Those familiar with marketing’s Double Jeopardy law will know that brands with higher market share have both higher penetration & higher loyalty than smaller rivals.  When a brand successfully increases its market share, its penetration rises and so do all its loyalty metrics, e.g. average purchase frequency, average share of category requirements, proportion of 100% loyal buyers, and the brand’s attitude scores.

We predominately see large differences in penetration between rival brands of differing market shares, and small differences in their loyalty metrics.  This leads to the slogan that “it’s all about driving penetration”.  This slogan is useful, and good advice to give to your marketing team.  However you should appreciate that it is a simplification, because Double Jeopardy says that both penetration and loyalty metrics move.  Movement in all these metrics is underpinned by a deeper phenomenon which is valuable to understand.

Not understanding what drives Double Jeopardy can occasionally lead to some confusion.  For example, if your data analysis period is long, &/or your category definition is very narrow, &/or your brand is very large, then the brand can have an inflated penetration metric.  In which case sales growth has to show up more in loyalty metrics like purchase frequency.

For example, in Table 1 penetration varies 10-fold between brands in a quarter, but 8-fold in a year.  While average weight of purchase varies more between brands in a year than it does in a quarter.

When some people see data from a long time period, or from a category that is very narrowly defined, they understandably can get confused.  They may say “but I thought growth was supposed to come from penetration” or “perhaps my category or brand is different – it breaks the law”.

But the law is still intact.  It’s just that when a brand is analysed as having very high penetration, then the penetration metric has less room to move upwards.  If you change the analysis, say use a shorter time period, then the penetration metric is much lower and everything looks normal (i.e. orthodox Double Jeopardy).

So what’s under the surface?

What creates the Double Jeopardy pattern?  It’s that any brand’s customer base has a very skewed distribution with lighter consumers vastly outnumbering the heavier ones.

The biggest group will usually be non-buyers.  Many of these people actually do buy the brand, but so rarely, that many of them have not bought during the period of analysis, so they get end up being classified into the ‘non-buyer’ group.

If that brand is fortunate enough to grow its market share this pattern will still exist, but the distribution will skew a tiny bit heavier (i.e. to the right).  Because the non-buyer group is the largest, this is where the greatest change is seen to occur.  Many of these non-buyers now become just frequent enough to shift into the “bought once” during the period group.  So the brand’s penetration metric leaps – which is what we typically see when brands grow.

If the brand was very large, or the time period of analysis very long, or the category narrowly defined, then “non-buyers” won’t be the largest group.  Instead light buyers will be the largest group.  In this case if the brand grows the same thing happens, each group buys a bit more frequently, and the most obvious change is amongst the lightest buyers, but the penetration metric doesn’t lift much as there are fewer buyers to shift from not buying in the period to buying once.

The key point is the same thing happens, because there are always  many more light than heavy buyers. When a brand grows it nudges up the buying rates in all groups.  That means an awful lot of light buyers buy a bit more, and many medium buyers buy a bit more, and a few heavy buyers buy a bit more.

So irrespective of how high your penetration looks (and this metric is dependent on the time period and category definition) your sales growth comes from stimulating many light buyers, some medium buyers, and a few heavy buyers.  Substantial sales growth can’t come from targeting just one group, especially not the heavies.

And this is the real lesson, not so much “go for penetration”, but rather reach all consumers – reach is a key to growth, even for the biggest (high penetration) brands.