Marketing

Most consumers buy across a range of brands and prices, depending on the shopping occasion and other factors.

In marketing, brands serve two different purposes: a functional purpose and a cultural purpose.

Intuitively, it seems like the 80/20 rule would hold true for a brand’s revenue distribution, where the top 20% of your customers account for 80% of your revenue.

Traditional marketing literature teaches marketers to pick a specific market segment and then position their brand and focus their marketing initiatives to appeal exclusively to that segment. The idea is that consumers identify strongly with the brands they buy, so they will naturally gravitate towards brands that “resonate” more deeply with them. This is called the market segmentation approach to marketing.

In any category, light buyers (i.e., those who only buy the category occasionally) favor large brands over small ones. This is known as the “Natural Monopoly Law” (i.e., larger brands monopolize light buyers) in How Brands Grow.

The modern consumer is bombarded with brands they can choose from. As a result, consumers filter out most of the brands they see because the human mind simply cannot process all the information it’s exposed to, and it has to take shortcuts.

Lifecycle marketing efforts work best when you work to accelerate existing customer behavior rather than attempting to stimulate new behavior altogether.

The true power of generative AI is not in the mass production of broadcast content, but in the ability to hyper-personalize individual assets and pieces of content on a 1:1 or near-1:1 basis.

Purpose is not irrelevant for brands, but it can’t just be lip service.

While regular brands exclusively work by imprinting themselves onto the culture (see Advertising may work by cultural imprinting), cultural brands establish a bidirectional relationship with culture: they are simultaneously building and influenced by the culture.

Not only are cultural brands bidirectional, but the best cultural brands also give their audience the tools and the freedom freedom to remix the brand’s narrative and visual language to create new artifacts.

Cultural fragmentation (which is typically caused by information abundance) leads to market fragmentation in an inverse U-shaped relationship:

You shouldn’t approach all sales channels in the same way. Instead, you should focus on the incremental value that each channel can bring to your brand (e.g., Wholesale is for breadth, DTC is for depth).

While it’s true that every sales channel has its purpose, you shouldn’t think about channels in isolation. Instead, you should be constantly thinking about how to integrate them so that they support, and not cannibalize, each other.

Just like good management (see Good management requires consistencybuild mental availability), good advertising requires consistency over a long time horizon to build mental availability.

For a long time, marketers have been trying to capture what makes good advertising. Unfortunately, it is tough to capture.

The ultimate goal of any brand management strategy should be to turn your brand into a reference for its category.

Many marketers consider brand marketing and performance marketing as two completely separate concepts. In their mind, brand marketing is a very long-term strategy that is not directly tied to a financial impact, while performance marketing is a very short-term strategy that is directly tied to a financial impact.

We’ve established that Brands should stand for purpose, not search for it.

If you need to search for your purpose, it means it’s artificial. Purpose is the byproduct of your values and work, not something you impose on your brand.

#referrals #acquisition

A powerful community-building strategy is to create a fanbase around your brand. Fans are not there to create something new, but to re-interpret what your brand does.

It is not always feasible for a brand to launch new products to expand their IP.

Marketers like to think of loyalty as a deep, emotional connection that’s formed between a consumer and a brand. However, the data doesn’t seem to support this theory: according to research done by Byron Sharp, 72% of Coke drinkers also drink Pepsi, and 89% of brand users don’t think their brand differs from competitors.

An anonymous, decentralized identity system could be a major step forward for the advertising industry and make up for the signal loss due to recent privacy changes.

When selling to a customer, you should uncover:

While certain channels need you to measure ROAS for optimization, you shouldn’t discount a channel issue because it can’t be measured directly. Instead, marketers should become a bit more comfortable with not having all the answers and focus on directional lift over time.

Long-term influencer partnerships help the influencer’s audience become accustomed to your brand, which increases their trust in you. In contrast, one-off partnerships are seen as more transactional and less authentic.

#partnerships #collabs #culture

Brands typically launch a loyalty program with the idea that it will either get their heavy buyers to spend more or that it will convert their light buyers into heavy buyers.

