamb has higher mental availability.

As such, it can be beneficial to think about which CEPs the new brand is going to focus on, particularly in the first stage, and how these add to the portfolio of CEPs for your company, if you already have a brand in that category. Then, I would also focus on the retail environment to see how physical availability can be shaped to encourage purchase as well.

How Brands Grow Part 2 covers these issues and many more. We are also building on these findings with our ongoing research at the Ehrenberg-Bass Institute for Marketing Science.

If you have any further questions, please email me at Jenni@MarketingScience.info.

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