Brands can market to their consumers in two major ways: TARGETED MARKETING, which is selling to a specific segment of buyers, and MASS MARKETING, which is selling to all buyers. So which of the two ways is most effective? In most marketing textbooks, TARGETED MARKETING has long been (and still is) touted as the smart, modern way to market. Spoiler Alert: This is a marketing myth. MASS MARKETING is more effective. –Source: Ehrenberg-Bass Institute for Marketing Science https://www.marketingscience.info
To better understand why, let’s take a look at one brand’s customer base, and all brand’s customers, BTW, can be split up into non-buyers, and light, medium, and heavy buyers.
Here’s a sample breakdown of buyers from a leading brand of tomato sauce in the US…
- 9% Heavy Buyers
- 22% Moderate Buyers
- 25% Light Buyers
- 44% Non-Buyers
What does this tell us? The overwhelming majority of this brand’s category buyers are not heavy buyers— most are light buyers … and non-buyers of this brand. In many cases, almost 80% of a brand’s category buyers can be light buyers and non-buyers.
Here’s another example of this in action: Coca-Cola’s customer base. Their average customer buy rate is 12 Cokes a year, but surprisingly, most Coke buyers, the overwhelming majority, purchase just one or two Cokes per year. Coke of course does have its HEAVY buyers who drink three Cokes every day (1,000 a year) but there are far, far fewer of these buyers— actually a very small percentage. Although Coca-Cola’s light buyers may be purchasing only one or two Cokes a year, because there are so many of these buyers (the overwhelming majority) collectively, they really add up. So it’s really important for companies to MASS MARKET to as many light buyers and non-buyers as possible.
This is a marketing myth”.
Okay, so you’re probably thinking: “But wait, my brand’s customer base differs from those of our category competitors— by gender, age, household size, income …”
Really? Do customer bases actually look significantly different across category competitors? Spoiler Alert: No. Buyers look pretty much the same across category competitors. This is known as the ‘duplication of purchase’ law: brands share customers in line with brand size.
In closing, we’ve learned …
- Mass marketing is more effective than targeted marketing, because light buyers heavily dominate brands’ consumer bases, so targeting them will provide the greatest penetration potential
- Brands share customers in line with their brand size, so brand growth lies in increasing market penetration via MASS MARKETING