04 October 2017
A new report released today by UniSA’s Ehrenberg-Bass Institute rejects the popular notion that the world is turning against big brands.
The report was released in response to mounting speculation that big global brands are losing out to small local brands, that young people today are less brand loyal, and that small brands have higher loyalty than large brands.
“When someone shouts that big brands are dying they get a lot of attention,” says Institute Director, Professor Byron Sharp, “because big brands pay the salaries of many, and make up a large chunk of our pension funds.
“But the scary story that large brands are dying, turns out to be wrong.
“These claims are dangerous because they are being used to justify hasty, ill-thought out marketing strategy.”
Using scientific research from published peer-reviewed journals, the report sorts fact from fiction.
One popular fiction is that consumers are rejecting ‘corporate’ brands and instead seeking eco/purpose/hipster brands.
Co-author of the report, Professor Magda Nenycz-Thiel explains the lack of substance behind the claim.
“Our analysis reveals that in more than 40 per cent of cases, leading brands actually do better among under-25-year-old consumers than they do selling to older consumers,” says Prof Nenycz-Thiel.
“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.
“Hipster coffee shops attract both young and old — and the same is true for Starbucks.”
The report shows that the ‘top five brands in any category are more likely to be growing sales than losing sales, in spite of competition from small brands as well as retailer’s own private labels.
Yet the report is also critical of some big brand marketing – it points out six big strategic mistakes that brands have made in the past 10-20 years, a result of knee-jerk reactions and a lack of evidence-based thinking.
“The good news is that these mistakes can be corrected, which in itself is one reason that the future looks bright for brands,” Prof Sharp says.
“Yes, the world continues to change, but overall this change isn’t favouring small brands over big.
“In fact, the resilience of leading brands in the face of much social and technological change is astonishing; the lists of top brands in many consumer goods’ categories look remarkably similar decade after decade.”
The full report is available here
Summary of assertions investigated in the report:
|
Assertion |
Evidence |
|
|
1 |
Big/global brands are declining. While small/local brands are growing. |
There is no universal pattern. Some big brands have gained share while some have lost share. But the share losses are mostly in growing categories so more big brands have grown, than lost sales revenue. Some small brands are growing, some have failed and disappeared |
|
2 |
Brand loyalty is declining. |
Evidence refutes this. |
|
3 |
People increasingly distrust and reject big brands. |
Evidence refutes this. |
|
4 |
Small brands command high levels of loyalty. |
Myth. Small brands actually attract less loyalty. |
|
5 |
Digital media has given small brands a cheap way to reach consumers - “levelling the playing field”. Big brands need to use more new media. |
Wrong interpretation. Actually wasted advertising spend on unproven new media has probably hurt large brands more than small. |
|
6 |
Small brands are successful without advertising. |
Misleading. It’s long been true that some fortunate small brands can grow without mass advertising – but then they need advertising to stay big. Most new brands need mass reach in advertising and routes to market. |
|
7 |
E-commerce has opened up direct-to-consumer opportunities for small brands. |
E-commerce has helped some small brands get started. |
Media contact: Michèle Nardelli mobile 0418 823 673 email michele.nardelli@unisa.edu.au
