DOUBLE JEOPARDY...A MARKETING PHENOMENON
Double jeopardy is a statistical phenomenon in marketing where, with few exceptions, brand loyalty is lower among buyers of low market share brands than buyers of high market share brands. The market leader in an industry enjoys a high level of sales due to customer loyalty, with a higher probability of repeat purchase. This phenomenon occurs because consumers believe the high sales product to be of high quality. Market challengers seek to gain this brand loyalty advantage and market leaders seek to defend their position.
It is not necessarily the incumbent or the first entrant to a market that enjoys the benefits of brand loyalty; it is the company that is the market leader once the industry has reached a substantial size. The double jeopardy effect is one reason that companies invest heavily in advertising. Once a company has gained a high market share, it will strongly defend it.
Market-challenging brands
The implication of double jeopardy is that brand managers of smaller firms should not be reprimanded for lower customer loyalty figures. Also, they should not be expected to build customer loyalty to the brand without the resources to build market share.
Exceptions to double jeopardy
Double jeopardy is not applicable if:
•the market is homogenous. There is no branding due to the homogeneity of the product.
•the market is too small. Too small a market and market share is not substantial enough to make a difference.
•the cost exceeds the benefit. If the cost of branding to achieve a high market share is greater than the benefit, then even though double jeopardy may exist, it is not worth striving for.
•the product has a monopoly. Monopolies do not need to brand themselves to increase sales.
•the product is a commodity. The market sets the price that branding does not influence.
•the product or market is new. If it is a new product or a new market, the brand may not enjoy the double jeopardy effect until the market matures and becomes substantial. An industry that has matured and become more substantial will reward the market leader with strong brand loyalty.
It is not necessarily the incumbent or the first entrant to a market that enjoys the benefits of brand loyalty; it is the company that is the market leader once the industry has reached a substantial size. The double jeopardy effect is one reason that companies invest heavily in advertising. Once a company has gained a high market share, it will strongly defend it.
Market-challenging brands
The implication of double jeopardy is that brand managers of smaller firms should not be reprimanded for lower customer loyalty figures. Also, they should not be expected to build customer loyalty to the brand without the resources to build market share.
Exceptions to double jeopardy
Double jeopardy is not applicable if:
•the market is homogenous. There is no branding due to the homogeneity of the product.
•the market is too small. Too small a market and market share is not substantial enough to make a difference.
•the cost exceeds the benefit. If the cost of branding to achieve a high market share is greater than the benefit, then even though double jeopardy may exist, it is not worth striving for.
•the product has a monopoly. Monopolies do not need to brand themselves to increase sales.
•the product is a commodity. The market sets the price that branding does not influence.
•the product or market is new. If it is a new product or a new market, the brand may not enjoy the double jeopardy effect until the market matures and becomes substantial. An industry that has matured and become more substantial will reward the market leader with strong brand loyalty.