Posted in Marketing and Strategy Terms, Total Reads: 2646
Definition: Double Jeopardy
Double jeopardy in marketing points out that, with few exceptions, the brands with lower market share also suffer from lower level of brand loyalty. It is an empirical law, first observed by social scientist William McPhee in 1963. The market leader enjoys greater sales not just because of higher penetration and higher market share but also because of higher brand loyalty among its consumers leading to repeat buying. According to the article Double jeopardy revisited published in the Journal of Marketing in 1990, in any given time period a small brand has fewer buyers and its buyers tend to buy it less often. This phenomenon is most likely a result of low product differentiation and lack of market partitioning.
What this law clearly implies is that for any company, the priority should be building market share. With greater market share comes greater customer loyalty. Brand managers cannot be expected to improve brand loyalty in the absence of substantial market share. For example, brand loyalty towards Amway products grew substantially in India in the late 2000s when its availability increased. Many consumers now swear by its products and refuse to switch to substitutes.
There can be deviations from double jeopardy either in the context of penetration or loyalty. The local kirana store, say Pradip kirana store, although present at only one location and servicing a small area (low penetration and low market share) might see very high level of brand loyalty in the form of repeat purchases. It can be considered a niche brand. At the other end, it’s also possible that a brand has high penetration but sees less repeat buying. For example, consider a seasonal product brand like Sivakasi crackers sales of which see a spurt during Diwali.