My second post on Byron Sharp’s How Brands Grow focuses on an excellent point he highlights that it is easy to forget. All those interested in marketing metrics should be aware of the challenge of double jeopardy in marketing. Sharp explains this and the impact it has on marketing metrics. This impact can confuse those not thinking about the problem who might come to a conclusion that is more driven by the nature of math than any strategic achievements of a firm.
The Double Jeopardy Law
Often when decomposing market share into the percentage of the market who are buying it and the amount they are buying we see bigger brands do better on both. Brands that a lot of people buy also tend to sell a little more to each of their buyers.
This pattern is known as the ‘double jeopardy’ law because smaller brands get hit twice; their sales are lower because they have fewer buyers who tend to buy the brand a little less often.
Sharp, 2014, page 42
Double Jeopardy In Marketing: Why Would This Happen?
Sharp explains a core reason for the widespread observation of double jeopardy in marketing can be due to the nature of the market. It is somewhat inevitable, rather than a result of clever, or not-so-clever, marketing. Distribution/availability can be key. Big brands are there whenever you want them. Small brands are often not available. Some people who would prefer the small brands can’t get them and so buy the big brands on occasion. Those who normally buy from small brands are simply more likely to encounter situations when they can’t buy their favorite choice and so go for the bigger alternative.
He gives an example of defection at Australian banks. The smaller, more local Adelaide Bank saw much more defection than the national banks. Are national banks better? Not necessarily, but if you move you can bring your national bank account with you. If your bank has a small footprint it may cease to be convenient. Customers who didn’t want to defect did so because they largely had to. Loyalty to a big brand with a large footprint is much easier than loyalty to a brand you find it hard to access.
It is always worth looking at data and coming up with a theory (by which I just mean a reasonable explanation) of what is driving any empirical observation.
For more on empirical and theoretical questions and metrics see here, here, here, and here.
Read: Byron Sharp (2014) How Brands Grow: what marketers don’t know, Oxford