New Ideas On How To Grow

As well as speaking with consumers every day we always keep an eye out for new thinking and new ideas about brand growth to help us frame our recommendations for our research clients. So we are happy to share these three separate pieces of analysis which all have growth as a theme.

More customers vs customers buying more

A new article (Marketing Week 160424) has drawn the attention of Prof Byron Sharp amongst others for demonstrating the peril of going against one of the basic laws of marketing science – that brands grow more effectively by increasing penetration through finding new customers rather than by attempting to increasing sales amongst existing buyers.
The article describes the latest financial results for the subscription flower business Bloom & Wild. The results are explained in the context of a strategic decision to focus on customer retention and range expansion rather than acquisition. After a period of dramatic growth these results report a 19% drop in sales and a dramatic increase in operating losses (from £20m to £100m). The stated approach followed by B&W is to “move from growth to profitability” by cutting marketing spend and prioritising the lifetime value of existing customers.
However, this ignores the law of double jeopardy, brands that lose market share (scale), suffer a reduction in buyer loyalty – in other words the buyers will on average buy less as the brand fails to grow.
B&W say short term profitability started to improve as operational efficiencies were pursued and marketing spend was reduced – but the theory says sustainable growth will require investment in acquiring new buyers back into the brand.

Stronger Together – 6 New Strategy Concepts

An article in the HBR (March 2024) by the Outthinker Networks (ON) think tank describes the outputs of a new study into high performing organisations. Pairs of competing companies were selected from a long list of 3000 on the basis of their relative performance on key metrics of current margin and margin growth, revenue growth and enterprise value.
ON identified differential strategy approaches between these organisations and explored them amongst their network of business leaders to define 6 strategy concepts which helped explain the performance of the more successful companies:

1. Borrow someone else’s road
hyperdriving frictionless market reach through expert channel partners – offline or increasingly via digital online platforms
2. Partner with a 3rd party
taking a more pragmatic view of competition by embracing opportunities for complementary service and supply arrangements even if there is a degree of overlap
3. Reveal your strategy
feel free to share intentions publicly as a faster route to effective and confident collaboration and better customer engagement through transparency
4. Be good
doing the right thing is attractive to customers investors and employees and contagious between collaborators and potential partners
5. Let the competition go (first)
following fast, different and better, by solving first mover problems and capitalising on the market creation investment of others
6. Adopt small scale attacks
experimenting before scaling and learning by doing are ways of managing risk whilst moving forwards to develop new business streams

All 6 require confidence in a strong brand and service offering, and each creates a potential pathway to outperform markets by looking outside, understanding and responding to external factors and acting with surety, speed and agility.

Steady as they Grow

The Ehrenberg-Bass Institute published new research last year which analysed the performance of supposedly successful new products for up to 8 years after launch. It found what all marketing people know to be true – most launches fail – but it was interesting to see the speed of this failure with 25% dropping out of the market in year one and a total of 40% by the end of year two.

It is therefore interesting to see previous research on the same topic from Britvic being quoted by Jon Evans of System 1 in the aftermath of the precipitative fall in value of the influencer inflated bubble of the Prime Hydration brand phenomenon in April 2024. Britvic found that those brands that were built very quickly on an awareness led strategy were vulnerable to dramatic decline in short order.

The key finding of their research was that without distribution (physical availability), masses of quickly delivered awareness (mental availability ) is of little value. In fact, the common factors of success seemed to be based on growing on a more steady basis, specialising and achieving penetration growth channel by channel, and focusing effort and investment where it can be afforded, contained and managed. Further success came from increasing reach by expanding distribution into new channels and investing and growing accordingly.
The result was that the analysis found those new entrants that boomed in year one of launch were not those that endured after 5 years. This is a lesson in cool efficiency , in maxing out each opportunity before assuming success, in the merits of maintaining clarity and consistency, and in achieving potential through patience and persistence.