Decoding Brand Success
Timeless strategies
for a new economic landscape
Decoding Brand Success: Timeless strategies for a new economic landscape.
01 Practical applications and real-world scenarios
02 Diving deeper: category-specific insights
03
Strategic implications and the path forward
Food for Thought
Double Jeopardy, the most renowned marketing principle, isn’t universally precise for all brands and categories. Why? Because penetration (the proportion of buyers who purchase a brand) is merely an outcome.
Our analysis, spanning five years during the COVID-19 pandemic and high inflation, reaffirms that the relationship between a brand’s penetration and its frequency holds true. However, pinpointing a highly predictable estimate for an individual brand within a specific category is more challenging than commonly acknowledged.
To uncover highly predictable patterns, enhance targeting, and make informed marketing decisions, consider thoroughly assessing your true competitors to better define your category. Additionally, delve into behavioural, usage, and attitudinal analyses to bridge the gap between predicted and actual outcomes.
Stubborn inflation and the lingering impact of the COVID-19 pandemic have led brand marketers and strategists to re-examine the growth rules of the past and speculate on their suitability for the future.
But are they looking in the right places? If we go back to the words of a book first published in 2015 before the roils of the pandemic and rampant inflation unravelled, all this speculation may be “for nought.”
The book, a follow-up to Byron Sharp’s, How Brands Grow, was clear: “brands grow by improving both penetration and loyalty, though typically far more sales growth comes from gains in penetration than improved loyalty.”1
1How Brands Grow Part 2 (First published 2015, revised 2021), Byron Sharp and Jenni Romaniuk, Oxford University Press
However, when we now look back at the 2010s, it was almost uneventful – value and volume both grew, and annual price rises were small. Since then, we have had a global pandemic, and more recently a cost-of-living crisis driven by high levels of inflation. The result for many FMCG companies is the highest value sales seen in a decade, but with a significant reduction in volume.
It is therefore important to re-examine the fundamentals under these more extreme conditions. For example, did the pandemic make us less likely to change our behaviour as we moved to more online shopping? Have the latest volume declines in many famous brands been caused by the heaviest buyers still buying, but less frequently?
Understanding brand growth dynamics
The simple answer based on the evidence is no. Our long-term examination of Fast Moving Consumer Goods (FMCG) brand performance in the United Kingdom revealed that, despite these external shocks, the fundamental relationship between brand penetration and purchase frequency has remained remarkably consistent.
If we plot penetration versus frequency per buyer for every brand with at least 1% penetration in the UK in 2019, before the pandemic, through the pandemic years, and finally in 2023, when inflation was soaring, we see the overall underlying relationship2 remained the same. The consistency of the visualisations across this period is remarkable given how unusual many other patterns look across this time period. Bigger brands continue to have more buyers who buy slightly more often.
2Three lines are fitted but to explain the underlying relationship: a simple linear model, a loess smooth and a polynomial regression. At lower levels of penetration, under 50%, we see all three models with a similar fit. The loess and polynomial fits diverge as penetration runs out hence frequency becomes more important.
