How brands grow: what differentiation and availability reveal

Growing a brand doesn’t rest on a single lever, but on the combination of three mutually reinforcing forces: differentiation, brand awareness, and customer satisfaction. This is the reading that emerges from a study of 153 brands across five countries, one that helped reconcile two schools that spent decades disputing the best explanation for brand growth. What follows summarizes what the evidence shows and how to turn it into strategy.

Summary

• Strong brands attract more buyers and sustain higher prices, a gain known as the revenue premium.
• Two schools explain brand growth: the traditional one, centered on attitude, and Byron Sharp’s, centered on mental and physical availability.
• The study by Pauwels and Koll shows that both are right, because attitude and behavior influence each other in both directions.
• Differentiation is the main driver of penetration, with an average elasticity of 0.22. Every 10% gain in differentiation is associated with a 2.2% increase in penetration.
• Brand awareness (0.28) and customer satisfaction (0.26) are the biggest drivers of market share.
• The weight of each lever changes with brand size and market maturity.

What it means to grow a brand

Building strong brands is one of marketing’s core responsibilities. The more a brand appeals to consumers, the more buyers it attracts and the higher the price it can command relative to the same product without a brand. This additional revenue is known as the revenue premium. As channels and purchase options multiply, consumers increasingly use brands as a decision shortcut, which makes brand management more relevant, not less.

Two schools of brand building

Experts tend to align with one of two camps. Both agree on one point: consumers must know the brand for any building to happen. The disagreement starts right after.

The traditional school: behavior follows attitude

In the classic view, consumers first discover that the brand exists, then form a positive or negative attitude about it, and only then decide to buy. Attitudes and beliefs would shape purchase behavior. For decades this was the dominant guideline, and from it comes a direct practical implication: without clear differentiation, a company grows less than competitors perceived as more distinct and relevant. Differentiation isn’t mandatory, but it makes the choice more likely, and it can be built in many ways, from celebrity associations (as Nike does with athletes) to a brand purpose (like Dove’s Real Beauty campaign).

What the study of 153 brands reveals

To test both theses with data, Koen Pauwels of Northeastern University and Oliver Koll of the University of Innsbruck analyzed 153 fast-moving consumer goods brands across five countries: Germany and the United Kingdom, mature markets, plus Indonesia, Thailand, and Saudi Arabia, emerging markets. The dataset combined purchase data from thousands of households with perception surveys, cross-referencing six indicators: market share, penetration, brand awareness, perceived differentiation, perceived value, and customer satisfaction.

The main finding settles the dispute: dual causality is the rule. Rather than one side beating the other, attitude and behavior influence each other in both directions. Some consumers know the brand, shift their perception, and then buy. Others buy first and adjust their perception afterward. The two schools, then, describe parts of the same process. The practical conclusion is direct: the “differentiate or die” philosophy still holds, and differentiation keeps generating market results.

The numbers: what drives growth most?

The researchers expressed the results as elasticities, that is, the percentage change in an outcome given a 1% increase in the factor analyzed. Reading the coefficients shows that each objective has a predominant driver.

Penetration responds mainly to differentiation, with an average elasticity of 0.22. In practice, a 10% gain in differentiation is associated with a 2.2% increase in penetration. Brand awareness and satisfaction follow close behind, at 0.21 each.

Market share follows a different pattern: it is driven above all by brand awareness (0.28) and customer satisfaction (0.26), followed by differentiation (0.19) and perceived value (0.17).

Satisfaction, in turn, is strongly fed by differentiation (0.42), which reinforces the chain effect among the three pillars.

Seven principles of brand differentiation

1. Uniqueness drives penetration

Brands that offer something competitors don’t expand their penetration. The average effect, every 10% of differentiation associated with 2.2% of penetration, is especially valuable for smaller brands, which need to win over those who don’t yet consider them. For large brands, differentiation mainly helps sustain leadership and justify premium prices.

2. Differentiation feeds brand awareness

Differentiation and brand awareness reinforce each other. The more distinct the brand, the more it is remembered and talked about, which expands its visibility. For smaller brands in mature markets, building awareness from strong differentiation is an efficient path, since notoriety is decisive both for small brands in mature markets and for large brands in emerging markets.

3. Strategies by brand size

Size changes the recipe for growth. Smaller brands gain more by investing in differentiation and perceived value to build awareness. Larger brands depend more on customer satisfaction, which has a stronger effect on their share and penetration, since the broad base is theirs to lose.

4. Mature and emerging markets call for different emphases

In emerging markets, differentiation weighs more on share and penetration, and consumers often want to know the brand even before going to the store. The recommendation is to build awareness through differentiation and perceived value. In mature markets, perceived value gains weight and decisions tend to be more routine. In that context, large brands should reinforce distinctive elements, such as packaging, color, and visual identity, to be spotted on crowded shelves, while smaller brands can explore underserved niches.

5. Differentiation goes beyond function

Differentiating isn’t limited to product attributes. Distinction can come from the brand’s story, its values, or the way it communicates. Smaller brands often find room in a more authentic approach: an origin narrative, local impact, personalized service, collaborations with creators, and limited editions that create a sense of exclusivity and discovery.

6. Consistency across every touchpoint

Keeping differentiation consistent at every touchpoint strengthens identity and eases recognition. Larger brands face the challenge of coordinating multiple channels and markets. Smaller brands benefit from a leaner structure, which lets them align message, design, and experience with more control and adapt strategy quickly.

7. Measure and adapt

A tight budget doesn’t prevent listening. Closeness to the customer is an advantage for smaller brands: it pays to talk directly, use accessible social media tools, and run small, frequent surveys instead of one large, occasional study. The ability to test, learn, and correct quickly makes a difference when the market shifts fast.

Brand management goes beyond communication

Neither the market nor consumer preferences are stable. As the study itself sums up, the best a company can aim for is to run faster than the competition while keeping enough differentiation across a relevant share of the market. It’s worth remembering that managing a brand isn’t limited to communication and visual identity. Business and financial factors, market dynamics, and external influences weigh as much as perception and can determine a brand’s survival.

How to apply it

The synthesis is clear: it pays to work on attitude and behavior at the same time, using marketing instruments to build trust and approval while expanding the product’s availability. The trio of differentiation, brand awareness, and satisfaction forms the combination that sustains growth. The weight of each lever, however, must be calibrated according to brand size and market maturity.

Source: Koen Pauwels and Oliver Koll, “Why Brands Grow: The Power of Differentiation and Penetration” (Management and Business Review, 2024).