Frequently asked questions
Showing 24 resultsWe are having some discussions internally about LTOs and if there is anything that can be done to improve speed to market. One of the things I would like to highlight is the risk of a poor LTO. We often think about success or failure as having equal impact. Does the Institute have any research in this area?
We haven’t actually done any research on LTO, but there is a report on new product launch:
There are also some academic publications on new line extensions and who are the most likely to purchase new launches:
- Exploring the Past Behaviour of New Brand Buyers
- Benchmarking Buyer Behaviour Towards New Brands
- Are there generalizable patterns in line extension performance?
Essentially, what we know is that new product launches are most likely purchased by heavy category buyers as well as heavy parent brand buyers — so, LTOs are most likely to be bought by those who purchase the brand already (and thus are likely to have little effect on brand penetration for the longer term). Elements that we know would increase the odds of success for new launches include physical availability support (e.g., wider distribution for the new products, looking like the parent brand) as well as extended mental availability support (e.g., advertising beyond the launch period). We are at the moment embarking on a research on LTO, so the results will be released in due time.
A.T
22 Aug 2024
In regards to your recent Question of the Week: “How much influence does the retailer have in selling products in store?, can you please help me understand if you would provide the same recommendation to some specific industries e.g. consumer health, where even more than 50% consumer brands volume (category average) is being sold based on Pharmacist recommendation, according to all market research data available?
If the market research shows more than 50% of consumer brands are sold based on Pharmacist recommendation, there is still approx. 50% of the market making decisions unaided (of the pharmacist recommendation).
So, building Mental Availability (MA) outside of the retail environment (or any shopping environment) helps those category buyers to think of or notice your brand(s) in store. But building MA will also be beneficial for those who are recommended brands by the pharmacists, as when they are shown the brands, they will recognise them because they have existing knowledge built up in memory from advertising and marketing communications.
K.V.
03 December 2021
How much influence does the retailer have in selling products in store? I can advertise my products and build the mental links so that the consumer looks for my brand in store, but what if the retailer is pushing to convince consumers to buy a different brand?
Video Transcript
Dr Kelly Vaughan: Hello and welcome to today’s Question of the Week. I’m Kelly Vaughan, a Senior Marketing Scientist at the Institute and I’m going to answer a question we received recently.
We were asked:
How much influence does the retailer have in selling products in store? I can advertise my products and build the mental links so that the consumer looks for my brand in store, but what if the retailer is pushing to convince consumers to buy a different brand?
So that is a great question. I’ll start by saying however you try…. And it is certainly worth trying… You won’t always win retail salespeople over to your (brands) side. That is, sometimes salespeople will recommend a competitor brand to yours.
But it’s often easy for us to over-estimate a salesperson or a retailers’ selling ability. Consumers do sometimes ask for salespeople’s advice, but it’s probably less often than we think. Most customers already have existing mental availability for brands before they even enter the store. So they’re already more likely to notice and ask about these brands that they have in memory. Therefore, unless a customer asks for assistance because they don’t have any mental availability for any brands, salespeople have really little opportunity to convince a customer to buy a different brand.
And as a marketer, we can actually reduce the likelihood that consumers will ask for such advice by building up the memory structures for our brand outside of the store. So brands should really be aiming to build their mental availability through advertising and through their marketing communications prior to customers entering the retail store (or whatever the shopping environment is that your brand competes). It may also be useful to consider thinking about building the mental availability up for salespeople as well, so that if and when they are asked for advice, they are more likely to suggest your brand or recommend your brand.
But we need to remember that retailers want to stock brands that customers are asking for, customers are looking for, and also the brands that customers will at least notice and are happy to buy. So efficiency is really important in modern retail, and most retailers find it difficult to hire and train people to actively sell products. So in effect, if you build up your brands mental availability for them, you are helping retailers by teaching customers which brands to think of and which brands to look for when they come in store.
