Only one in five consumer products companies consistently grow over a long period of time. Eileen Shy, a partner with Bain's Consumer Products practice, discusses how winning brands succeed by focusing on household penetration.
Read the Bain Brief: How to Outgrow Your Competitors—Lessons from US Brand Winners
Read the video transcript below.
EILEEN SHY: Few consumer products companies actually achieve growth over a long period of time. Only one in five brands consistently grows. What do the winning brands do? They focus on growing household penetration. They grow penetration at 1.3% per year, focusing on selling a little bit more to a lot of people rather than exclusively focusing on heavy users.
Three key areas of success for US brand winners—one, they focus on assortment effectiveness; two, they focus on brand memorability, spending not necessarily more but more effectively to build memorability with their brands; and finally, they focus on winning at the point of decision—winning on shelf with really superior shopper visibility.
To start, we ask five questions. First, are you measuring household penetration as a key performance indicator? Next, are we using our innovation plans to build incremental penetration? With our advertising and promotional strategies, are we focused on building lasting memorability?
Do we have the perfect sales execution to really build that on-shelf presence that we need? And finally, are we saddled with excess cost and complexity that is overwhelming our organization? You can beat the odds. You can become one of the one in five brands that consistently grows, but it requires unwavering focus to do so.
Across categories and countries, increasing penetration is the primary way to build big brands. This is a key insight from the research of the Ehrenberg-Bass Institute for Marketing Science, summarized by Professor Byron Sharp, director of the Institute, in his book How Brands Grow, based on decades of observations of buying behavior.