Business Day

The best way to grow consumer products brands

The best way brands can grow over the long term is to increase the number of buyers.

著者：Gus Brusselmans and Oliver Merkel

First published on 6月 10, 2014
min read


This article originally appeared in Business Day. Consumer products companies throughout the world are waking up to a profound new finding: The best way brands can grow over the long term is to grow the number of buyers. That may sound obvious or even like circular reasoning, but the reality is that it’s a big departure for consumer goods executives. Most brand plans call for tapping into a well-segmented group of shoppers, getting them to try the brand and converting them into avid consumers who buy larger and larger quantities over time. While this approach may appear attractive, evidence shows that it just doesn’t work. Instead, there’s a simple rule that successful brands follow: It’s all about increasing household penetration. (Penetration is defined as the percentage of households in a market buying a particular brand in a given year.) This finding emerged from recent Bain & Company analyses of the buying habits of nearly 100,000 shoppers across the globe, based on data collected by Kantar Worldpanel, and our experience working on more than 600 brand growth projects. Across dozens of categories and in such far-flung markets as Indonesia or the UK, we have systematically arrived at the same insight. The one thing that all leading brands have in common is that they also lead their categories in penetration. From our experience, loyalty across categories doesn’t vary significantly over time, but household penetration does. Brands primarily stand out because more people buy them. Look at China. Tsing Tao in beer, Pampers in baby diapers and Maybelline in color cosmetics all earned penetration rates that are significantly higher than the average of the top 20 competing brands—at least four times higher. But penetration is a leaky bucket, and even top brands can experience churn rates of nearly 50%. That’s why winners continually invest to acquire more new consumers every year than they lose. Also, despite the importance of penetration, too many brands make the mistake of limiting their imagined universe of users. Consider that Red Bull would have hit a wall if it viewed its brand as competing only in “premium energy drinks.” The brand realized there was a much broader competitive space – many consumers could easily trade off a Red Bull for an energy bar. By acknowledging this, the brand managed to boost its penetration in the US to above 14% of the adult population. So, how can brands grow their penetration rates? They need to be in the game for the long run. Unfortunately, few companies choose to lay plans for longer than the next 12 months, and many managers change everything from the types of SKUs to the advertising strategy, rather than staying the course. They risk losing out to rivals that stick with a plan for slowly and steadily increasing penetration. Meanwhile, boosting penetration is difficult to do in isolation from another critical performance indicator: brand consideration (defined as the percentage of consumers who would consider your brand for a given purchase occasion). Building penetration depends on continually building consideration—which in turn helps increase penetration. The steady path for earning consideration and penetration requires investing in three key brand assets: memory structures, product portfolios and in-store assets. Memory structures. Building memory structures means anchoring a brand in consumers’ long-term memories, using the full range of touchpoints. Winning companies broadcast a brand’s messages widely enough to be heard by the largest possible swath of consumers. To get into consumers’ heads – and stay there – they articulate messages that are distinct and memorable. It takes persistence, repetition and consistency. Skin care brand Nivea has essentially been using the same visual cues for its core product for decades. And winning brands concentrate their resources on fewer brands. They identify those that either have enough scale to self-fund the required investments or enough potential to break into a new consideration set. Product portfolios. Too many brands and SKUs can result in ineffective levels of advertising, shopper confusion and other woes that erode penetration. Surprisingly few innovations eventually result in increased penetration. They fail at a high rate and distract marketing and commercial teams from supporting core SKUs. For their part, hero SKUs generate higher volumes that increase scale, leading to bigger margins that enable investment to fuel growth. Winners constantly invest in their hero SKUs to keep building on their success, with every new product meeting a high threshold for different consideration sets or consumption occasions, thus contributing to penetration. Consider the water company that introduced smaller bottles with special caps—the perfect companion for thirsty joggers. In-store assets. Finally, having targeted the most important SKUs, it’s critical to adequately invest to activate them at the point of sale and ensure they’re always available at the right place on the shelf. Leading companies identify the store assets that are critical to own in their category. They define a compelling picture of success to guide their salesforce. These winners adopt a “store-back” view to reverse-engineer their core processes and make them compatible with their trade customers’ constraints. For example, they consider a retailer’s space constraints when defining their product portfolio, ensuring that the majority of the products actually see the light of day. As consumer goods companies embark on the long journey of earning penetration and consideration, they can rely on an approach that has helped rejuvenate brands in a range of categories across channels and markets: The Bain Brand Accelerator^SM. Through this process, we first work with brand and category teams to rediscover the rules of their category and the real assets of their brand. We then help them define plans to ensure proper activation and funding to eventually get their brands to more and more people. This interactive journey, anchored in deep business facts and stimulated by vibrant creativity, brings together the best of consumer goods companies’ talent and capabilities to revitalize their brands. The patterns we observed are consistent with the theories developed by Professor Andrew Ehrenberg and hold true in a broad variety of categories and markets. They are being further studied by the Ehrenberg-Bass Institute for Marketing Science.

