Thursday, November 12, 2015

How do brands grow? TV.

Distilled wisdom from Byron Sharp's How Brands Grow: What Marketers Do not Know:

Sharp begins by noting that the majority of any successful brand’s sales comes from “light buyers”: people who buy it relatively infrequently.The consequences of this insight are big:
  • ...you will never increase your brand’s market share by targeting existing users ... loyalty programmes, says Sharp, “do practically nothing to drive growth”.
  • ...a successful brand needs to find a way of reaching people who are not in its target market, ... advertising must somehow gain the attention of people who are not interested in it, have never bought it, or who bought it so long ago they can’t remember.
  • Advertising, says Sharp, works best when it doesn’t try and persuade, but merely makes us remember the brand at the point of purchase
  • Brands are not the rich sources of differentiation marketers like to think of them as, but short cuts through the complexity of decision-making. Most consumers aren’t aware of, ... the difference between NescafĂ© and Kenco and don’t want to spend longer than they need to thinking about which they prefer. They just want to get coffee and get home.
  • Brand engagement is largely pointless...A senior marketer at the drinks company Diageo, where Sharp’s book has been influential, put it to me bluntly. “After 10 or 15 years of f***ing around with digital we’ve realised that people don’t want to ‘engage’ with brands, because they don’t care about them.’
So what does all this mean for advertising?
Ideally, it would reach millions of people who aren’t particularly thinking about your product. You’d want them to see the same thing at around the same time, so that they can talk to each other about what they’ve seen, reinforcing each other’s memories of it. You would need to sneak up on them, since they have near-zero interest in hearing from you, indeed don’t want to. You’d need a form of content requiring negligible mental effort to process: one which comes in bite-sized chunks, but which is still capable of moving and delighting. It turns out there is an app for that: the TV ad.

8 comments:

  1. I cannot argue against the basic premise that a company’s organic growth has to come from the customers that they do not have at the moment. However, they do have to make sure they do keep the customers that they do have.

    As section 12.3 points out, advertising can influence demand to be more or less elastic, either selling at a discount or at a higher price. Higher prices usually communicate a sense of high quality. In other words, advertising is a means to broadcast information about a product or services to the masses, both existing and new customers.

    Especially in the competitive TV landscape with the technology continuing to change at a rapid pace. TVs continue to get bigger, thinner, clearer, and cheaper, making customers mindful of what their next TV will be. If Sharp does not continue to showcase their products to them, it only makes it easier for them to switch to a newer and more attractive product. And what’s more – TVs are now becoming a commodity – it is only getting harder to tell the different between the top brands. \

    As the article points out, the key is for advertising needs to make sure customers are thinking about their brands when they are ready to make a purchase. That logic applies to both new and existing customers.

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  2. While branding, especially with TVs or any electronics, has a high influence on buyers, price may super cede that. If there is a product offered at a lower price compared to a popular branded item, odds are the consumer will go with the cheaper item. There are numerous ways for consumers to research products, as well as compare them before they even go to a store. TVs have become like the automobile industry. You have Lexus, which also make Toyota. A consumer may go with the Toyota because if fulfills a need without the hefty price tag. I believe Samsung makes Vizio, so the same may hold true, consumers going with price value rather than the label.

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  3. I totally agree with Sharp’s advertising philosophy “Advertising works best when it doesn’t try and persuade, but merely makes us remember the brand at the point of purchase. Advertising must somehow gain the attention of people who are not interested in it, have never bought it, or who bought it so long ago they can’t remember.”

    Today, I think a lot of companies have realized and using this technique. For example most TV advertising/commercials are using memorable songs from the past to peek consumer’s interest. The songs have nothing to do with the products or services they are selling. However it entices the consumer, and when it comes time to make a purchase they will remember that brand. For example, just take a look at these top 10 commercial ads with great music https://www.youtube.com/watch?v=3a4yM_wPvAo

    Authors Froeb, McCann, Shor, and Ward state “we use marginal analysis to show how to price in conjunction with advertising or promotional expenditures. The most important thing to realize is the different types of promotional expenditures affect demand in different ways. For pricing, it is most important to know whether promotional expenditures make demand more or less price elastic. If promotional expenditures make demand more (less) price elastic, then you should reduce (increase) price when you promote the product (p. 157).” Therefore, when it comes to consumers purchasing TV’s or any products that are advertised, the most important thing is the price of the product relative to substitute products. Keeping prices competitive guarantees success.

