The Natural Monopoly Effect in Brand Image Associations

Abstract

The Natural Monopoly is a robust empirical generalisation that describes the tendency for more popular brands to attract light users of the product category. This study shows that this pattern can also explain the underlying ‘trade-off’ between associations that consumers hold in memory for a specific brand vs. other brands, given the same range of category cues or category entry points (e.g., purchase or consumption situations, core benefits etc.). Specifically, the Natural Monopoly can be extended to explain that consumers with limited knowledge of brands are more likely to memorise associations primarily in relation to the most popular brands of the category, which ‘monopolise’ category entry points. This is confirmed with broadly consistent results across three data sets, multiple time-periods and a total of six categories (including CPGs, services and mobile applications). As such, this study significantly expands the generalisability of the Natural Monopoly empirical law by showcasing it as a ‘tool’ to extend knowledge on brand image associations. The results also yield important practical implications for growing a brand's mental availability. For the most popular brands, the outcomes of this study highlight the relevance of reaching out to consumers with limited knowledge of brands within the same category; for the least popular brands, they indicate the importance of building associations with category entry points.

The Natural Monopoly Effect in Brand Purchasing: Do Big Brands Really Appeal to Lighter Category Buyers?

“…They found that heavier wine buyers in Greece tended to purchase large-share wine brands, whereas light buyers tended to buy small-share brands. Stocchi et al (2017) suggest the anomaly could be due to the unique nature of the very fragmented Greek market. Another study by Bassi (2011) examined buying metrics for beer brands in Italy.…”

“…More recently Stocchi et al (2017) explored whether the NM effect occurs in brand image associations. That is, the extent to which large-market share brands dominate the brand perceptions of consumers with least knowledge of the product category.…”

“…However, the NM effect has been identified in several contexts in which shelf space is not a factor (e.g. Gruneklee et al, 2016; Stocchi et al, 2017) which implies a shelf-space advantage for the larger brand is not necessarily a pre-requisite for the NM effect. Furthermore, there is an absence of evidence about whether in-store brand visibility affects the choices of lighter category buyers to a greater or lesser extent than heavy ones.…”

“…Despite there being a good rationale for interest in the NM effect, comparatively little research has been conducted on it. Several studies show NM quite clearly in contexts such as leisure activities (Gruneklee et al, 2016), as well as brand image (Stocchi et al, 2017). The NM pattern in brand purchasing, namely that larger brands have buyer bases that purchase the category less often, has been presented in several books and studies, but several null results and counter-examples have also been reported.…”

“…The NM pattern in brand purchasing, namely that larger brands have buyer bases that purchase the category less often, has been presented in several books and studies, but several null results and counter-examples have also been reported. Indeed, Natural Monopoly has often been reported on as a ‘sideline’ to other variables of interest in a range of studies (Stocchi et al, 2017). In relation to brand purchasing, it is not clearly known whether the NM effect holds across a wide range of product categories, and indeed how strong the effect is.…”