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Brand penetration vital in India

News, 13 May 2016

NEW DELHI: Brand marketers in India should focus on penetration rather than building loyalty according to a study which found that 80% of the country's top CPG brands have lost share over the past three years.

Using data from Kantar, consulting firm Bain & Co India looked at the top 412 brands across 37 consumer packaged goods (CPG) categories and established that 330 had lost share between 2012 and 2015, while only 82 had gained share.

The study reported that shoppers buy a repertoire of brands, the precise number of which varies depending on the particular category.

So, for example, people tend not to switch brands when shopping for butter – an average of 1.2 brands were bought in 2015 – but are more promiscuous when it comes to soap – an average of 5.6 different brands were purchased in 2015. More typically, consumers bought from a limited range of between two and four brands

Another factor is that brand penetration – defined as a household that has bought a brand at least once in the last 12 months – is subject to constant churn. In the example of a biscuit brand, overall penetration rose by five percentage points over three years as the proportion of "newcomers" exceeded that of "leavers".

Joydeep Bhattacharya, partner, Bain and Co. India, told Mint that brands ought to concentrate on becoming part of the consumers' consideration set, pointing out that market share gains are linked to how brands perform on penetration and not on loyalty.

"It's no longer about segmenting, loyalty, targeting and differentiation," he said. "Brand marketers should instead drive penetration and constant recruitment."

His colleague Shyam Unnikrishnan, manager and member of Bain's Strategy and Consumer Products and Retail practices, added that "penetration is at the 30-40% level for most large brands", meaning there is ample opportunity to increase this and drive growth.

The study reflects the evidence-based marketing approach advocated by Australian academic Professor Byron Sharp, whose influential book How Brands Grow maintains that brand growth is mostly about building physical and mental availability rather than brand differentiation.

At a London event late last year, Sharp reflected on what that book had got right and wrong. He continued to be scathing about segmentation and behavioural targeting. 


"Segmentation should be horses for courses," he declared. "Studies that say 'we came up with six target segments' are very dangerous. That's super-dumb target marketing."

Data sourced from Mint; additional content by Warc staff