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  4. Let’s look at television programming as brand (ABC, CBS, NBC, Showtime, HBO) really doesn’t stand on its own, it has to be associated with a product that has some recognition or demand. HBO and Showtime have recognition for their racy programming however you rarely see the brand itself being advertised…it’s usually associated with one of their shows. A new consumer would probably to not be likely to watch CBS, ABC or any other channel unless they saw product which attracted them. HBO for instance created a huge following with Game of Thrones. Customers who never subscribed to HBO saw the product and now became subscribers. Thanks to all digital metrics now being made available to companies, HBO could identify the new subscriber with the type of programming that caused them to subscribe. Now they need to keep them by advertising similar product while at the same time try to gather new subscribers by offering different types of programming in different seasons. If you look closely, programming is meant to appeal to a wide variety of consumers so as to maximize capture. When Game of Thrones ends a season, new programming is introduced that is meant to still be of interest to the Game of Thrones enthusiasts while adding different series to capture a slightly different viewer.
    In short, the brand is always associated with the product if there is continuous co-mingling of product name and brand. Advertising one or the other individually has much less benefit as consumers cannot associate the two.

    ReplyDelete
  5. Let’s look at television programming as brand (ABC, CBS, NBC, Showtime, HBO) really doesn’t stand on its own, it has to be associated with a product that has some recognition or demand. HBO and Showtime have recognition for their racy programming however you rarely see the brand itself being advertised…it’s usually associated with one of their shows. A new consumer would probably to not be likely to watch CBS, ABC or any other channel unless they saw product which attracted them. HBO for instance created a huge following with Game of Thrones. Customers who never subscribed to HBO saw the product and now became subscribers. Thanks to all digital metrics now being made available to companies, HBO could identify the new subscriber with the type of programming that caused them to subscribe. Now they need to keep them by advertising similar product while at the same time try to gather new subscribers by offering different types of programming in different seasons. If you look closely, programming is meant to appeal to a wide variety of consumers so as to maximize capture. When Game of Thrones ends a season, new programming is introduced that is meant to still be of interest to the Game of Thrones enthusiasts while adding different series to capture a slightly different viewer.
    In short, the brand is always associated with the product if there is continuous co-mingling of product name and brand. Advertising one or the other individually has much less benefit as consumers cannot associate the two.

    ReplyDelete
  6. It is interesting to see that while social media and online marketing are a new avenues to reach and engage with customers they shouldn’t be utilized exclusively. This concreates the fact that a company needs to diversify their advertising portfolio and not put all their eggs in one basket. Consumers are not cut and dry and despite many beliefs built on the assumption that consumers behave in a rational, calculating way, it’s obvious they don’t (Froeb, McCann, Shor & Ward 2014). Utilizing an advertising portfolio that reaches out via a multimedia approach will capture some of those light buyers. According to Sharp’s first law, brands can’t get bigger on the back of loyal customers (Leslie 2015), therefore the majority of any successful brand’s sales come from people who buy it relatively infrequently.
    Reference:
    Froeb, L. & McCann, B. & Shor,M. & Ward, M.(2014) Managerial Economics: A Problem Solving Approach. Boston, Massachusets: Cengage Learning

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  7. I'm reading this post after just seeing the AMAs, sponsored by T-mobile. The screens were lit with their logo, and of course, because it was a huge show, people were holding up novelty light sticks given out by T-mobile. I sat here seeing the glaring advertisement of this company thinking how there are so many people watching this awards show right now, about 40% probably subconsciously considering T-mobile as their next wireless carrier -- I know I did (not subconsciously then, i suppose). TV is probably single-handedly the best way to grow a brand. Catchy infomercials, comedic jingle, famous actors, all help put a name out there either by causing a conversation to start or simply causing a laugh. It’s certainly the best way to reinforce a brand or company without shoving it down someone’s throat. I always felt that ads on YouTube, or similar streaming sites were quite annoying with their ads because they show up way too many times.

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  8. The text states that advertising is designed to increase attractiveness of a product to makes the demand less elastic. In order to grow a brand there are several steps that can ensure growth: Tapping into other markets increase brand awareness, use direct marketing, perfect brand image, meet customer concerns, attack the competition, the list goes on. However, the most important factor is price. Low prices mean consumers get more value per dollar spent. High prices mean less value for their money. So the net effect of low prices is higher demand. High prices, in contrast, decrease demand. When prices are set high it infers that the quality is also high. By offering promotions, discounts, and discounts, the reduction in price will attract more customers. Customers are more willing to pay a reduced price.

    http://www.marketingprofs.com/articles/2015/28714/35-ways-to-grow-your-brand

    http://smallbusiness.chron.com/advertising-affect-price-elasticity-65925.html

    ReplyDelete