Another factor that’s important to consider is how prominent your brands are inside the store/shopping environment. We need brands to not only be easy to think of, but we also need them to be easy to buy. That is, easy to find in the shopping environment. So this means making your brands stand out amongst the clutter; and that clutter could be from the sales environment, it could be competitor brands, it could even be the salespeople.
But most importantly, we should be focusing on building brand mental availability because that will put your brand into more ‘races’. Some of these races you will win, and others that you won’t. Some of these may be lost because a salespersons recommended a competitor. But ultimately the more races your brand competes in, the more chances you have of being that brand that is purchased.
So thank you for submitting that question, that’s it for today’s Question of the Week! Don’t forget you can submit your questions online as well. Thank you!
Why do some ads become more effective overtime?
Video Transcript
Emily Gray: Hi everyone, my name is Emily Gray and I’m a Marketing Scientist at the Ehrenberg Bass Institute, and today I’m going to be talking about media and reach. Recently we were asked the question:
Why do some ads become more effective overtime?
This is an important question because it is often thought that the sales response to an ad follows an S-shaped sales pattern – and that is the first few exposures have limited effect, the next few have a very large effect and thereafter exposures have a lower effect again.
But research shows something a little bit different – the sales response to an ad follows a convex pattern: so, the initial exposure is the most impactful and there are diminishing returns to subsequent exposures. Both the often-assumed S-shaped response curve (suggesting ads wear in) and the observed convex response curve (the first exposure is the most powerful) have one thing in common – that more exposures do in fact increase ad impact, the difference is how many exposures are required to effectively maximise that impact. So the key takeaway from this question is that the first exposure is the one that matters the most, which is why we advocate for prioritising reach.
Reach refers to the number of people exposed to your marketing activities. And we know that for growth, a brand needs to increase their penetration and recruit a larger proportion of buyers. Therefore by prioritising reach, a brand has more of an opportunity to recruit a greater number of category buyers. In essence, an ad should only have to reach a consumer once to have the biggest impact.
So here are some tips on how to prioritise reach within your media plans:
- Firstly, target all category buyers. Reach as many buyers as possible.
- Spread out your Gross Rating Points (GRPs) over time; so the more time you’re on-air, the greater the chances are that the ad will coincide with the consumers entering the market, and the cheaper the reach is.
- Look for incremental reach; so choose platforms and times that give you the highest additional reach possible.
- And consider high-reaching media first then look at other media platforms that that first media platform might not be able to reach.
- And lastly, minimise the gap between exposure and purchase as well as limiting the gap between when you are on-air and when you’re off.
So that is it from me today, and if you have any questions you want us to answer, you can submit these questions on our website.
How can big brands continue to grow?
Video Transcript
Dr Arry Tanusondjaja: Hi, my name is Dr Arry Tanusondjaja and today I’m going to talk about:
How can big brands continue to grow?
This is an important question for big and small brands, so we know more about the mechanics of brand growth.
Brands can continue to grow – even for big brands. It’s useful to take a step back and specify what we mean by ‘growth’. What we really mean is sales or revenue growth.
For smaller brands, growth is predominantly obtained through getting a lot more buyers – which also translates to a little higher purchase rate for the brand in aggregate. For bigger brands this is more balanced. When penetration is already high, the key is to maintain it or to increase penetration whenever possible.
In categories with high category penetration, such as toothpaste or coffee, big brands can still reap further growth by increasing consumption volume – for example, through introducing different pack sizes or product features, or increasing the dollar per volume through premium offers. We can already see this in those categories with the introduction of coffee pods and premium toothpaste options. This does not mean that we can take our foot off the pedal for penetration. The underlying importance of penetration remains – growing brand penetration is still possible. It also provides an important framing for the business. As penetration gains are likely to be small for big brands in established categories, it may be useful to look at brand penetration in shorter windows (such as within the quarter or six months). This focus on driving penetration in a shorter time period plays out as growth in frequency in the longer time period.
