Building Better Brands

How can you grow your brand? Spend more? Change ad copy? Shift support from advertising to promotion? Reposition your brand to better differentiate it from its competitors or to increase consumers' perceptions of its value? Every day in the U.S., brand managers develop and implement strategies intended to grow their brand's sales and manufacturers invest in marketing programs designed to attract new users and to attract more usage from current users, yet most established brands in the U.S. don't grow annually. What's the problem? Why don't brand sales respond to these investments? How can brands consistently grow in sales and share? What will really create a sustainable competitive advantage for your brand?

Market mix models

Market mix models based on UPC scanner data can unlock the answers. After more than ten years of collecting information and armed with a database of more than 50,000 brands across 250 categories and 55 countries, Ipsos-Novaction researchers can look at results across brands and markets to determine which marketing strategies are most likely to produce significant growth in a brand's sales. The underlying drivers of a brand's success are determined by analyzing trial sales, repeat sales and sales volume. The marketing mix model Sales Builder divide a brand's total sales into incremental sales--short-term increases caused by marketing programs such as promotion and pricing, and baseline sales--sales due to the brand's inherent demand, positioning, or strength in the marketplace. The causal variables are called push factors, meaning things the brand manager does to push the product towards the consumer, such as promotion and pricing. The demand-based variables are called pull factors, meaning measures of consumer's inherent demand for the product, such as differentiation and perceived value.

Comprehensive data for comprehensive results

The following analysis shows how brand managers can create sustainable growth for their brand. Of the 50,000 brands in the dataset, the 150 most recently analyzed established brands are included in this study, and while models may monitor brand performance over years, this analysis focuses on six months of changes. The analysis includes over 1,000 data points. The dataset used is robust, comprising large and small brands, global and local brands, declining and growing brands, and a broad mix of product categories. Ipsos-Novaction's market mix model, Sales Builder, is unique in that it incorporates measures of all key drivers of a brand's sales, not just the causal factors measured in scanner data. By incorporating measures derived from survey tracking data that the manufacturer has collected, the data set includes measures of key consumer attitudes about the brand that are related to its inherent demand among consumers. Further, survey-based measures of advertising quality from copy test results, help better capture and explain the effects of ad copy. The results from this comprehensive database show that while generating significant growth for established brands is complicated, there are winning strategies for successfully growing brand sales.

Small change

The first phase of the study investigated single effects--an increase or decrease in only one driver variable at a time. Variables included push factors (distribution, distribution quality, promotion, relative price) and pull factors (share of voice, ad quality, perceived quality, and perceived value) and analyzed whether the driver was decreased a lot (--), decreased somewhat (-), increased somewhat (+), or increased a lot (++). The table below shows the percentage of cases where the change to the driver increased sales growth by at least 5%. For example, 42% of brands that increased distribution somewhat achieved growth of 5% or more, while 65% of brands that increased distribution a lot achieved growth of 5% or more.

Single Effects on Sales Growth

The research shows that increasing push factors is somewhat more likely to produce growth than increasing pull factors. The strongest single driver appears to be distribution (either total availability or quality of distribution), though it isn't always possible to increase distribution, especially for large brands. Certainly, if a brand has the opportunity to improve its distribution or distribution quality, this should be explored.

The most striking result in the table, however, is that the single effects are not much more likely to produce significant growth than flipping a coin! Of all the single effect strategies shown, only increasing a brand's distribution gives significantly more than a 50% chance of driving growth. Manufacturers don't want to play Russian roulette: they want to know they are using a proven, brand-building strategy before they invest millions of dollars.

Based on this finding, we extended our analysis with the purpose of identifying those strategies, if any, that had very high probability (70-80%) of producing significant brand growth. We suspected that to achieve this probability of brand growth would require changing multiple drivers at once, so we began analyzing combined effects.

Winning strategies

We examined the growth produced by over 225 strategies (i.e., combinations of drivers being changed) to identify eighteen "winning strategies" --strategies that have a very high probability (about 70% or more) of growing brand sales.

Of course it's not possible to show results for all 225 strategies here, but we will highlight some very interesting findings. Some strategies that we suspected would be winners weren't. For example, increasing ad quality a lot and share of voice a lot generated only a 61% probability of significant brand growth (again, our results measure was growth in 6 months, so the true effect of investment in advertising is likely understated.) And some strategies that generate a high probability of growth simply aren't sustainable; the bankruptcy strategy, which involves increasing promotion a lot while cutting base price a lot, produces a 71% chance of significant sales growth but certainly won't produce long-term profits.

The eighteen winning strategies are summarized below. The table shows the percentage of cases where the strategy increased sales growth by at least 5%. For example, brands that increased ad quality somewhat or a lot and increased consumer perception of the brand's perceived value had an 83% probability of increased sales growth by at least 5%. Wow!

Winning Strategies for Brand Growth

These winning strategies also reveal some marketing truths about what works and what doesn't to build brands. First, marketers need to manipulate more than one driver at a time to achieve significant growth in brand sales. Manipulating more than one factor greatly increases the probability that the brand will see significant sales growth in the next 6 months. Secondly, push factors--which have received the most attention from marketers and modelers in the past ten years--can be effective brand builders. However, overall they appear to be somewhat less strong drivers of significant growth than pull factors. Importantly, the only push factors numbered among the winning brand builders are increased distribution and decreased price, with the exception of the bankruptcy strategy.

The winners clearly show the importance of understanding and manipulating pull factors to drive brand growth. Twelve of the eighteen winners include manipulation of at least one pull factor, and several different pull factors are demonstrated to be winners (ad quality, share of voice, perceived quality and value). It is not always necessary to increase pull factors a lot to drive significant growth either--even a small increase in pull can contribute to significant growth.

Most of the mix analysis done in the U.S. has focused on push factors; thus pull factors and their sales impacts are not well understood. Clearly, these should be the focus of more scrutiny by marketers and modelers in the next ten years.

Recommendations for Brand Managers

The first and best opportunity for quickly achieving sales growth is to maximize distribution and distribution quality. Beyond increasing distribution, driving significant sales growth is not easy. Producing significant growth requires a fundamental change to the brand. You need to manipulate more than one driving factor at a time, and you probably need to incorporate changes to pull factors as well as push factors. The strongest pull drivers are perceived quality, perceived value, and differentiation relevant to consumers in the market. Giving the brand a stronger competitive advantage in consumers' eyes increases the brand's pull.

To manage your brand for growth:

• Assess pull and push factors regularly, today and over time, in order to understand the brand's overall health and equity.
• Nourish your brand's pull over time by implementing strategies that strengthen consumers' inherent desire for the brand. Remember, consumer pull factors are not static and immutable.
• Change the brand fundamentally whenever the pull stops growing or is at a significant disadvantage to competitors.
• Stay true to your brand's equity when making fundamental changes or risk alienating current users.
• Understand the likely effects of fundamental changes to your brand on consumer perceptions and sales. Changes are risky and must be tested pre-market.
• Employ appropriate research tools: forecasting and push/pull diagnostics are key.