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Evidence · Brand growth

How brands grow: what the research shows

Brands grow and decline mainly through changes in how many people buy them (penetration), not through large changes in how loyal existing buyers are. Bigger brands are bigger chiefly because they have more buyers, and they reach more light, infrequent category buyers. The evidence comes largely from packaged-goods panel data analysed by one research group, and subscription markets follow different rules.

Definition

Penetration is the share of people in a market who buy a brand at least once in a given period. Loyalty, in this research, is behavioural: how often those buyers buy the brand and what share of their category purchases it gets. The penetration-led view of growth holds that differences in brand size, and changes in brand size over time, are driven far more by penetration than by loyalty. It is closely tied to the double jeopardy pattern and to the NBD-Dirichlet model of repeat buying.

What the research finds

Growth comes mainly from gaining buyers

Studies that ask whether brands grow by acquiring customers or by retaining them find that, across categories, acquisition is the dominant route: brands that gain share do so mostly by adding buyers. The idea was popularised in a book that brings together decades of repeat-buying research.[1][2]

Loyalty rises only slightly with size

Large and small brands in a category differ mostly in their number of buyers; loyalty measures differ much less and fall only a little for smaller brands. Because this follows statistically from brand size, higher loyalty tends to be a by-product of growth rather than its main cause.[3][4]

Big brands reach lighter category buyers

Across 28 consumer goods categories in the Netherlands, buyers of the two largest brands bought the category about 25% less often than buyers of the two smallest brands, after controlling for price, pack size and promotions. Growing a brand therefore means reaching people who rarely buy the category, not only its heavy users.[5]

Acquisition versus retention is an empirical trade-off

Customer-profitability models treat the split of spending between winning and keeping customers as something to estimate, not assume. At one web-hosting firm, customers acquired through word of mouth added nearly twice as much long-term value as those acquired through marketing, although marketing-acquired customers added more value in the short term.[6][7]

Subscription markets behave differently

In subscription markets such as sports season tickets, many customers are solely loyal and hold one or two subscriptions in a category, so retention plays a larger role than in repertoire markets. A review of this research expects the rapid spread of subscription products to reduce that excess loyalty over time.[8]

The same logic is argued for business markets

Researchers from the same tradition argue that business-to-business brands also grow mainly by adding buyers and that smaller B2B brands have slightly less loyal customers. This case is made in an industry-sponsored report rather than a peer-reviewed study.[9]

How strong is the evidence?

The pattern that growth comes mainly from penetration is well replicated in consumer packaged goods, but most of the studies reviewed here come from the Ehrenberg-Bass Institute and its collaborators, and the most widely read statement of the idea is a book, not a peer-reviewed article. The evidence is largely descriptive: it shows how growing brands differ, not which marketing actions cause growth. Subscription markets, business markets and categories with strong partitions may depart from the pattern, and the B2B claims rest on a non-peer-reviewed report. Work on the acquisition and retention trade-off comes from different research groups and single-firm data, so it complements rather than tests the penetration view.

Claims tested against the evidence

References

  1. Erica Riebe, Malcolm Wright, Philip Stern, Byron Sharp (2013). How to grow a brand: Retain or acquire customers?. Journal of Business Research.
  2. Byron Sharp (2010). How Brands Grow: What Marketers Don't Know. Oxford University Press.
  3. Andrew S. C. Ehrenberg, Gerald J. Goodhardt, T. Patrick Barwise (1990). Double Jeopardy Revisited. Journal of Marketing.
  4. Andrew S. C. Ehrenberg, Mark D. Uncles, Gerald J. Goodhardt (2004). Understanding Brand Performance Measures: Using Dirichlet Benchmarks. Journal of Business Research.
  5. John Dawes (2020). The Natural Monopoly Effect in Brand Purchasing: Do Big Brands Really Appeal to Lighter Category Buyers?. Australasian Marketing Journal.
  6. Werner Reinartz, Jacquelyn S. Thomas, V. Kumar (2005). Balancing Acquisition and Retention Resources to Maximize Customer Profitability. Journal of Marketing.
  7. Julian Villanueva, Shijin Yoo, Dominique M Hanssens (2008). The Impact of Marketing-Induced Versus Word-of-Mouth Customer Acquisition on Customer Equity Growth. Journal of Marketing Research.
  8. Heath McDonald, Steven Dunn, Dominik Schreyer, Byron Sharp (2023). Understanding consumer behaviour in evolving subscription markets – lessons from sports season tickets research. Journal of service management.
  9. Jenni Romaniuk, John Dawes, Byron Sharp, Arry Tanusondjaja, Magda Nenycz-Thiel (2021). How B2B Brands Grow. Ehrenberg-Bass Institute / LinkedIn B2B Institute.

Bibliographic details only. Follow the DOI to read each study at its publisher.

Related topics

A synthesis of 9 studies, written by ScholarSignal. Last reviewed 2026-09-26.

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