How Brands Grow on a Small Budget

If you’ve read “How Brands Grow,” you may have noticed that something critical is missing.

There are incredibly valuable discussions and data around mental and physical availability, category entry points, Distinctive Brand Assets, light buyers vs heavy buyers, customer acquisition vs. retention, market penetration vs loyalty, the 95/5 rule and so on.

The book shows you empirically why, how, when and where to spend your marketing budget. It’s awesome. But ...

There’s a massive, glaring hole in the heart of “How Brands Grow.”

Small brands.

There’s plenty of discussion around giants like Nike, Coke, Ford, Apple, Harley-Davidson, and larger brands from the UK and Australia.

There’s nothing about small brands. Well, there’s the Double Jeopardy Law. That’s all about small brands.

Because of the Double Jeopardy Law, small brands trying to grow are playing up a very steep hill.

The Double Jeopardy Law states that smaller brands have less market share because they have fewer customers who buy less often.

Okay. That seems obvious. It's essentially the definition of a small brand. Except for the “who buy less often” part. That’s interesting.

Because customer loyalty is mostly a function of brand size.

Forget the Apple fanboys who line up for hours to get the latest whatever thingy. They make for great earned media — or they used to — but they are a vanishingly small minority of customers.

Larger brands have more market share because they have more customers who buy slightly more often. Emphasis ours.

Theoretically, there are two ways to increase sales — get existing customers to buy more often or continuously acquire new customers.

In reality, getting existing customers to buy more is not a path to growth.

Because, at some point, existing customers will not need or want more of what you’re selling. People can only buy so much toothpaste, dishwashing soap, health insurance or SaaS.

Research shows — and Byron Sharp makes it very clear — the only way to grow market share that makes any mathematical sense is to continuously reach more and more people.

But that means spending more money on ads and media, right? And smaller brands don’t have more money.

How do you play to win when the deck is stacked against you?

How do you take on category leaders and carve out more market share for yourself?

For small brands, this is where great strategy, creative and creativity become so vital.

Over the next few weeks, we’re going to pull pages from a few different playbooks and talk about what small brands can do to drive growth on limited budgets.

We’ll see you next time.

Sources!

“Chapter 2 of How Brands Grow: What Marketers Don’t Know” – Byron Sharp