Intro to latest article due for publication in October

With the world cup now over and the Olympics looming on the sporting horizon, perhaps it’s time to ask ourselves, “what’s the big deal about being number one?” Why the fascination with winning? Like a lot of British people I’ve got a soft spot for the underdog, the heroic failure who cares more about the taking part. And yet, from a straight licensing point of view, sales of the Eddie the Eagle T-shirts are unlikely to eclipse Bode Miller’s Alpine Skiing for PlayStation 2. So perhaps the reason for the obsession with winning is most obvious in the world of business – to the victor go the spoils.

In their legendary book ‘The 22 Immutable laws of marketing’ marketing legends Jack Trout and Al Ries explain that “The main rule is to be number one…the second [man to arrive on the moon] will not be remembered. Being number one is not always possible and certainly not always easy. Number one will need to look ahead to continue its strategy but will also have to look back, to verify what the followers will do. It is difficult to stay number one.”

For many brands leadership is a valuable positioning statement, and for good reason according to David Aaker in Brand Leadership: “Leadership… can inspire employees and partners by setting a high brand aspiration level… for many customers a leadership brand provides reassurance…implies quality...and/or innovation that translates into solid functional benefits.“

But the most direct relationship between leadership and the bottom line is indicated by a piece of research by British marketing scientist Andrew Ehrenberg which suggests that customer loyalty is proportional to market penetration. From this, Jean Noel Kapferer concludes that ‘it is difficult to generate increased loyalty in the long term without also increasing market penetration … the future of a brand thus depends on its … ongoing ability to attract new customers in order to increase its market penetration and in the meantime demonstrate its relevance to a changing world.“

Restating this in more simplistic terms, an increase in market penetration achieves a double whammy driving new customer acquisition and growing existing customer loyalty. Most licensors get very excited about the first part of this sentence - ‘wow’ they say, ‘New customers! New revenue! New business! New profit!’ failing to appreciate the importance of the second part.

For a leading brand licensing will only every generate a minute fraction of the value that would be achieved by a growth in market share, so why do it? what’s the attraction? You might as well ask Roger Federer what’s the appeal of winning another grand slam title? Surely you’ve won enough Roger, why keep doing the training, the work, the effort. After making the obligatory references to Switzerland his family, and his sponsors, Roger would probably reply – “I’ve made all the effort to get here, to be the best in the world, and now I want to make the most of it while I can, before my crown inevitably falls I want to win everything I can. And that’s the essence of my brand.”