For bigger brands, monitoring the state of the category is also vital. Through our research on organic growth we find that for the largest manufacturers, 70% of their growth comes from category growth. The research covered 39 consumer packaged goods categories from the US and the UK, and across 189 manufacturers. The patterns are similar for brands and the finding is clear – category growth is instrumental for the growth of big brands through a symbiotic relationship.
Bigger brands can afford to run wider reaching and longer campaigns, in effect nudging the category and the brand consumption for more people throughout the year. Bigger brands also have more resources to expand their Physical Availability through building their distribution, thus increasing the chance of category and brand consumption. The net effect is increasing category penetration and consumption volume – that brings growth to the big brands and other brands in the market, a tide that lifts all boats!
In summary, growth in revenue is possible for big brands – by activating growth levers such as increasing volume per buyers or dollars per volume, while maintaining or growing brand penetration. This needs to be done while focusing on the growth of the category, rather than merely gaining or stealing market shares.
That’s it for this week’s Question of the Week, please don’t forget to submit your questions to us!
For more information:
- Report 106: A Rising Tide Lifts All Boats: The role of share and category movement in organic growth
- A rising tide lifts all boats: The role of share and category changes in managing organic sales growth
Is there evidence about the relative effectiveness of EDLP (everyday low price) versus high-low pricing?
Video Transcript
Prof John Dawes: Hi I’m John Dawes from the Ehrenberg-Bass Institute and the question that I’ll be addressing today is:
Is there evidence about the relative effectiveness of EDLP (everyday low price) versus high-low pricing?
And so there are four aspects that are useful to consider when we’re weighing up EDLP vs high-low strategies:
- First is how this choice will impact on your ability to get displays or prominence on shelf?
- Secondly, your price relative to competitors.
- Thirdly, is there anything about what consumers prefer?
- And fourthly, what can you learn from others as far as what’s worked and what hasn’t worked?
Alright so let’s start off. So EDLP means, generally speaking, your baseline price is lower than what it used to be. Now if you do high-low pricing, so you do a higher baseline price with temporary promos, one advantage of that is usually you do usually get in store visibility with the reduction – even if its only a tag on shelf, but that does signal that the price is lower and we know that signalling is a big factor in price response.
Whereas with EDLP, your price is lower but the degree which it’s signalled or communicated to buyers is usually less. And certainly some of our sponsors have found that they have moved to EDLP, that is: lowered the price at which their brand sells at retail. They’ve done that so that the baseline price is lower, but there’s been fairly disappointing sales results. So we think perhaps ideally, you need to get some commitment from retail partners that if you move to EDLP, they will give you more prominence in-store or some other reward for doing that, because otherwise all that will happen is you’ll wind up selling around about the same as what you used to before, but at a lower price.
One other thing to consider is the nature of EDLP. If the negotiations with channel partners are about EDLP to them, the questions is: but how much of that price reduction that you have to offer them (to get to the EDLP level) is actually going to be passed onto the end buyer?
Next point, another one of the key findings about price changes is that consumers are more responsive to changes that pass the price of a competitor. So a brand moves from being somewhat more expensive than a competitor to being less expensive, that magnifies the effect of the price change. So presumably, if you do high low, then in the periods when you are low, you are getting a larger uplift from passing competitor prices, whereas the uptick or the increment that you could conceivably look forward to from moving to EDLP might be more modest throughout the year if that lower baseline price doesn’t pass the price of a key competitor.
Last point, some people put out a rationale that consumers like EDLP, or they prefer EDLP – they find high low confusing or irritating, ie. “which is the right price for my brand?”. There can be a bit of that but bear in mind so many consumers are quite light/ infrequent buyers, there’ll be a lot of price cuts they don’t even notice. Most buyers of a brand will buy it on deal some of the time and not on deal some of the time. There’s an Institute sponsor report on that.
So what that suggests is there’s not a great deal of resistance or kind of angst about the fact that consumers are faced with brands that are sometimes at this price and sometimes at that price. We suggest that if you’re assessing a move towards EDLP, ask colleagues in other countries that have already done it to share their data or their results, so you can see whether it benefited them.
