Marketers who try to build brand loyalty through price promotions are like "medieval doctors" whose bloodletting tactics inadvertently kill the patient, an influential professor has sensationally claimed.
"People believe brands need to increase loyalty to grow. That's not true," said Professor Byron Sharp of the Ehrenberg-Bass Institute for Marketing Science ahead of a lecture next Friday in London. "Brands grow by increasing the size of the customer base. You need more customers, not more loyalty from existing customers."
Sharp, who will be delivering the lecture at Mountainview Learning alongside Mars global chief marketing officer Bruce McColl, called on brands to switch their focus to building household penetration rather than loyalty.
"Marketers write plans about how to grow brands for loyalty rather than penetration, and it's a faulty plan," he said. "When it doesn't work, instead of thinking there's something wrong, they write another one next year. They're like medieval doctors. Those people aren't getting better they're dying and the doctors aren't noticing."
Promotions did little to increase market share, he added, citing research by the Ehrenberg-Bass Centre that found only seven of 140 leading fmcg brands had increased market share by more than 1% each year over a six-year period.
Three-quarters of brands had a market share within three points of their position six years before.
"People believe brands need to increase loyalty to grow. That's not true," said Professor Byron Sharp of the Ehrenberg-Bass Institute for Marketing Science ahead of a lecture next Friday in London. "Brands grow by increasing the size of the customer base. You need more customers, not more loyalty from existing customers."
Sharp, who will be delivering the lecture at Mountainview Learning alongside Mars global chief marketing officer Bruce McColl, called on brands to switch their focus to building household penetration rather than loyalty.
"Marketers write plans about how to grow brands for loyalty rather than penetration, and it's a faulty plan," he said. "When it doesn't work, instead of thinking there's something wrong, they write another one next year. They're like medieval doctors. Those people aren't getting better they're dying and the doctors aren't noticing."
Promotions did little to increase market share, he added, citing research by the Ehrenberg-Bass Centre that found only seven of 140 leading fmcg brands had increased market share by more than 1% each year over a six-year period.
Three-quarters of brands had a market share within three points of their position six years before.
No comments yet