If you are running a big brand it must seem like you have a large target painted on your back. Every other brand in the category wants a share of what you already have. And stories of big brands losing out to newcomers are everywhere. But are big brands really dying?
A group of researchers from the Ehrenberg-Bass Institute set out to answer this question using Nielsen data for 4-5 years of recent Nielsen store scanner data from 21 packaged goods categories in the USA. The paper summarizing the results of their investigation of whether big brands are dying or not is summarized here but, quoting from the original paper, their essential conclusion was,
“There is no universal pattern. Some big brands have gained share while some have lost share.”
The obvious shortcoming of this investigation is that it is limited to packaged goods brands in the U.S. so I decided to see whether a different conclusion might be drawn if a wider set of categories were examined across a wider set of developed and developing economies.
To do so I used a data set drawn from BrandZ which covers 3,087 brands of all sorts measured across a five year interval. The obvious limitation of my analysis is that it is based on claimed data and subject to sample error, however, we do know there is a close correlation between the proportion of people who claim to have bought a brand last and its market share as measured by companies like Nielsen.
My definition of change was that the proportion claiming to choose a brand last needed to increase or decline by at least four percentage points over the five years (to account for variance due to sample size). While still a work in progress, it is reassuring to note that my analysis comes to the same conclusion as EBI do. Big brands are not dying in most categories and countries. However, my analysis does add some nuance to the basic conclusion and highlights the role that category plays in defining the likelihood of big brand decline.
Across the entire data set I find that there is a negative correlation of -.0.22 between brand size in Year 1 and subsequent change in chose last across five years. However, regression finds that the relationship only turns negative for brands which had 15 percent or more of the sample claiming to choose them last in Year 1. Of these 298 very large brands, chose last declined an average of less than one percent, with 14 percent growing and 27 percent declining. So, as a build to the overall conclusion I find that only for the biggest brands does the risk of decline outweigh the opportunity of growth.
A key point to note is that these figures exclude the mobile phone observations because of the extreme volatility observed in that category. The biggest winners are invariably Samsung and Apple iPhone, growing by large amounts across different countries, and the biggest loser is Nokia which declined by equally dramatic amounts. And that would be the other conclusion from my analysis, category and innovation have a huge role to play in whether or not brands grow or decline. Service brands and consumer packaged goods are relatively more stable than infrequently purchased goods but that does not guarantee that disruption will not happen. In fact, one might argue the longer that status quo is maintained the more likely it is that disruption will take place.
Overall my conclusion must be that it is possible for big brands to hold ground and even grow no matter how hard it might be.
Written by Nigel Hollis,Executive Vice President and Chief Global Analyst at Kantar Millward Brown.