Business Media & Marketing

Sunday 22 April 2018

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

'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'. Stock photo
'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'. Stock photo

John McGee

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-to-play" 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.

Sunday Indo Business

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