Disequilibrium marketing and why Ehrenberg-Bass is only half right.
The Ehrenberg-Bass Institute (EB) has analysed the data. Market share doesn’t change. If you have 35% market share in 2025, you’ll have between 34% and 36% in 2026. This is largely because market share is its own form of advertising: if your brand sits on a lot of supermarket shelves, or in a lot of cupboards, people keep on being exposed to it again and again. This reinforces it in their brain. So they remember the brand when they next want to buy something. Advertising can strengthen this, a bit. But if you have 35% market share you’re probably already doing a lot of advertising. So it’s hard to get much further ahead.
As Byron Sharp – the data proves it. Great, so marketing is solved now?
(As long as your market share is 35% already.)
What about those of us who don’t have 35% share? Are we doomed to stay where we are, treading water on a 0.4% or 4% share forever? Or are the rules different for us? Turns out they are. The EB “laws of growth” are what’s known in economics as an equilibrium theory: it tells you the equilibrium state that can be reached in the long term by major brands. It does not fully explain how they got there, or how things can change.
EB’s observations rely on the rules of System 1. This automatic system in the human mind associates brands with specific category entry points (or “CEPs”: triggers or situations that make people think about a product category). Seeing a brand around you reinforces System 1 associations (makes them stronger), and System 1 associations are a big driver of choice, especially in low-involvement or frequently purchased categories.
But they are not the whole picture. System 1 explains only equilibrium buying patterns.
Meanwhile, there’s certainly a role for System 2: the logical, evidence-based mental process that works out the logical answer to “which product should I buy?” It can figure out the best deal across different promotions, and work out if the product fits your monthly budget or has too many calories to meet your dietary goals. System 2 is often more of a constraint on purchasing than a driver. Remove the constraints and you can unlock more demand. To some extent, it can work out whether your product meets functional needs. But System 2 can’t tell you if you’ll like the taste, or if it will give you the good feelings that people generally want from what they consume.
The problem is, in many situations System 1 can’t tell you that either. If the product is new, or unfamiliar, or it’s been a long time since you’ve bought it, or you’re using it in a new situation, System 1 has no habits or learned experience to rely on. There is no stable long-run outcome. The market is in disequilibrium. As a consumer, you have to use your imagination, or what we call: System 3.
The first part of a consumer decision is certainly, as EB claims, a category entry point that brings your brand either to mental or physical availability. A thirst that makes you want a beer – probably from a small repertoire of favourites. Or a browse of the taps while you’re queueing up at the bar: whatever brands have occupied the physical space enter the consideration set.
But the next part isn’t in EB’s model. Consumers have to engage in a more active mental process (albeit one that’s still driven by emotion and visualisation, not logic). A consumer with an unmet need embarks on an internal “storytelling” process to seek a pathway to a solution. Most category has a small number of dominant stories that connect a need trigger to a solution. If a dominant brand has a strong enough presence in System 1, it can act as a shortcut to the end of the story. But if the dominant brands don’t meet the consumer’s needs or haven’t been sufficiently reinforced, the consumer’s mind goes looking for a brand story that is a good fit to the category story.
Your job as a challenger brand, or an established brand looking to expand its relevance or launch new products, is to tell a story that resonates with consumers: a story that is a close fit to how they navigate the category. That story can be a brand story (Ford’s heritage and history), or a product story (the Ford Mustang-E and how it will make you feel).
This mental storytelling takes place in System 3: the brain’s mental simulation system. That’s where consumers imagine what it would be like to have a new experience (hang-gliding? tasting chilli-lime flavoured crisps?) And where they plan out new ways to satisfy their needs.
If you aren’t a dominant brand, System 1 isn’t strong enough to drive purchase. If your category has limited feature differentiation, System 2 isn’t enough either. But you can tell a distinctive story that will offer a unique pathway to your brand. Enough to achieve trial, which is an important early step to establishing mental availability in System 1.
You can measure your brand narrative and your category narrative with the same tools, which tells you how good a match your brand is for the category. They can also tell you what you need to change to make it a better match. Once you’ve made that match successfully, sales will start to increase.
Eventually, after System 3 is used enough times and your product is selected often enough, the pathway becomes reinforced. System 1 can take over and your brand might get chosen automatically at the next CEP. That’s your route to 35% market share. But if you’re not there yet, it’s System 3 you should be focusing on.
Make sure the stories told by your brand and products are the stories your customers need to hear.