‘How do we know if our brand really has market leadership?’

Q: You once told us that if our brand has the highest market share in our category, we are the market leader. That was quite some time ago in early ’80s when we were your MBM students at AIM.

About a month ago, we asked two of our brand managers who attended your brand equity seminar to share with the rest of their colleagues what they learned. One of the things they echoed was this: When you talked about brand equity, it seemed that one of your side remarks said that “market share is not enough to establish your brand’s market leadership.” While that was something said in passing, it was important for the two of us as partner owners of this medium-size consumer supplement company with one brand that has attained the highest market share.

Will you please just quickly explain what you meant by that side remark?  Please tell us what then is enough for us to know if our brand really has market leadership.

A: Thank you for the question. As speakers and marketing professors your question reminded us that things said “in passing” have a way of touching certain sensitivities of our students. But at the same time, it was good that the side remark provoked your question.

Your definition of a brand’s market leadership in terms of the market share metric was popular in the ’80s when you learned it. We’re not saying that this metric is no longer a true metric today. It still is, but as your two brand managers reported market share is no longer the only metric of market leadership.

Over the years, marketing continues to change and advance as a “science.”  In the mid ’80s, it was Michael Porter with the publication of his best-selling book, “Competitive Advantage: Creating and Sustaining Superior Performance, who popularized “market share” as the metric of market leadership. That was a welcome contribution to the advancement of the marketing discipline and to brand management in particular.

Then in the same decade, 1986 specifically, Al Ries and Jack Trout, came out with their own bestseller, “Positioning: The Battle for Your Mind.”  This book redefined market leadership but it was not the source that provided the metric for this new dimension of market leadership. Among the marketing academicians, it was Philip Kotler who two or three years after in his new edition of his popular Marketing Management textbook, offered “share of mind” as the market leadership metric in the competition in the mind of the consumer. So there came to be two market leadership metrics: “share of market” as leadership in the competition in the physical market place, and “share of mind” as leadership in the competition in the consumer’s mind.

For several years after, marketing practitioners seemed to be contented with these two market leadership metrics. There were insightful elaborations of the new metric. One of them addressed the issue of the relationship between share of market and share of mind. Again, it was the marketing academicians who rose to the occasion. A new marketing concept came into being that said: “Share of mind predicts a brand’s share of market.” The logical support for the “truth” of this concept came from the consumer behavior literature. Its research said: “Every external change in consumer behavior is preceded by an internal change.” With specific reference to the two metrics, this translates to: “Less buying to more buying is preceded by less top-of-mind awareness to more top-of-mind awareness.”

Aside from the simplicity and elegance of this logic, the concept had also a practical marketing utility. For example, at one time here’s the share of market and share of mind metrics for Colgate toothpaste and Close-up:

Share of market:  Colgate—42 percent; Close-up—37 percent

Share of mind:  Colgate—38 percent; Close-up—46 percent

According to the “prediction” in the marketing concept relating share of mind to share of market, here’s what’s likely to happen: “If Close-up continues doing what it has been doing and Colgate continues not doing anything about it, Colgate’s 42 percent market share will go down to the level of its 38 percent share of mind and lose its market leadership. On the other hand, with the same set of ‘ifs,’ Close-up’s 37 percent market share will go up to the level of its 46 percent market share and grab market leadership.” At that time, it was probably these predictions that alerted and provoked Colgate to indeed do something to prevent what could have happened and to retain market leadership.

Then five or six years later, an MIT Professor, Michael Treacy together with Fred Wiersema (of the Customer Intimacy fame) published their own bestseller, “The Discipline of Market Leaders: Choose Your Customers, Narrow Your Focus, Dominate Your Market.” A third new metric of market leadership came by the name of “share of heart.”

There were several specific metrics of share of heart that have been proposed. It was a Vanderbilt University professor, Richard Oliver, whose three related share of heart metrics that have come to be most cited. He termed them as: (1) a “cognitive-centric” share of heart, (2) an “affective-based” share of heart, and (3) a “conative-centric” share of heart. Overall, though, the share of heart metric has remained controversial and awaits the next step of establishing its relationship to share of mind and share of market to finally constitute a trilogy or a trinity of market leadership metrics. In the meantime, you might want to at least recognize the first two market leadership metrics of share of mind and share of market.

Keep your questions coming. Send them to us at [email protected] or [email protected]. God bless!