New University of Waikato Management School research has shown the most significant factor in building a new brand is distribution, rather than the traditional marketing tools of advertising, discounting and a long product line. The research is co-authored by Waikato’s Professor Harald Van Heerde. His research found broad distribution has the largest direct impact on sales of a new brand. Distribution accounts for 31% of new brand growth and 54% of building market potential - more than any other strategy.

Discounting, store flyers and in-store displays also speed up a brand’s growth to maturity. He says these humble marketing tools play the second biggest role in achieving quick brand growth. He says discounting can also be a useful tool but over the longer term it can hurt market potential because it makes consumers unwilling to buy your brand when it’s not on special. Advertising is more effective at accelerating brand growth than increasing market potential.

Professor Van Heerde says the overall best strategy to conquer a national market, is to aim for full distribution from the start with the full product line, rather than a more gradual approach. He says “initial prices are best kept low and then raised. Advertising should happen massively upfront and then can be reduced over time. Telecom’s overwhelming advertising campaign for its new XT network is exactly what we would recommend.”

 Copyright © The Main Report Group