So to wrap up:
- EDLP – generally it means lower prices, so the question is: what concession or reward will you get in return for doing that?
- Secondly, you may lose the capacity to signal lower prices and you might lose out on an ability to pass the prices of competitors at particular points when you want to do that.
- There’s actually little evidence that consumers necessarily prefer EDLP, they do like lower prices but that can come in the form of temporary specials.
- And the last point, look for evidence about how well the strategy has worked in other categories that you may be familiar with, or maybe in other countries that your brand is present in – that will help you make an informed decision.
Thanks for listening, bye for now.
For more information:
When building Distinctive Brand Assets, which assets should we prioritise? Those already strong on both metrics, those with high Fame, or those with high Uniqueness?
Video Transcript
Ella Ward: Hi, my name’s Ella Ward and I’m a Senior Marketing Scientist at the Ehrenberg Bass Institute, and for this week’s Question of the Week, we were asked:
In the series of building distinctive brand assets, which assets should we prioritise? Those already strong on both metrics, those with high Fame, or those with high Uniqueness?
Strong Assets – high on Fame and Uniqueness
Well, if you have assets that are already strong on both of these metrics, you’re in a really great position but, your work isn’t over yet. Memory is fickle, and it can deteriorate without reinforcement, so it’s important to treat every opportunity to build your strong assets as ‘do or decay’. Prioritise these assets and continue to use them so they stay strong and fresh in consumer memory.
Consistent use of your strong assets is also important to teach new buyers who are entering the category. Cater to these people by including your strong assets in entry level portfolio options, such as your Hero SKU. This will ensure that your assets remain strong amongst all category buyers.
High Uniqueness, low Fame
Next, there are those assets with high Uniqueness but low Fame, and this indicates that the asset is owned by your brand in consumer memory but it’s not widely known amongst all category buyers. These are the next assets to prioritise, as Fame is much easier to build than Uniqueness. Unlike Uniqueness, which is pretty dependent on what your competitors are doing, we can increase Fame in three primary ways:
Firstly, is through consistency. So if an asset has been used for a while but it lacks Fame, this may indicate that it’s been used inconsistently over time, or there have been frequent changes. Consistent use across platforms and time will help to reinforce the link between the asset and your brand, building its Fame.
Next, we use reach, and in order to teach consumers, we have to reach them first. So asset building activities with a wide reach will ensure that as many category buyers as possible are able to learn the association between the asset and your brand.
Finally, we use prominence, because low Fame can also indicate that an asset lacks cut-through with consumers.
You can build the Fame of these assets by increasing their presence in marketing activity, so give them a specific focus that draws consumer attention.
High Fame, low Uniqueness
Finally are those assets with High Fame but low Uniqueness, which implies that many consumers know about the asset, but they also associate it with your competitors!
In some instances, many competitors may link to the asset. In which case, it’s more likely to act as a prompt for the entire category, rather than a prompt for your brand. In other cases, only one or two competitors may be linked. But this is also problematic as you risk evoking these competitors when you use the asset, potentially in place of your own brand.
Assets with high Fame but low Uniqueness are a low priority for building, as the odds for effective brand retrieval are not in your favour. If using these assets is deemed necessary, ensure they are accompanied by clear direct branding (i.e. the brand name) to avoid any confusion by consumers.
So that’s it from me on prioritising your distinctive brand assets, but we’ll see you next time for another Question of the Week. Thanks!
If loyal buyers are habitual, why are they not a useful source of growth? If you don’t pay attention to them, don’t you risk other brands stealing them away?
Video Transcript
Jake Mesidis: Hi everyone, my name is Jake Mesidis and I’m a Marketing Scientist here at the Ehrenberg-Bass Institute. Today I’m going to be talking to you about loyal buyers, also known as heavy buyers. This is in response to a set of questions recently submitted to us. The first asks:
If loyal buyers are habitual, why are they not a useful source of growth?
