The work of Professor Byron Sharp challenges most current fashionable marketing and advertising thinking. Why not make yourself a nice cup of tea and spend fifteen minutes having your assumptions challenged...
If you enjoyed that, there is a whole pandora's box of great stuff on his blog, here.
This might be a stupid question, but didn't he just disprove the 80/20 rule with that Harley example?
ReplyDeleteNot a stupid question at all.
ReplyDeleteI think there are a couple of things going on there. Assuming you're talking about the Pareto principle, which in advertising has been commonly taken to mean that 80% of 'profits' come from 20% of customers? Research suggests that in marketing/brand sales terms this is in reality more like 50/20 (or 50/30/20) to be more precise - ie 50% of sales come from the 20% most loyal buyers (that is behavioural loyalty). The other 50% comes from less frequent buyers. However, over time this will 'even out' - all buyers over time will move closer to the average - high buyers will buy less, and infrequent buyers will buy more.
The other thing is the conflation of the idea of "attitudinal loyalty" with "highest users" - the Harley Davidson example challenges fashionable marketing and advertising thinking, because this assumes that the people with the "most Harley" attitude will be the highest buyers. This isn't really the case, as Prof Sharp's example illustrates. The idea that attitudinal loyalty to brands exists and that it influences buyer behaviour is largely disproved by his work.
Not stupid at all very astute in fact.
ReplyDeleteHe actually says (in his book) as a rule the likely contribution of revenue from heavy users to light users is nearer 60/40 i.e 40% of your users generate 60% of your revenues and vice a versa
Which is quite a difference from Parato's 80/20
Is this different for fmcg's? Or does it apply to both fmcg's and consumer durables?
ReplyDeleteByron Sharp presents some very sharp views which should be brought to clients. Maybe then over time some clients would feel more comfortable to get attention (i.e. getting the ads noticed) vs. getting loved (i.e. playing it safe in order to be liked).
ReplyDelete