James Intriligator on how brands grow

James Intriligator on how brands grow

Professor of Consumer Psychology and Innovation James Intriligator gives us his view on Byron Sharp’s popular book How Brands Grow..

 “The Sharp Approach”:  Moving Beyond 20/20 Hindsight and Simplistic Segmentation

I recently read Byron Sharp’s book “HOW BRANDS GROW”. I found that Sharp raises some excellent points and concerns for modern marketing.  His book offers many data-driven insights.  Perhaps that is why the likes of Coca-Cola have been beating paths to his door.   His book offers up seven core “rules” of marketing.  Many of these rules (observations?) are likely accurate and useful for marketers; others, not so much.  Let’s raise some important caveats – after all, we don’t want to throw the baby out with the bathwater.

History is written by the winners

The first thing worth pointing out is this:  all of Sharp’s data sets focus on “the winners” in mainstream product categories – long-term, well-funded success stories.  And, while his laws describe how such winners move, it is not clear what relevance the laws have for advising others how to become winners.  Also unclear is how relevant they are for companies in other (e.g. niche, new, or design-led) categories.  This “20/20 Hindsight” — looking only at the winners of an evolutionary game — can often mislead innovators.  Old tropes like “That’s how Apple did it” or “Einstein worked in a patent office – so maybe I should too” are sometimes simply not applicable. Indeed, innovation often pops out of specialisation; it’s the polar opposite of “one size fits all.”  With millions of humans (or brands) competing in the world, looking at the “winners” can sometimes be informative – but it can also be drastically misleading.

Segmentation is still alive

Sharp suggests that brand owners and marketers should not bother with tailoring messages for specific demographics – they should just get their messages out in front of everyone.  Well . . .  yes, if you are Coke and want to increase your market penetration, then getting yourself out in front of millions more people is key to brand penetration. But of course many brands, products, and services don’t have the luxury of nearly unlimited marketing budgets.  And often products will not be targeted at (or desired by) everyone.  For most brands, strategic spending is key to development, penetration and growth.  As an example, if you are a struggling new start-up aiming to sell high-quality razors delivered weekly to the door of affluent men (see: DOLLAR SHAVE CLUB), then advertising on billboards in low-income areas is a waste of money. Of course, understanding segments isn’t just crucial for maximising the return-on-investment of marketing spend — it’s also vital for crafting your products, brands, and campaigns.

Sharp tries to show that segmentation doesn’t really work by looking at product categories such as cars, beers, and soft drinks.  He shows that there is no real difference, in terms of brand preference, based on his segmentation variables.  But one big problem is that he only uses the most basic of segmentation criteria: age, gender, and household size. Is it really very surprising that beer brand preferences don’t skew on age?  Or that leading car brands are sold about equally to men and women?  This very basic approach is barely segmentation at all. It’s not the kind that any respectable branding or marketing agency would employ.  Attitudes and beliefs as well as a range of other psychological and social factors – these are the keys to effective segmentation strategies.  Surprisingly, Sharp fails to look at any of these criteria – other than “buyer personality,” which has long been known to ineffective for strategic segmentation (would anyone expect extroverts to buy Bud Light more than introverts?).

The earlier example of “dollar shave club” presents a good example of effective segmentation and branding.  Although the brand is called “dollar shave club”, and appears to be targeting low-end buyers with the word “dollar”, they’re not.  This is all part of their brand image and messaging. Sharp appears to simply not understand this aspect of branding – brands don’t just SAY what they are and then move along.  Perhaps in a future blog post I can say more about brand development, but for now let me give you one simple example of Sharp’s misunderstanding of branding.  Consider Yorkie chocolate.  Sharp goes through great pains to demonstrate that their branding simply fails – in that, although they say “It’s not for Girls”, girls still buy it. But, just like dollar shave club, often the brand is not what it says on the tin.  So, going back to segmentation, if you want to see a lovely example of how effective (and cost-effective) good segmentation can be, check out dollar shave club’s VIDEO ADVERT.  They spent under $1000 on the ad that targeted their brand-relevant segment and the ad generated over $20m in sales.  Now that’s good branding and segmentation working hand-in-hand.

Innovation is still alive.

Sophisticated segmentation must be a core part of any product, brand, or campaign development activity – but it’s not the end of the story.  Instead it should be part of a holistic, design-led development approach.  As RESEARCH HAS DEMONSTRATED, companies that incorporate design thinking into their development processes are far more effective.  Some highlights from that report:

–        Shares in design-led businesses have outperformed the FTSE 100 by more than 200% over the past decade.

–        Rapidly growing businesses are nearly six times as likely as static ones to see design as integral.

–        For every £100 a design-alert business spends on design, turnover increases by £225.

–        Businesses that add value through design see a greater impact on performance.

Work smarter:  segment and innovate.

Although Sharp has some good analyses and advice to offer, I recommend thinking carefully about his interpretations – and his recommendations.  Don’t be overly swayed by “how the winners got there” or “how global leaders perform.” Segmentation and innovation – when done right – is still alive and well.  In fact segmentation, innovation and holistic design-thinking may help you become a brand that Sharp includes in his next backward-looking winners analysis.  Segment (well!), be holistic, be nimble, be creative, and innovate.

JAMES INTRILIGATOR
Professor of Consumer Psychology and Innovation
Bangor University