How to grow your NEW brand

Continuing our yesterday’s top actionable insights in ‘How Brands Grow Part 2 revised E-book’, today’s lessons focus on how to jumpstart your new brand and keep its momentum going.

1. Start with Point of Parity instead of Point of Difference

‘Buying a brand for the first time does not require a major conversion, just a bit of mental availability’

A new brand has to build ‘essential memories’, which are not about the brand superiority or differentiation, but simply what it is (eg a soft drink) and what is looks like (so it can be found). Therefore, it is key to define the category you are in, and that you are a plausible option in it. “People aren’t looking for the difference, they are looking to understand the brand and whether it is worthwhile to commit to long-term memory”.

This reminds me of the Point of Parity versus Point of Difference distinction. Back when I was teaching with Kevin Keller, we delved deep in the necessity for new brands to first show they are a legitimate player in the category, before consumers would be open to learning any point of difference. The impetus was the internet bubble Superbowl ads of new brands, but it also applies when your brand is over a century old but relatively unfamiliar to an audience. That year, I was asked to entertain European business journalists, brought to campus to learn about the Tuck School of Business and spread the word in Europe. I was horrified by our brochure, which focused on all the ways we were better than Harvard Business School. I turned that around, suggesting first all the ways we were similar to HBS. Once the journalists were convinced Tuck was worthwhile to understand, we could then talk about how we were different and better than HBS. In 2021, i was happy to see the independent comparison in above picture, showing how Tuck wins out over HBS [2022 update: that website now has HBS beating everyone with a perfect 100 score – so is obviously hacked 🙂 ]

• Change your message over time instead of keeping it to the same positioning

Once you have established at least one Category Entry Point (CEP) with your brand (e.g. a great afternoon pick-up), you want to increase that number to grow your brand (e.g. great to wake up in the morning). Therefore, your message and thus the ‘positioning’ attribute should change over time. This reflects what we found for vehicles on message consistency vs change, although we measured market’s changing willingness to pay for attributes instead of category entry points (e.g. cost of ownership, performance, convenience, safety). In our research, younger brands should stay on message, but older brands should vary it with the times (in the updated version, we also investigate the impact of ad execution of the same message, ping me for the working paper). Thus:

‘If your advertising is working, as the campaigns change, so should what the brand is known for’

• Continue to advertise to build distinctive assets that can be widely used

Partly explaining that younger brands ‘stay on message’ longer is that they have to build their distinctive assets. To make it usable, your distinctive asset has to be consistent, reach all category buyers (fame), and prominently link to your brand (uniqueness). For this purpose, you need to continue advertising, so ‘start as you mean to go on’

HGB recommends launching in 2 stages:

Stage 1: Get enough initial sales to safeguard distribution. Minimize frequency to keep funds for Stage 2: Be continually on air to convince light and medium category buyers

Targeting heavy users is not necessary, as they are more likely to buy the new brand anyway and are thus overrepresented in your initial customer base. However, they are rare, and they will simply put your new brand in their repertoire without much loyalty. So you need to reach light category buyers by continuing to advertise past the launch period. Given examples include the Apple Ipod, which increased advertising in each quarter, and Tiktok, which has been advertising on TV throughout its uncertain 2020.

• Don’t rely on word-of-mouth

The wonderful chapter with Robert East shows that, while WOM is perceived as very valuable to buyers, it is often not much for marketers as they can’t control it. It is the WOM giver who decides, based on the personal relationship with the receiver. The trigger is either the receiver specifically asking about the category, or the brand having a newsworthy story independent on whether the receiver is in the market. So positive WOM is least likely to reach consumers with lowest prior propensity to buy the brand, even though it is most likely to have an incremental impact! Taking this prior propensity to buy into account in modeling the effects of WOM, its ROI may be lower than that of advertising, as shown for new season TV programs. Cem Bahadir and I find the same in our longitudinal study of the effects of marketing (price and advertising) versus word-of-mouth in several Asian markets. Received WOM is more important for (highly involved) female than for male consumers. However, the marketing mix has a greater impact on WOM transmission than does Received WOM across countries, and especially for growing brands and for male consumers, who are typically less involved in the studied personal care category.  

For negative WOM, the effect reverses (East and Romaniuk 2021). Negative WOM has a big impact for those with high prior propensity to buy the brand, but is most likely to reach consumers with medium propensity. Moreover, negative WOM is mostly given by past users, but also by consumers who never used your product! This is a key limitation of e.g. calculating Net Promotor Score only for current users instead of surveying all category buyers. Likewise, Prof. Bahadir and I find that negative WOM does not significantly hurt the studied emerging market brands over time (as displayed in the above picture). Instead, positive WOM is useful as a brand reminder to both givers and receivers. In sum,

‘Both positive and negative WOM can have a big impact, but both tend to fail to reach the right people to do this’

• Focus on trial instead of loyalty  

New brands do have lower loyalty than existing brands, but HBG holds that is because support for launch (buying mental and physical availability, price discounts, etc) disappears too quickly.

Many companies believe that brand growth comes from reducing defection, thus increasing loyalty. While this may be the case, HBG holds that potential is limited, as defection reasons are mostly NOT under company control. The cited research shows that 60% was not related to brands, 40% got a lower priced competitive offer and only 4% noted a service issue. Moreover, your defected customers still have better memories of you than the never-customers, and may come back to you in the future. So don’t fret about defection (unless related to a major change or product reformulation) – instead aim to maintain the natural loyalty levels.

“Loyalty will be a natural consequence of effective marketing that grows the customer base and increases penetration”

After reviewing evidence for double jeopardy in emerging, business-to-business, and luxury markets, HBG concludes ‘Tactics may change, but the fundamental need to build up mental and physical availability does not’.

Up next: Testing ‘How Brands Grow’: which research is needed to test the advice in HBG that goes counter what other smart people in marketing have recommended. Stay tuned.

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