Summary of How Brands Grow

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7

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  • Applicable
  • Overview
  • Concrete Examples

Recommendation

Companies waste time and money on ineffective marketing strategies. Marketing research professor Byron Sharp suggests that, instead, they should act according to research that shows definite patterns or “laws” in how buyers buy and brands grow. He defies conventional marketing theories as he explains why sellers should use mass marketing to reach light buyers, and why loyalty programs and price promotions don’t work. According to Sharp, marketing managers erroneously focus on serving existing customers rather than on acquiring new ones. However, Sharp doesn’t mention Groupon, Living Social and similar sites that redefine mass marketing every day. And, except for the occasional quirky quote, the prose – while informative and applicable – is dense and dry. getAbstract recommends his insights to marketing students, professors and researchers; to those seeking to understand consumer behavior; and to data-oriented ad buyers or analysts.

About the Author

Byron Sharp is a professor and director at the University of South Australia’s Ehrenberg-Bass Institute, which specializes in marketing research.

 

Summary

Determining Brand Growth

Most corporate marketers do not understand how buyers buy and how marketing works; this information gap makes for inefficient and costly marketing. Research shows definite patterns in how consumers make purchasing decisions and how brands grow. How well a brand sells depends on how many buyers it has and how often they buy.

In theory, a brand can be large, either because a few buyers purchase it frequently or because many people buy it occasionally. Consumer loyalty is stable across different-sized brands. Large brands have higher penetration, but consumers buy most brands at an equal rate of frequency (if you need a new box of detergent monthly, you buy it monthly, whatever the brand).

In a comparison of five United Kingdom laundry detergents based on market share, penetration and purchase frequency, Persil had the highest market share and penetration, Surf had the lowest, and all other brands were in the middle. Purchase frequency was similar for all brands. Two brands with equal market share also have, in effect, equal market penetration, “a metric that records how many people bought the brand, at least once, in a particular time period...


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