We often believe that we need to come across as smart or fascinating if we want people to like us. This is not really true: for the most part, people like those who make them feel good about themselves. In other words, making the other person feel smart and fascinating may be the quickest way to win them over.

If you’re a consumer brand selling wholesale, gaining or losing market share can cause you to enter into a positive or negative self-reinforcing feedback loop:

In addition to physical availability, marketing must also build mental availability. By this, we mean that it must reinforce the mental structures in the consumer’s brain that allow the consumer to:

Brand growth comes from light buyers, and light buyers are not motivated enough to shop in specific channels: they will just buy their products wherever they want to buy it.

In most marketplaces, a few sellers drive most of the outcomes.

Marketplaces are usually 80-20. You don’t start selling in one if you’re not equipped to deal with the additional complexity.

Merchandising used to be an afterthought, just ugly band t-shirts with logos and concert dates printed on the back.

In metaverse experiences, you get a ton of first-party data through the actions that users take in the experience. You don’t need third-party cookies to track it, which makes the metaverse a solid mitigation strategy to the death of cookies.

To be successful in the metaverse, you either need to be a giant company with a huge following, e.g., Nike/Puma, with the gravitational pull to attract a new type of consumer into the metaverse, or you need to be metaverse-native (e.g., KIKI), and lean heavily into the quirks of Web3.

Traditionally, the monetary value of a cultural artifact (e.g., a painting) would only be known when that artifact was involved in a transaction—usually a sale. Even then, the value of the transaction would not always be publicly disclosed and would only be known to the buyer and the seller (or a select few).

In the retail/e-commerce industry, there’s much discussion about the power of personalization as applied to different contexts: advertising, purchase experience, customer service, etc.

If you reward your loyalty program members with money immediately (e.g., in the form of a cashback or a balance that they can accumulate over time), you will have very little flexibility in shaping the reward structure down the line.

In the past, rare objects were objects that were not widely circulated.

Many fast-fashion brands are launching resale programs in an effort to appear more sustainable, but in reality, the evidence shows that these programs will not do much to make brands more sustainable. In fact, resale programs only reduce the carbon dioxide emissions of a fast-fashion brand by 0.7%.

Despite all the talk about brands needing to invest in customer retention, it’s important to know that brands cannot survive on retention alone: most brands only retain 20-30% of their customer base.

When we buy through social media, we often emphasize the person over the brand: we don’t want to buy a particular brand, but rather a particular person’s look or lifestyle.

The nature of social media means that marketing organizations are moving from brand-centric commerce to product-centric commerce, i.e., when you buy something without really caring about the brand that is producing it.

Creators and consumers have the ability to co-create and amplify a brand through their daily actions, and the lines between them are fading.

The problem with selling to the consumer on the Internet is that it favors price comparison and, as a result, discounting. The moment one brand starts offering a product for a slightly lower price than the competition, it triggers a discounting spiral that makes everyone worse off.

Luxury used to be having money to buy things. It was the accumulation of wealth.

Turning your brand into a source of social capital is a quick way to boost organic growth. You can do this by effectively activating your brand’s purpose (see Brands need to activate their purpose) so that buying from you becomes a statement about one’s own values rather than a mere transaction.

One good use of loyalty programs is to collect insights and data, e.g., through surveys, focus groups, etc.

Wholesale is not just about generating direct revenue.

Every sales channel has its purpose. In the case of the wholesale/DTC conundrum (no matter whether we’re talking about physical or digital DTC), most brands should think about is as a breadth vs. depth distinction:

I started becoming interested in commerce when I joined Nebulab, where we help mid-market and enterprise brands use technology to launch unique shopping experiences. That led me down a rabbit hole of branding, marketingcustomer experience, customer experience, and much more.

While “customer experience” (CX) is a vague term that takes on different meanings depending on what the vendor of the day is trying to sell you, I think it’s best defined as the sum of all the interactions a customer has with your brand over time.