29th of September 2022
Marketing is fundamental for South Australian businesses
Summary
Researchers at UniSA’s Ehrenberg-Bass Institute have distilled a series of basic marketing facts about brands and buyer behaviour, that apply for South Australian businesses, as well as nationally and internationally. These ‘laws of marketing’ are the product of research spanning over fifty years.
Key facts are:
- Brands vary a lot in how many buyers they have, but they don’t vary very much in loyalty.
- The variation in loyalty between brands is in-line with their size: bigger brands get a bit more loyalty, smaller brands get a bit less. This is called the ‘law of double jeopardy’.
- What double jeopardy tells us is that for a brand to grow, it has to increase the size of its customer base – its ‘penetration’. Trying to focus just on increasing loyalty doesn’t work.
- Another marketing law is that brands have many more ‘light’ or infrequent buyers than heavy ones. This means as a brand grows, its customer base increases and most of those new customers will be ‘light’, they won’t buy the brand much.
Businesses that want to grow need to understand and embrace these ‘laws of marketing’.
Evidence-based marketing for growth
The Ehrenberg-Bass Institute has developed an evidence-based framework for sustainable growth. This framework is based on decades of study into buyer behaviour and patterns in brand metrics. A key finding from all this research is what is called ‘the law of double jeopardy’ (Sharp 2010). This ‘law of marketing’ is that brands and businesses differ greatly in the size of their customer base, but the variation in loyalty is much smaller.
Yes, bigger brands and businesses have slightly higher levels of loyalty than smaller brands and businesses – but not much more.
Double jeopardy tells us that brands grow by increasing the size of their customer base. A common myth in business is that you must primarily focus on loyalty to grow. This is wrong. Having loyal customers is obviously a good thing, but all the evidence, over decades, different countries and categories (including B2B, services and luxury) shows that brands – and firms – grow via more customers, not more loyalty.
Read the full article in Business SA.
