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Hello Marketing Chroniclers. Short and sweet this month. Got some really pithy insights around brand loyalty, a fantastic WARC report I think everyone should read, and some thoughts on the “Maple Leaf Premium”. Enjoy 🧠

REPORT/

The Multiplier Effect

A few weeks back I had Ann Marie Kerwin from WARC on the Account Planning Group of Canada’s “Grow Your Brain” show where she took us through their latest report titled "The Multiplier Effect".

One of the key takeaways from reframing the role of brand marketing as a multiplier for performance initiatives is this idea of "watering the tree".

If you all you do is pick the fruit from the tree but don't do enough to water it, at some point there will be nothing left to be picked.

Or as Ann Marie calls it, brand serves as the "fertilizer" to keep the crops growing and healthy.

For the past 10-15 years our industry has slid into this "high-touch", ROI-driven, risk-averse digital machine in which brand managers measure their brand's success by how many engagements they're getting on social media, or by how many leads they're generating for their sales team.

In the process, brand equity has been forgotten and became something largely done by big CPG brands only. Yet, as WARC's latest report shows, when we inject brand building activities into our plans, performance sky rockets - to upwards of 90% increase in ROI.

And the brands who should be doing brand marketing the most are also the ones doing it the least - I'm talking to you small brands!

Read the full report here.

OPINION/

What Do We Mean By “Loyalty”

The concept of "loyalty" is one of the most misunderstood concepts in the world of marketing.

Empirically speaking, loyalty is the propensity of consumers to purchase your product again within a set timeframe (which can vary by category).

Advocacy, which often gets lumped into loyalty-speak, does not require the consumer to purchase your product. Meaning, I can advocate for Louis Vuitton even though I don't own anything from them.

Back to loyalty - all categories have what one could call "natural loyalty". Meaning, consumers will have a certain repertoire of brands that they buy from (what is known as "polygamous loyalty", as the marketing scientists at the Ehrenberg Bass Institute call it), and there's very little brands can do to increase the frequency of purchase of their product without adding more options, variations and extensions to whatever it is that they sell.

A great example is the average number of TV channels that people tune in per week. Nielsen data shows that households that have between 1-40 channels only tune into 5-9 of them on average. As more channels get added, that number climbs up marginally.

Another fascinating experiment in the field of loyalty was one done back in the 60s that aimed to measure how quickly people formed loyalty within categories. Bottles of identical beer labelled with different letters (M, L, P, etc.) were displayed to consumers (& randomly repositioned after each week to mitigate for bias). Within the first few repeat purchases there was nearly 100% probability that consumers would choose a different brand than they had on the previous trial (eg, they were switching brands), but that quickly dropped to 50% (and kept dropping further) within the next few purchases.

These types of experiments yield quite similar results over and over again no matter the category - consumers have a natural tendency to form repertoires of brands that they buy as a way to minimize cognitive load.

The caveat with these experiments is that in categories that are purchased less frequently (i.e. analgesics or cars) there's a statistical skew towards higher levels of loyalty because consumers may have only shopped the category once or twice within the measured timeframe.

The bottom line is: the distribution of repeat brand purchase skews significantly to the left (i.e. most cereal consumers buy the category only 1-2 per year). To become a heavy category buyer all it takes is to buy it a couple more times and you crack the top quartile. Meaning, most brands' sales volume comes from light category buyers!

This isn't to say that brand loyalty doesn't exist - as the data shows it certainly does, but rarely is 100% loyalty. And it also doesn't negate the importance of brand advocates who are often great sources of inspiration for future product development and improvement.

But if you are to GROW your brand, figuring out how to attract light category buyers is the only mathematical path to meaningful growth.

OPINION/

The “Maple Leaf Premium”

I was recently asked if the "buy Canadian" trend will continue for as long as the tariffs threat loom large (and possibly beyond) - and my answer was simple: consumers buy groceries largely based on price and quality - if that happens to be Canadian, then they'll buy Canadian. If not, well...

There's a pricing research methodology in marketing research called the Van Westendorp method. It asks 4 simple and direct questions:

1. At what price would you consider the product to be so inexpensive that you would feel the quality couldn't be very good? (Too Cheap)

2. At what price would you consider the product to be priced so low that you would feel it's a bargain? (Bargain Price)

3. At what price would you say the product is starting to get expensive, but you still might consider it? (Acceptable Expensive)

4. At what price would you consider the product to be too expensive to consider buying it? (Too Expensive)

Based on these answers you can map out the graph pictured below. The intersection of the 4 lines is what you'd consider the "acceptable range" for your product.

Now, it could be a perfectly sensible decision to go beyond that and raise your prices past that range if the calculus of profit vs consumer volume loss makes sense for your brand. But that needs to be carefully evaluated.

Back to Canadian products - Loblaws has recently estimated that Canadian consumers will accept a +5% premium for buying Canadian. Anything above that and you'll begin seeing a large drop off in switching to the maple leaf.

So, will this trend last? It largely depends on how high the "Maple Leaf Premium" gets and the tightening of consumers' wallets as this trade war rages on... but one thing is for sure:

>Though it may not have been the case in the early days due to passion and pride, moving forward Canadians will likely choose not to engage in a trade war at the till at the expense of their household budgets.

INSPIRATION/

Brian Cox Clocks Off with Malibu

I’m not gonna lie — I’m a huge Succession fan.

So when I saw Brian Cox doing an ad for one of my favourite drinks from college… well, I knew it was going to be a hit.

While I don’t think celebrities are a silver bullet, when used tactfully they can drive exceptional levels of memorability.

Case in point — this ad scored a 5.1 Star rating on System1’s creative effectiveness ad testing platform, in a category that averages a meagre 2.9.

It also received an exceptional 1.47 Spike Rating, which indicates how well a creative drives short-term sales, and a strong 91 Fluency Rating, which refers to the strength of brand recognition.

Hats off to Malibu, might need to pour myself one after all these years.

BRAIN FOOD/

Strategist’s Delight (What’s On)

• Book: The End of History and The Last Man (Francis Fukuyama)

• Podcast Episode: Rory Sutherland on why marketing is the answer to economic growth (Uncensored CMO)

• TV Series: The Studio (Apple TV+)

• Film: I’m Still Here (Amazon Prime, purchase)

QUOTE/

Brands and People

More of PPA:

• 🤝 Follow me on LinkedIn

• 🗣 For speaking engagements, you can reach me at [email protected]

• 💌 In case you missed it: What Marketers of The Future Should Know — WOM, creativity in B2B, approaching datasets, category buyer memory tracking, and more

PPA 

Pedro Porto Alegre is a seasoned marketing strategist with in-depth experience building brand and communications strategies for top-tier B2C and B2B organizations across Canada. His repertoire extends from crafting and executing integrated multi-media brand marketing campaigns to the commercialization of performance-driven innovations for multimillion-dollar and nascent brands alike.