Book Review: How Brands Grow

Science has revolutionized every discipline it has touched; now it is marketing turn! “How Brands Grow (HBG)” is based on decades of research that has progressively uncovered scientific laws about buying and marketing performance. This book is the first to present these laws in context, and explore their meaning and marketing applications.

HBG is a manifesto for evidence based marketing, building brands based on what works in scientific practice rather than what should work in marketing theory. In addition to outlining seven evidence led rules for unlocking growth through brand marketing, the book busts a number of pernicious and costly marketing myths that are sometimes still peddled today.

There are some Laws introduced in this book –

·     Double Jeopardy Law – Brands with less market share have so they have far fewer buyers, and these buyers are slightly less loyal (in their buying and attitudes)

·   Retention double Jeopardy – All brands lose some buyers, this loss is proportionate with their market share, i.e. big brands lose more customers (though these lost customers represent a small proportion of their total customer base)

·     Pareto Law, 60/20 – Slightly more than half of a brand’s sales come from the top 20% of the brand customers. The rest of the sales come from the bottom 80% of customers (i.e. the Pareto law is not 80/20).

·    Law of buyer moderation – In subsequent time periods heavy buyers buy less often than in the base period that was used to categorize them as heavy buyers. Also, light buyers buy more often and some non-buyers become buyers. This regression to the mean phenomenon occurs even when there is no real change in buyer behavior.

·    Natural Monopoly law – Brands with more market share attract a greater proportion of light category buyers.

·       User bases seldom vary – Rival brands sell to very similar customer bases.

·    Attitude and brand beliefs reflect behavioral loyalty – Consumers know and say more about brands they use more often and they think and say little about brands they do not use. Therefore, because they have more users, larger brands always score higher in surveys that assess buyers’ attitudes to brands.

·    Usage drives attitude – The attitudes and perceptions that a brand’s customers express are very similar to the attitudes and perceptions expressed by customers of other brands.

·    Law of prototypicality – Image attributes that describe the product category score higher than less prototypical attributes.

·     Duplication of purchase law – A brand’s customer base overlaps with the customer base of other brands, in line with their market share (i.e. a brand shares the most customers with large brands and the least number of customers with small brands). If 30% of a brand’s buyers also bought brand A in a period, then 30% of every rival brand’s customers also bought brand A.

·   NBD – Dirichlet – A mathematical model of how buyers vary in their purchase propensities (i.e. how often they buy from a category and which brands they buy). This model correctly describes and explains many of the above laws. The Dirichlet is one of marketing’s few true scientific theories.

One thing that emerges from the law-like patterns is that everything varies together. As brands get bigger their metrics move in the opposite direction to the metrics of brands that are shrinking. Bigger brands have higher penetration and loyalty metrics. This suggests that marketing metrics, including market share, all reflect one thing: popularity. Therefore, brands vary in their popularity, and everything flows from that. Also, two rival brands with similar levels of popularity will have very similar metrics.