Effective marketing of small brands: niche positions, attribute loyalty and direct marketing

Abstract

Purpose – This paper aims to explain the structure of the market from the perspective of small brands and to discuss marketing strategy implications. Design/methodology/approach – The paper uses revealed preference data of the Australian wine market, comprising 4,000 wine shoppers' purchases over a 12-month period. Standard brand performance measures such as penetration and purchase frequency are applied to the data to define niche and change-of-pace brands. Using the same data, price tier loyalty is measured using polarisation, and discussed in relation to the attribute offering required and the direct marketing approach required for true niche positions. Findings – The empirical results show that both niche and change-of-pace positions are prevalent in the wine market and small wineries, within a direct marketing channel approach, should target higher price points with branded wines but also lower price point products as well. The results suggest that attribute levels that are change-of-pace are unsustainable for small brands and can only be undertaken by large brands with the appropriate marketing resources. Research limitations/implications – The authors conceptualise that small brands should focus on attribute levels that have excess loyalty. Large brands can absorb attribute levels that are change-of-pace. This conceptualisation requires further discussion, particularly from the strategy literature, as well as further empirical testing. Practical implications – Whilst “niche” positions are the holy grail of some teaching and much practitioner endeavour, this paper has presented data that demonstrate the need for managers to ascertain if the position they occupy is in fact a niche or a change-of-pace position. Originality/value – This paper fulfils a need by using revealed preference behavioural data to highlight different strategies for small and large brands. Behavioural analysis and papers in the past have emphasised the strength and tendency towards large brands without offering insight into small brand strategies.