Why Every Brand Is A Growth Brand

Walker SmithNovember 9, 20233 min

Standing still means shrinking. Brands must grow. And not only to grow the business. Brands must grow for the business to remain steady. Like the Red Queen—running as fast as possible just to stay in the same place. The basic math is easy, as seen below from Kantar Worldpanel’s Brand Footprint report. In 2022, there were 180 million million more households worldwide than in 2013. From just over 1 billion to nearly 1.2 billion in ten years. Let’s say a global brand had 1 percent penetration among all households in 2013. That’s 10 million. If the brand stayed even with 10 million, that would be 0.83 percent penetration in 2022. Same number of customers but a lower share (all other things equal). All because the brand failed to keep pace with population growth. Brands must add more to keep from losing ground, much less gaining new ground. Which means that every brand is a growth brand.

Why Every Brand Is A Growth Brand

Innovation Is Job One. One of Peter Drucker’s most famous aphorisms is that there are only two essential functions of a business, innovation and marketing. Drucker felt everything else could be outsourced—these must be held close. Drucker’s observation seems particularly apropos in light of the Worldpanel arithmetic. A brand that fails to continually build and invest in its value proposition will be unable to grow enough even to hold its position. This is a particularly pressing issue in today’s increasingly stale and undifferentiated marketplace. Across categories, consumer spending seems to be teetering after its post-pandemic spike as much from boredom as from anything to do with a pocketbook squeeze. New items are only 2 percent of retail offerings now, versus 5 percent pre-pandemic. Breakthrough innovation is harder than ever.

Old Friends Or New Friends? The necessity of growing just to stay even raises the age-old issue of loyalty versus penetration, with the attendant worry about losing old customers in the pursuit of new customers—like the classic case of giving a discount to new subscribers while renewing existing subscribers at full price. However, this is a false dilemma. Consumers differ by their experience with a brand, and thus the odds, higher or lower, that they will buy it on their next opportunity. It’s not loyal versus new. It’s easy-to-win versus hard-to-win. Better odds versus lower odds. Oftentimes customers who’ve never bought before will be easier to win than prior customers. Targeting should be built from easiest to hardest, with the goal of at least staying even with population growth. Surprise-and-delight may well boost the odds of buying again, but that’s always an open empirical question, never gospel.

Slowing Growth. The future challenge for brands is slowing economic growth. GDP growth is nothing but population growth times productivity growth—more people producing more things. When population growth slows, the result from that multiplication is inherently smaller. And global population growth is slowing. From this Worldpanel math, you can see that slower household growth means that the number of new households needed to stay even is reduced. But a brand’s topline will grow more slowly as well (other things equal, like price). Plus, the future universe of available new customers is smaller as well, which narrows the market size in total, thereby intensifying competition and marketing costs. Better to draft behind a growing market than to fight for position in a slowing market.

That’s what the arithmetic shows. The future will be a fight.

Contributed to Branding Strategy Insider By: Walker Smith, Chief Knowledge Officer, Brand & Marketing at Kantar

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