Mark Ritson on how Lidl used excess share of voice to boost sales and market share

Understanding Lidl's Market Challenges in the UK

Initial Market Entry and Share

• Lidl, a German discount retailer, faced intense competition upon entering the UK market, dominated by established British supermarkets.

• After 20 years, Lidl achieved only a 3% market share, prompting an inquiry into growth limitations.

Perception of Quality vs. Price

• British consumers equated low prices with low quality due to long-standing shopping habits.

• Research indicated that customers perceived Lidl’s fresh produce and meats as inferior compared to local competitors despite comparable or superior quality.

Strategic Problem Identification

• Lidl recognized the challenge of changing consumer perceptions through advertising alone.

• The brand needed to create more positive experiences for shoppers who discovered its product quality unexpectedly.

Marketing Insights from John Philip Jones

• Marketing professor John Philip Jones highlighted a correlation between market share and advertising spend (share of voice).

• Brands with lower market shares must invest more heavily in advertising to maintain their position; this is termed "excess share of voice" (ESOV).

Advertising Effectiveness Factors

• Small brands like Lidl need a higher ESOV compared to larger brands to sustain their market presence.

• Data analysis revealed that established brands benefit significantly from their size when it comes to advertising returns on investment.

Lidl's Strategic Response

Goals for Growth

• In 2014, Lidl aimed to increase sales and market penetration among British households while positioning itself as surprising and fun.

Communication Strategy Development

• The strategy included overcoming negative perceptions about price versus quality through effective communication.

• A notable TV campaign was launched alongside print ads emphasizing surprise and quality rather than short-term promotions.

Social Media Engagement

The Impact of Share of Voice on Market Positioning

Overview of Little's Market Strategy

• Little had a media objective to significantly increase its share of voice (SOV), starting with a market share of approximately 3% and an SOV of about 5%, resulting in a positive excess share of voice (ESOV) of 2%.

• In 2014, Little increased its SOV to 9%, leading to an ESOV calculation that improved to 6%. By the following year, this escalated dramatically to an SOV of 19%, yielding an impressive ESOV of 16%.

Results and Market Share Growth

• The campaign led to a notable shift in consumer perception regarding the quality of food offered by Little, closing the gap between them and competitors. This change transformed their previous weaknesses into points of parity.

• Over five years, Little doubled its market share from 3% to 6% in the UK, largely attributed to their strategic advertising efforts which generated £2.7 billion in incremental sales.

Key Lessons from Little's Campaign

• The success was rooted not only in outstanding insights and strategies but also in understanding how ESOV contributed significantly to their growth trajectory.

• Despite common beliefs that larger brands dominate smaller ones due to scale advantages, Little’s case illustrates how effective marketing can level the playing field.

Additional Resources