A (2:00)

They're good.

B (2:01)

Okay, so that answer is probably what a lot of people think of when you think of a tiny brand. Right? Small brand, small market share, but very loyal. Fewer customers, but they buy more often. Right. Okay. So this paper focuses on tiny brands, which they define as brands with less than 1% market share. So Fun fact. More than half of all brands in most categories, they fall into this bucket and they're usually ignored in research. And the big question of this study is, do tiny brands behave differently from big brands when it comes to growth? Because this comes up a lot. I don't know if you've seen this type of conversation on LinkedIn, Rob, but when people bring up how brands grow and these principles, one of the most common replies you'll get is, well, this only applies to big brands. The book only looked at big brands. It didn't look at smaller brands. And if these don't hold true for smaller brands, that's kind of a problem. Cause like we said, more than half of brands have less than 1% market share. So a lot of marketers, we're not all working on Coca Cola now. A lot of us are working on smaller brands. So they looked at, do these smaller brands or tiny brands have extra loyalty like niche brands are supposed to? Like we believe they do. Like Rob and I are saying, it seems logical. And if they grow, do they grow by selling more to those same people or by getting more people to buy them? So to answer this, the researchers analyzed five years of household panel data in the Netherlands. They looked at over 400 brands acqua across 20 consumer packaged good categories using. We've talked about this before. The NBD Dirichlet model. Aren't. Isn't it fun?

A (3:32)

Fantastic.

B (3:33)

I got that model again. Wait, we covered that model. NBD Deer Schleichley, Dear Slay. Okay, Rob, what do you think? Do you think that tiny brands have more loyal customers than large brands? You kind of already answered this.

A (3:47)

I absolutely do. I mean, I. I just think that, you know, people. People want to feel in the know on something. And when was the last time you sat around and been like, hey, man, I sure love my Coca Cola versus oh, I've got this new thing that I'm trying out. I really love it. It doesn't have eggs in it. And it da, da, da. And it's like you want to feel like you're in the know and you kind of take it on as a part of your identity. So, yes, I think they're more passionate.

B (4:13)

Wrong. You're wrong.

A (4:15)

Dang nabbit. I was ready to go to court on that one.

B (4:19)

Nope, you're wrong. So they found that tiny brands don't have this extra loyalty that we'd assume they do. They usually have less. Isn't that crazy? Wow. I know. There's a widespread belief that tiny brands survive because they have a small group of intensely loyal buyers. This study found the opposite. Most tiny brands show deficits in loyalty. Their buyers purchase them less often than expected, given how many buyers they have. So 69% of tiny brands showed lower than expected loyalty. Only 16% showed excess loyalty. So that's kind of this hallmark of niche success is this tiny group. So instead of being, you know, beloved little cult brands, most tiny brands are bought rarely by very few people. And you might be thinking, all right, maybe that royalty is rare, but when it exists, you know, for that 16%, surely it must help, right, if you've got these loyal customers. So the researchers tracked what happened to those brands over five years. They looked at all these tiny brands, and they found some grew, some declined. A lot of them disappeared entirely. They just took them off the market. Okay, now here's the key result. Tiny brands with excess loyalty were no more likely to grow than. Than those who had a deficit in loyalty. So even when you had that cult, like, following, it didn't seem to help, which is crazy.

A (5:36)

So, Robin, just don't be tiny.

B (5:38)

Right? That's. I mean, literally. But what do you think is the best or most efficient way then, for a tiny brand to grow?

A (5:44)

I'm. I'm still spinning on this one, but I guess, you know, I always love the story of. When we've talked about it before in the podcast of Harley Davidson, where you really speak to the tribe, but, you know, you're speaking to everyone when you're speaking to the tribe and everyone else kind of comes in. So if you have this kind of niche positioning, like Harley Davidson did to the, you know, the Hell's angel crowd, but you're really casting a wider net, especially we love broad media. Right. You know, you're casting that wider net and it becomes this campfire approach where people are listening in. I guess that's. That's, you know, that would be the strategy I would consider.

B (6:22)

Yeah, I think that you are. You're right on with that. So the researchers, they looked at, okay, we looked at all these tiny brands, which ones grew, which ones went away, and they looked at the growth brands, and the answer was overwhelming reach really did the heavy lifting for these brands. So for tiny brands that did grow, their market share increased 164%, their reach increased 135%. And, and. But their purchase frequency, which would kind of be a loyalty metric, increased just 26%. So these tiny brands, they didn't grow by convincing their current buyers to buy more often. They grew by getting more Buyers. And as reach increased, loyalty naturally moved towards normal levels. Which is interesting. Right? So these brands, it's not like they had a permanent issue with loyalty like those that had a deficit. Their loyalty kind of matured as they grew, which would be a principle for marketing effectiveness. All right, so what does this mean for marketing? First, going niche is just not a growth strategy. If you deliberately narrow your appeal, you cap your reach, you cap your growth and you increase volatility. So tiny brands, if you're a tiny brand and restricting yourself to this perfect customer, you're not thinking with the growth mindset. Second, loyalty follows growth, not the other way around. If you try to fix loyalty before you grow, you're thinking about it backwards. The data shows loyalty improves after reach increases, not before. So nine times out of 10 loyalty programs, hyper targeting, you know, customer first strategies, they probably aren't going to get you there. And finally, tiny brands need to compete for the whole category. And this one is hard for marketers to accept. But tiny brands, they don't grow by avoiding big brands, they grow by competing with them. Got the same buyers are in the same category and you're in the same mental and physical availability game. So being small doesn't exempt you from the laws of marketing. All right, time for a Rob GPT. The idea that tiny brands survive on regulars is like believing a coffee shop can live off the same 12 locals forever. In reality, even the smallest cafe grows by getting more people to walk through the door, not by convincing the same people to drink a fourth latte a day. All right, Rob?

A (8:29)

Yeah. This is so interesting. My brain's going in a lot of places because I start to wonder, is it a tiny brand in a large category, well known category where you're losing versus a tiny brand in a tiny category, or maybe a perceived big brand in a tiny category. So for instance, I'm very loyal to eating goo for running, right? The goo gels. I, I'm not going to use a different kind of gel, but it's also a category that isn't very large, you know, and so, but I'm passionate about it. I really like their product. I would talk about it with anyone, but it's a niche brand in a niche category. Is that where the loyalty comes in? Making any sense?

B (9:17)

No, you're making sense. Yeah, I'm not sure about that. I think if you're a brand in a brand new category and there's less competition, it's going to be easier to grow your market share in that category. If it's more nascent. I know too that a lot of times it's hard to grow because there's a lot of advertising competition for your category as well. It's going to be harder to enter the national insurance category and try to grow your share of voice because it's so crowded out there. But if you're creating a brand new category or you're one of the first, you know, first to market and running gels, probably easier to steal away market share. I know that we've, when we had Dale on the podcast, he was talking about how it's really hard to, to grow in general because it's not impossible, but it's hard because you have to sort of outspend your share. But there are ways to do it and how you choose different advertising channels used. But yeah, it's, it's difficult to grow. But I just thought this study was really interesting because that is an argument you see a lot online is that this doesn't apply to me. This is apply to my brand. My brand's different, my brand's special. But for the most part, brands are following these laws of growth and it'd at least be something to consider. Is my marketing reflecting?

A (10:31)

Yeah, yeah. Ooh, this is a good one.

B (10:35)

That's it for this episode of the Marketing Architects. We'd like to thank Taylor De Los Reyes for producing the show. You can connect with us on LinkedIn and if you like the podcast podcast, please leave us a review. Now go forth and build great marketing marketing architects.