Brand Growth And The Randomness of It All

Distribution
Penetration is key to market share and diving brand growth

Editor’s note: This article is the first part of a series.

When I was growing up, a friend of mine had a really bright – and desperate – idea. He was going to stand in a street corner (there were no malls in those days) and ask random women if they wanted to have sex. The theory was that if he asked enough women, one would say yes. He got slapped silly by a couple of really angry women, of course, and cancelled the experiment.

Fast forward many, many years: one of the key moments at a networking group breakfast is “power card exchanging” in which you try to exchange cards with as many other attendees as possible. The winner is the person with the most cards. The theory is that you never know where the next great referral is coming from, so you want to spread your cards as much as possible.

In 1996, Allan Baldinger, Edward Blair and Raj Echambadi published a seminal piece of research that confirmed both theories: the #1 correlation to brand growth is distribution (see Figure 1). More specifically, the mathematical correlation for all (353) brands was 83 percent, for big brands it was 87 percent, for medium brands it was 80 percent and for small ones 87 percent. That’s very, very strong.

Essentially, the more places in which you are distributed, the more your market share will grow. And, it stands to reason, the higher your penetration, the more people can sample your product, buy it and become loyal consumers.

Scatter Plot

 

Real-World Examples (page 2)

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