And the follow up question is:
If you don’t pay attention to your loyal buyers, don’t you risk other brands stealing them away?
By the end of this video, hopefully I can make the answer to these questions clear to you.
So, it’s tempting to pay extra attention to your loyal buyers – after all, they are the ones that are buying your brand most heavily. However, if your goal is to grow your brand, these buyers are not particularly useful. Let’s have a look at why.
First and foremost, it’s difficult to make a heavy buyer buy more heavily, or a loyal buyer even more loyal. Loyal buyers are habitual, and as we know, habits are hard to change – even if we want to encourage them. Think about this in regard to your own buying behaviour. If you’re already buying a lot of one brand, are you really going to buy more because some marketer told you you should? Probably not right? You’ve already got everything you need. If you’re solely loyal to one brand, is it because you have an unfaltering dedication to them and their products? Again, probably not. You only likely buy that brand very infrequently, and it’s just the brand that is most salient and available.
The key to growth is instead found in your light buyers. This has been documented consistently across several brands, over several years, in several different categories. Even in categories that don’t have what we would consider ‘typical’ light buyers, such as services or durables, the same principle applies, with majority of your growth coming from those who buy your brand or pay for your service infrequently. Loyalty varies in line with brand size, or penetration. If you were to look at two brands in the same category that are roughly the same size, it is probable that their loyalty metrics are similar, regardless of whether one has actively tried to pursue a loyalty-based strategy.
If you were to look at brands that have grown consistently over several years, you would see that these brands have had significant increases in their penetration, and only minor increases in their purchase frequencies. This is because these brands have acquired those infrequent, light buyers, instead of trying to make their existing customers buy more which as we established, is no easy feat. This shows that the acquisition of light buyers should be of priority for any brand wishing to grow.
Now I know what you’re thinking, if we don’t prioritise them, won’t they leave us? Remember, these buyers are habitual by nature. They were buying you habitually before you paid them any special attention, and they’ll likely continue to do so in the future. Besides, these buyers are already likely buying from other brands. This isn’t a reason to panic – this is just how consumers behave. Consumers buy from a repertoire of brands, meaning they’ll habitually buy from a set of brands that they are familiar with and your brand is lucky enough to be one of them. In fact, you’re already probably paying more attention to them than you think.
Loyal buyers are loyal because your brand is already mentally and physically available to them. This means that they are likely already being reached by and are more receptive to your current advertising strategies, and are able to access your brand when they shop with relative ease. Even if you started focusing your marketing mix on acquiring those vital, growth giving light buyers, you’re still likely reaching those heavy buyers enough to keep your brand salient to them. So in short, no, they likely won’t leave you, unless you actively try to stop being salient and available.
So that’s it for this question of the week. If you’re interested in learning more about loyal buyers and why light buyers are the key to growth, I recommend reading Prof. Byron Sharp’s ‘How Brands Grow’. If you have any more marketing questions that you want answered, don’t forget to send them through via our website or your Sponsor Officer. Thank you.
For more information: How Brands Grow – what marketers don’t know, Prof. Byron Sharp
Brands grow by mostly increasing their customer base with smaller predictable increases in purchase frequency. Does category growth follow this or a different pattern?
Video Transcript
Dr Steven Dunn: Hi, I’m Dr Steven Dunn and this week I’m going to be addressing a question about category growth:
Brands grow by mostly increasing their customer base with smaller predictable increases in purchase frequency. Does category growth follow this or a different pattern?
Really interesting question. So a large body of evidence has been developed over many years telling us how brands grow but until recently there’s been little robust knowledge about how categories grow. So the last few years, the Ehrenberg-Bass Institute has been pioneering new research looking at category growth and understanding how to drive this growth across different conditions.
When we look at product category growth – in terms of total revenue sales growth – we can decompose this into three components:
- First of all we have penetration to understand how many people buy the category.
- We then look at volume per buyer to understand how much of the category each person is buying.
