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Market dynamics

What is a brand? When William Lever began marketing soap in Victorian England, he offered a guarantee of quality and consistency. Customers were prepared to pay for that assurance and the brand became a storehouse of trust: "this brand will always give me what I expect and work hard to adapt to my changing needs."

At the heart of all successful brand development is consumer understanding. However, consumer understanding is a hard nut to crack - conventional market research often fails largely because consumers can't or won't say what they want.

How and why do consumers choose a particular brand?

Clearly, awareness of the brand is a necessary first step towards choice but it's not enough. To move further towards making their choice, consumers need to become more informed and then to evaluate the benefits of our brand versus others. Assuming they perceive the quality of our brand or the value that it offers, they may become a first-time purchaser. Beyond that, they may start to generate some loyalty towards our brand and become a repeat purchaser or even one that becomes exclusively loyal. Of course, at some point in time, they could have a negative experience with our brand and refuse to buy it in the future.

The basis of our marketing models is this continuum or chain of mutually exclusive consumer 'states' and the time-dependent transitions from one state to another.

As a brand manager, our role is to understand what causes the consumer to move from state to state and what are the most effective levers that we can apply to convince the consumer to choose our brand for the first time, and then to choose it again and again.

In reality, very few consumers are ever exclusively loyal to one brand and our brand manager is competing for the consumer's choice.

To take just one of the elements of the 'marketing mix', price is often the lever of choice for brand managers. Discounting can be very successful in driving the volume of consumers who choose our brand, but often discounts are offered to already loyal customers who would have been willing to pay full price, undermining the profitability of the brand. On the other hand, justifying a price premium may be more challenging, but any increases will go straight to the bottom line.

Powersim's strategic simulation solutions provide real insights into these dynamics and their impact on overall business performance, often exploiting the riches of data that are available to brand managers and allowing them to foresee the consequences of their actions and to design a better future.

With our extensive experience in this area, Powersim have developed a market dynamics model that with limited customization could be applied to your business. Equipped with this model, you can articulate these factors and communicate them around the leadership team, exploiting the invisible dynamics of the market to generate informed debate on your future profitability under alternative strategies.

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Increase your knowledge of consumer trends and develop your brand, by using market dynamics business simulations. Call a Powersim consultant today on 01483 467220

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Market Dynamics Case Studies

FMCG Company
Plotting the path to successful brand growth in FMCG
Building Society
Profitability delivering what the customer wants in a dynamic environment