This article originally appeared in Business Day.

Consumer products companies throughout the world are waking up to a profound new finding: The best way brands can grow over the long term is to grow the number of buyers.

That may sound obvious or even like circular reasoning, but the reality is that it’s a big departure for consumer goods executives. Most brand plans call for tapping into a well-segmented group of shoppers, getting them to try the brand and converting them into avid consumers who buy larger and larger quantities over time. While this approach may appear attractive, evidence shows that it just doesn’t work.

Instead, there’s a simple rule that successful brands follow: It’s all about increasing household penetration. (Penetration is defined as the percentage of households in a market buying a particular brand in a given year.) This finding emerged from recent Bain & Company analyses of the buying habits of nearly 100,000 shoppers across the globe, based on data collected by Kantar Worldpanel, and our experience working on more than 600 brand growth projects.

Across dozens of categories and in such far-flung markets as Indonesia or the UK, we have systematically arrived at the same insight. The one thing that all leading brands have in common is that they also lead their categories in penetration. From our experience, loyalty across categories doesn’t vary significantly over time, but household penetration does. Brands primarily stand out because more people buy them.

Look at China. Tsing Tao in beer, Pampers in baby diapers and Maybelline in color cosmetics all earned penetration rates that are significantly higher than the average of the top 20 competing brands—at least four times higher.

But penetration is a leaky bucket, and even top brands can experience churn rates of nearly 50%. That’s why winners continually invest to acquire more new consumers every year than they lose.

Also, despite the importance of penetration, too many brands make the mistake of limiting their imagined universe of users. Consider that Red Bull would have hit a wall if it viewed its brand as competing only in “premium energy drinks.” The brand realized there was a much broader competitive space – many consumers could easily trade off a Red Bull for an energy bar. By acknowledging this, the brand managed to boost its penetration in the US to above 14% of the adult population.

So, how can brands grow their penetration rates?

They need to be in the game for the long run. Unfortunately, few companies choose to lay plans for longer than the next 12 months, and many managers change everything from the types of SKUs to the advertising strategy, rather than staying the course. They risk losing out to rivals that stick with a plan for slowly and steadily increasing penetration.

Meanwhile, boosting penetration is difficult to do in isolation from another critical performance indicator: brand consideration (defined as the percentage of consumers who would consider your brand for a given purchase occasion). Building penetration depends on continually building consideration—which in turn helps increase penetration. The steady path for earning consideration and penetration requires investing in three key brand assets: memory structures, product portfolios and in-store assets.

Memory structures. Building memory structures means anchoring a brand in consumers’ long-term memories, using the full range of touchpoints. Winning companies broadcast a brand’s messages widely enough to be heard by the largest possible swath of consumers. To get into consumers’ heads – and stay there – they articulate messages that are distinct and memorable. It takes persistence, repetition and consistency. Skin care brand Nivea has essentially been using the same visual cues for its core product for decades.

And winning brands concentrate their resources on fewer brands. They identify those that either have enough scale to self-fund the required investments or enough potential to break into a new consideration set.

Product portfolios. Too many brands and SKUs can result in ineffective levels of advertising, shopper confusion and other woes that erode penetration. Surprisingly few innovations eventually result in increased penetration. They fail at a high rate and distract marketing and commercial teams from supporting core SKUs.

For their part, hero SKUs generate higher volumes that increase scale, leading to bigger margins that enable investment to fuel growth. Winners constantly invest in their hero SKUs to keep building on their success, with every new product meeting a high threshold for different consideration sets or consumption occasions, thus contributing to penetration. Consider the water company that introduced smaller bottles with special caps—the perfect companion for thirsty joggers.

In-store assets. Finally, having targeted the most important SKUs, it’s critical to adequately invest to activate them at the point of sale and ensure they’re always available at the right place on the shelf.

Leading companies identify the store assets that are critical to own in their category. They define a compelling picture of success to guide their salesforce. These winners adopt a “store-back” view to reverse-engineer their core processes and make them compatible with their trade customers’ constraints. For example, they consider a retailer’s space constraints when defining their product portfolio, ensuring that the majority of the products actually see the light of day.

As consumer goods companies embark on the long journey of earning penetration and consideration, they can rely on an approach that has helped rejuvenate brands in a range of categories across channels and markets: The Bain Brand Accelerator^SM. Through this process, we first work with brand and category teams to rediscover the rules of their category and the real assets of their brand. We then help them define plans to ensure proper activation and funding to eventually get their brands to more and more people. This interactive journey, anchored in deep business facts and stimulated by vibrant creativity, brings together the best of consumer goods companies’ talent and capabilities to revitalize their brands.

The patterns we observed are consistent with the theories developed by Professor Andrew Ehrenberg and hold true in a broad variety of categories and markets. They are being further studied by the Ehrenberg-Bass Institute for Marketing Science.