- And finally price per volume, such as a ‘dollar per kilogram or a dollar per litre’ to understand how much the consumers are paying for the category.
Now theoretically, a category can grow if it increases any one of these three components. Yet, we do see some predictable patterns. First of all, we see the two major sources of category growth are increases in penetration and increases in price per volume. Increases in volume per buyer – through getting our existing category buyers to buy even more – is a relatively small source of growth.
Then when it comes to the importance of penetration, as opposed to price per volume, we see differences between categories and more importantly, differences between categories differing in levels of maturity. When we look at those ‘less mature’ categories that have lower levels of maturity to start with, in terms of quarterly penetration, we see that the major source of growth here is penetration gains. The road to growth is getting more people to buy the category.
We then turn our focus to those ‘more mature’ categories that have a higher level of quarterly penetration to start with. Here, further gains in penetration start to see a diminishing return. Large growth typically comes through increases in price per volume. Now, this does not mean that penetration suddenly does not become important. If we then look at category decline, we see that penetration losses is certainly a major source of category decline in these conditions.
Now, our research on category growth continues, if you’d like to know more look out for future reports and book in a seminar today.
And if you have any other questions on any topics, please submit them to us.
To maintain sales brands need a share-of-voice appropriate for their share-of-market. What about the situation when a brand wants to grow its market share: should it then invest MORE than its appropriate share-of-voice? Could you provide any evidence or facts regarding this point?
Video Transcript
Kelly Vaughan: Hello and welcome to the Question of the Week. My name is Kelly Vaughan, and today I am going to answer a great question we received recently. We were asked:
I understand that to maintain sales, brands need a share-of-voice appropriate for their share-of-market. What about the situation when a brand wants to grow its market share: should it then invest MORE than its appropriate share-of-voice? Could you provide any evidence or facts regarding this point?
The short answer is yes – if you want to grow, spend more than your ‘fair’ Share of Voice. The evidence demonstrates that long-term overspending of Share of Voice is linked to growth, and long-term underspending is linked to decline. But we need to stop for a moment to consider how we define ‘over and under spending’.
These spending behaviours are most commonly described as a departure from the naïve approach of Share of Voice=Share of Market. With this approach excess Share of Voice (SoV) is defined as anything above the brands Share of Market (SoM). For example, a brand of 15% SoM would be considered overspending if its SoV was anything above 15%. This approach is easy to understand, simple, and widely used in industry.
We recommend, however, using a different approach drawing on Jones’ seminal work, which introduced the Advertising Intensity relationship that demonstrated larger brands can afford to underspend the benchmark of SoV=SoM, and that smaller brands need to overspend just to maintain their current market share.
The key difference of the Advertising Intensity derived approach it is based on the responsiveness to advertising and the total spend in each specific market. This is an important point as evidence shows Advertising Intensity relationships can and do vary considerably between categories, and also within categories from year to year. Typically the Advertising Intensity relationship is negative/downward sloping, as originally demonstrated by Jones, but there is also evidence of positive/upward relationships. So it’s important the Advertising Intensity relationship used to establishing brand’s budgets is drawn on the brand’s own market conditions and is also monitored over time.
In relation to overspending against this Advertising Intensity benchmark, evidence from Institute research demonstrates that long-term overspending is linked to growth. Two studies, one published and one forthcoming, found brands who overspent over five or six years increased on average in Share of Market. The sample of these studies cover brands in 25 different categories from 11 countries with advertising spend spanning seven different media and it provides evidence that brand growth is linked to spending more than your ‘fair’ Share of Voice. However, it is important to stress, that spend is only one piece of the puzzle, and overspending will not guarantee brand growth – it may be a necessary but it’s not a sufficient condition.
Advertising also needs to be well-scheduled, prioritise high-reaching media, be clearly branded and leverage the brand’s existing mental availability. Then of course there are all the Physical Availability considerations to increase the likelihood of growth such as presence, prominence and portfolio, but that’s a topic for another day!
Thank you for listening.