Big brands are not dy­ing ... they are just chang­ing

Sunday Independent (Ireland) - Business & Appointments - - FRONT PAGE -

BIG brands are alive and kick­ing and ru­mours of their demise are greatly ex­ag­ger­ated. That’s one of the key find­ings of an ev­i­dence-based and ground-break­ing global re­search pa­per car­ried out by the Ehren­berg-bass In­sti­tute for Mar­ket­ing Science at the Univer­sity of South Aus­tralia which has just been pub­lished.

The re­search pa­per ex­plodes many of the myths that would have us be­lieve that, in an age of dis­rup­tion brought about by dig­i­tal tech­nol­ogy, es­tab­lished big brands are in ter­mi­nal de­cline, brand loy­alty is dead and young peo­ple are turn­ing their noses up at the es­tab­lished brand hege­mony.

Led by Pro­fes­sor By­ron Sharp, one of the founders of the In­sti­tute, the re­searchers ex­am­ined a num­ber of com­monly ped­dled mar­ket­ing mis­nomers and looked for ev­i­dence to back them up by us­ing five years of Nielsen FMCG (fast-mov­ing con­sumer goods) data as well as em­pir­i­cal re­search pa­pers from aca­demics around the world.

It has to be stressed that this is ev­i­dence-based re­search and not the ram­blings of an overly cyn­i­cal new-age mar­ket­ing guru who thinks ev­ery­thing pre-dig­i­tal is dy­ing.

“The no­tion that large brands are dy­ing is sim­ply not true. Nor has the world fun­da­men­tally changed in a way that favours small brands over big,” ac­cord­ing to the au­thors of the Are Big Brands Dy­ing? re­port.

“We con­clude that there have been some shifts in the mar­ket­ing en­vi­ron­ment that have cre­ated new op­por­tu­ni­ties for some new­com­ers, but some of the cur­rent claims are over-stated and oth­ers are bla­tantly wrong,” they note.

An anal­y­sis of the per­for­mance of lead­ing brands across 21 FMCG cat­e­gories in the US found that 48pc of the top five na­tional brands in­creased sales rev­enue, while 40pc lost some rev­enue over a five-year pe­riod. But the losses were small in the grand scheme of things.

While some big brands may have lost mar­ket share, it was usu­ally to other big brands as op­posed to smaller chal­lenger brands.

The re­search also knocks on the head the com­monly held belief that younger con­sumers are ditch­ing es­tab­lished brands. While this myth is of­ten prop­a­gated by chal­lenger or of­ten youth-fo­cused brands, the fig­ures show oth­er­wise.

While the re­search did show that an anal­y­sis of 1,950 sub-brands in 19 con­sumer-goods cat­e­gories did find a “slight skew” to­ward younger con­sumers, it dis­ap­peared if th­ese sub-brands grew suc­cess­fully.

It also noted that in more than 40pc of cat­e­gories an­a­lysed, the top five lead­ing brands ac­tu­ally had greater mar­ket share among younger con­sumers than they did among their older co­hort.

Ad­mit­ting that there was a trend for brands to high­light their brand val­ues to woo younger con­sumers, the idea that younger peo­ple dis­trust and re­ject big brands is not backed up by ev­i­dence.

“While there is cer­tainly a trend for brands to sig­nal virtues like be­ing eco-friendly, the idea that young peo­ple in­creas­ingly dis­trust and re­ject big brands is not backed by the ev­i­dence,” says the re­port.

One of the other in­ter­est­ing find­ings is the of­ten trot­ted out belief that dig­i­tal me­dia has cre­ated a level play­ing field for all brands ir­re­spec­tive of their size. Not true, says the re­search. In the good old days es­tab­lished and new brands could use dig­i­tal me­dia to their ad­van­tage and for a rel­a­tively low cost. Now that the dig­i­tal ecosys­tem op­er­ates on a “pay-toplay” ba­sis, smaller brands that don’t have the advertising bud­gets are at a dis­ad­van­tage to their big­ger ri­vals who can out-spend them rel­a­tively eas­ily.

In fact, the re­port notes, larger brands have prob­a­bly over-spent on dig­i­tal me­dia, sim­ply be­cause they could. They are also the most likely to be the brands that are in­vest­ing in pro­gram­matic advertising but be­cause of the is­sues that have dogged it to date — ad fraud, wastage, mid­dle-man costs and lack of ad viewa­bil­ity — big­ger brands have also had to en­dure much greater wastage. In an ideal world where the dig­i­tal ecosys­tem was not tainted, it is en­tirely con­ceiv­able that the big­ger brands would have fared even bet­ter in terms of their ROI. Why does any of this mat­ter? A lot of the new mar­ket­ing think­ing in the dig­i­tal age has been quick to chal­lenge the old in­dus­trial age by say­ing its days are num­bered and newer brands that are leaner, more agile or pan­der to a par­tic­u­lar de­mo­graphic will win out. We now know — based on the ev­i­dence — this is not true.

The re­al­ity is big brands are chang­ing too. They have more money to in­vest in mar­ket­ing and they are get­ting bet­ter at it all the time. But they have also re­alised that in­no­va­tion and the cus­tomer have to be at the cen­tre of their busi­nesses. And if they find a plucky young up­start that is nib­bling away at its mar­ket share or has de­vel­oped a new process or cat­e­gory, they will sim­ply go out and buy it.

It’s been like that for don­key’s years. Con­tact John Mcgee at john@ad­world.ie

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