B (1:47)

Yeah, they're too good.

A (1:48)

I mean, guacamole needs a taco chip.

B (1:50)

Yep. Yeah, you can't just shovel it out with your hands or something. I mean, you can.

A (1:55)

It's not very polite looking.

B (1:56)

So this sort of scenario is what this research studied. The study is titled Filling the Void How Competing Brands Can Capitalize on a Brand Deletion. So it's more from the side of. Of the retailer, but this was conducted by Christopher Keller of the University of North Carolina and Harold Van Herd. Herd Hurdy of the University of New South Wales. And the core question is this. When a brand gets permanently pulled from the market, who wins? So believe it or not, brands die or get deleted. All the time P and G famously cut more than 100 brands in 2014. Coca Cola has axed 200, including Tab and Odwalla, which I had never heard of before. The logic behind doing something like this is typically that we're going to save money. Our other brands will pick up the slack. But does it actually happen? So, Rob, if you had to guess, when a national brand disappears, who do you think benefits the most from that?

A (2:54)

I feel like this is a trick question. Okay. Because I feel like, well, of course the number two brand is going to benefit, but I'm going to guess that's not the case. That if I'm super loyal to one brand, I see the number two brand as the adversary. So I'm not going to submit to the adversary. I'm going to explore some of the other options so I can find my new brand. Now, that's only because it just seems so obvious that the number two brand is going to benefit. And so that's why I'm going to. I'm going to go with my alternative route.

B (3:26)

No, that's interesting because we'll get into it. But they did find that the competitive brands benefit, which isn't surprising, but the specific type of competitive brand I was sort of surprised by. Oh, So I think you're kind of on track here. So what the research did, they looked at 10 years of US scanner data. So they looked at from 2010 to 2019, and they looked at more than a thousand national brand deletions across 201 markets. So this is like a massive experiment. They were looking at brands like Whisk Detergent and Melox and Acid. But they used a method called difference in differences. What that means is for each brand deletion, they tracked what happened to competing brands in the markets where the deletion occurred compared to the same competing brands in markets where the deletion hadn't happened yet. So that comparison is how they isolated what was the real effect. They also accounted for the fact that brands don't disappear overnight. A deletion usually starts with a slow drop in distribution across stores, then gradually goes to zero. On average, it takes about 22 weeks to kill a brand. Here's the headline. Finding brand deletions do benefit competitors. So you're right about that. On average, competing brands see a 1.73% revenue bump. But the distribution between competitors was very uneven. So private labels or the store brands gained the most at 3.45%. Sister brands, meaning other brands owned by the same manufacturer as the brand that got Deleted came in second at 2.77%. And rival national brands from other companies gained the least. So you're right, Rob, that was at 1.36%. The store brand came out on top of. And researchers found that competing brands gained more when they're priced similarly to the deleted brand. They also gained more when the deleted brand had a higher market share before it disappeared. Which sort of makes sense. If you're a bigger brand, your void is going to be bigger, which means there's a bigger opportunity for others. And gains were higher in less concentrated categories versus tight oligopolies, where consumers have fewer places to go once a brand is gone. But the revenue bump wasn't just happening on its own. A lot was driven by how competing brands responded with their marketing. So, Rob, what do you think brands could do to capitalize on a competitor going away or deleting a brand?

A (5:40)

I just wonder if there's opportunities to really have fun with it, perhaps on one level, and help the customer mourn the loss of their donkey chip. You know, make the switching easy, maybe with some type of coupon offer. Or how do you make the transition easy as well? I think we've all been pretty deeply seeped in certain brands. Like, if you're really big into Hertz, say, and let's say Hertz goes away, how does Avis help them migrate their information? Maybe there's like a point like, hey, we'll take. We'll give you the same points that you had with Hertz or whatever, you know, being clever that way. Or if you're a brand like Garmin and they were to go away, I think that group is very loyal to all that data that they have. And is there an easy way to migrate that data into your platform? So how do you remove the friction of switching if your product is a technology or complicated product? And how do you have fun with it when it's something as, you know, simple as a donkey chip?

B (6:36)

Yeah, I think that's really good advice. And it does relate to what the study found. So all three types of brands, like the rival ones, the sister brands, and the private labels, they found that when they increase their distribution after a deletion, that had the strongest effect on revenue, with elasticity being around 3, meaning a 1% increase in distribution drives roughly a 3% increase in revenue. And that's what you're saying are like, that's essentially making it easier to buy. And that drove the most. They also found that when sister brands extended their product lines, that helped. So line length has Strong elasticity. And that move added another 0.84% revenue gain on top of everything else. So the researchers think that since sister brands are inside the same company, they can hear about the deletion earlier and then plan ahead. So extending the product line, that benefited them, but not every marketing response did well. And this is interesting because you were saying maybe they should offer like a coupon or something.

A (7:33)

I hear that was a bad idea coming.

B (7:35)

Oh, no, that's actually not a bad idea.

A (7:38)

But research would disagree with you, Rob.

B (7:40)

No, I was saying that some brands raised their prices after another brand went away because maybe they were thinking, let's take advantage here. That didn't work. Yeah. So when that happened, that reduced their revenue. Right. They had penalties for that. But there was also price promotion had a strong elasticity, meaning that it was effective in this situation. Now, they found that brands barely used it. So your idea of, hey, let me offer coupon, let me. That wasn't common, but they think that it could work. So that was interesting. And then all the brands tended to increase their advertising as well, but they actually found the elasticity there was weaker. So what does this all mean for brands? If you're a brand and your competitor disappears, move fast on distribution. That's going to be the highest return lever. Or I think another way to think about that would be make it easy for people to buy. Consider extending your product line before competitors react. Maybe consider a price promotion that is underused. Could be highly effective in that sort of moment. And don't automatically raise your prices just because competition softened. It's going to cost you in the long run. And if you're a manufacturer and you're considering deleting a brand stress test how much revenue your remaining brands can realistically absorb. It might be less than you think. Okay, time for the Rob GPT. Imagine a popular local gym suddenly closes. Every other gym in town sees more people walk in. But the boutique gym, that raises prices because there's less competition that backfired. For them, the real winners were the convenient gyms already on people's commute. They add more classes, welcome new members, and keep their prices steady. Meanwhile, the Gym's other location, 20 Minutes Away, expects loyal members to follow. But only a few do. So when a competitor disappears, the winners aren't the ones who exploit it. They're the ones who make switching easy. Rob, what do you think?

A (9:28)

I really want donkey chips right now. I talked way too much about those, but this was super interesting. And you know, it is amazing to hear about all these brands that come and go sometimes you just assume they're always still around. And it's a big variable we all have to be looking at in terms of how we position ourselves when they do go.

B (9:48)

Yeah, I was surprised by just how many brands are deleted every year. And that's like an interesting strategy choice, keeping an eye on that. And I'm sure it really varies according to what category you're in, how much that's happening, but interesting way to look at things.

A (10:03)

Definitely.

B (10:05)

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, please leave us a review. Now go forth and build great Marketing Architects.