Marketing Insights-Brand Awareness-Preference Model
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Market researchers have long known that buyer awareness of a brand strongly influences preference for that brand. Research now shows that 70% of buyers must be aware of your product before 25% of them will make it their preference. This is a much lower ratio than traditional marketing models sug- gest, reaffirming the fact that a high level of brand awareness is essential to achieving significant brand preference in your market. Two views of awareness and preference Awareness Preference Conventional models assumed a 1:1 relationship between brand preference and brand awareness. Traditional awareness-preference model 1 Awareness Most companies Successful companies Preference Updated awareness-preference model 2 The relationship between brand awareness and preference follows an S-shaped curve. Most com- panies must significantly increase awareness to achieve desired gains in brand preference. 2 Successful companies with high brand awareness reach a point where additional dollars spent on awareness create roughly equivalent returns in terms of preference. As awareness increases, brand preference increases more rapidly. Initially, most companies must increase awareness significantly to achieve modest gains in brand preference. A new look at their critical relationship from 5MetaCom Brand awareness and customer preference Executive Summary ▪ Initially, brand awareness must reach about 15% before buyer preference reaches a threshold share of 2%. ▪ Brand awareness typically must exceed 70% to achieve 25% buyer preference. ▪ At 70% brand awareness, awareness/preference growth reaches a 1:1 ratio. ▪ Above 90% brand awareness, a 1% growth in awareness can yield growth in buyer preference that exceeds 1%. ▪ Products with high switch- ing costs require a much greater investment in brand awareness to increase buyer preference.
Transcript of Marketing Insights-Brand Awareness-Preference Model
Market researchers have long known that buyer awareness
of a brand strongly influences preference for that brand.
Research now shows that 70% of buyers must be aware of your
product before 25% of them will make it their preference. This
is a much lower ratio than traditional marketing models sug-
gest, reaffirming the fact that a high level of brand awareness
is essential to achieving significant brand preference in your
market.
Two views of awareness and preference
Awareness
Pre
fere
nce
Conventional models assumed a 1:1 relationshipbetween brand preference and brand awareness.
Traditional awareness-preference model1
Awareness
Most companies
Successful companies
Pre
fere
nce
Updated awareness-preference model2
The relationship between brand awareness andpreference follows an S-shaped curve. Most com-panies must significantly increase awareness toachieve desired gains in brand preference.2
Successful companies with high brand awarenessreach a point where additional dollars spent onawareness create roughly equivalent returns in termsof preference.
As awareness increases, brand preference increasesmore rapidly.
Initially, most companies must increase awarenesssignificantly to achieve modest gains in brand preference.
A new look
at their critical
relationship
from 5MetaCom
Brand
awareness
and customer
preference
Executive Summary▪ Initially, brand awareness
must reach about 15%before buyer preferencereaches a threshold share of 2%.
▪ Brand awareness typicallymust exceed 70% to achieve25% buyer preference.
▪ At 70% brand awareness,awareness/preference growthreaches a 1:1 ratio.
▪ Above 90% brandawareness, a 1% growth inawareness can yield growthin buyer preference thatexceeds 1%.
▪ Products with high switch-ing costs require a muchgreater investment in brandawareness to increase buyerpreference.
© 2006 5MetaCom. All rights reserved. 5MC15222 www.5metacom.com • 317.580-7540 Advertising that makes technical and scientific products easier to buy and easier to sellSM
High awareness leads to higher brand preference
Further analysis of the data confirmed that the
relationship between awareness and preference is logarith-
mic, not linear.3
Awareness-preference ratios do not typically reach a 1:1
relationship until awareness levels are higher than 70%.
As switching costs increase, the awareness level required to
build brand preference also increases.
With brand awareness at 30% and preference shareat 4.2%, a 4% increase in awareness is required toproduce an additional 1% preference share.
Typically, a brand known by more than 70% of themarket is preferred by 25% of customers. At thisstage, brand preference increases 1% for each 1%increase in awareness.
For brands with greater than 90% awareness, a 1%increase in awareness resulted in a 1.25% increasein preference share.
Awareness
Pre
fere
nce
Average ofall items
Items withlow switchingcosts
Items withhigh switchingcosts
Awareness-preference measurements3
Although awareness/preference curves for some productclasses were significantly higher or lower than average,they followed similar logarithmic patterns, indicatingsimilar impact from increased awareness.
Awareness is key
Analysis shows that the highest brand preference increases
come after substantial brand awareness is achieved.
Additionally, products with high switching cost and risk
(e.g., medical systems or electronics) were found to require a
much greater investment in awareness-building to increase
brand preference.
1 Marketing Management, Vol. 4, No. 4;13, 1996.2 J. Haughey, L. Hays, Marketing Management, Vol. 4, No. 4;13, 1996.3 V. Kijewski, E. Yoon, Penn State Institute for the Study of Business Markets, 1990.
About the study• Data compiled on more
than 1,000 products
• Included 95 categories ofmaterials and services usedin the semiconductor manu-facturing industry
• Data analysis conducted atPenn State Institute for theStudy of Business Markets,1990
