Double Jeopardy in the Hong Kong Digital Economy | Eureka AI Moment June 2023

How Does the Marketing Law of Double Jeopardy Drive Your Growth Strategy?

The law of double jeopardy is an empirical law of marketing science first identified in 1993. This law has proven to apply to different categories and countries around the world, particularly in Consumer Markets.

But does it apply to the Digital Economy?

Below we show how it also applies to the Hong Kong digital economy, and how it can help you to grow your digital business!

What is the Marketing Law of Double Jeopardy?

The law of double jeopardy states that:

• While customer penetration differs significantly between brands, frequency of usage/purchase does not.
• Brands with the highest market share have the highest penetration of customers, and a slightly higher frequency of purchase.
• The smallest brands always have the lowest frequency of purchase and the lowest penetration
• Therefore, the smaller brands experience “double jeopardy”; they have both lower penetration, and lower frequency of purchase.

Below is an example from the scientific literature of Double Jeopardy for Shampoo brands in the UK.

We see that Head and Shoulders has the highest penetration, as well as the highest frequency of purchase. Sunsilk has both lower penetration and lower frequency = double jeopardy!

However overall, the purchase frequency does not vary widely, so we conclude that the driver of market share – and growth – is market penetration.

The implication of double jeopardy is that the only way to grow your brand, and business, is to acquire new customers by increasing penetration.

Getting more sales from your existing buyers is unlikely, as the spend / frequency with which someone can purchase your product is usually capped.

So does this law of Double Jeopardy apply to the Hong Kong digital economy? ?From Eureka’s data, the answer is a resounding yes!

Double Jeopardy Example One – Travel Apps

Travel apps were used by 27% of the Hong Kong population in June 2023.

The apps with the largest Market share – Trip.com and Agoda – have a usage frequency of 3 times per month, versus the average of 1.8.

But the driver of market share is their higher market penetration. The lower market share apps have the lowest frequency of usage – double jeopardy!

Double Jeopardy Example Two – Digital Banking

The same pattern can be seen in banking, here seen as a chart. HSBC, with highest penetration, also has the highest frequency of monthly usage. The smaller brands have a lower frequency at an average 2 times per month.

In this example we see Mox Bank and Union Bank have an opportunity to increase their frequency of usage.

Double Jeopardy Example Three – D2C Apparel

Last week we looked at the Direct to Consumer (D2C) category, and we can see the law applies here as well.

The market shares of My Theresa and Uniqlo are driven by their higher market penetration. Meanwhile, frequency of usage varies around the average.

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So What?

The law of double jeopardy tells us the only way to grow your brand significantly is by acquiring new customers and increasing market penetration.

So where should you focus to acquire these new customers?

Read our next Eureka AI moment to discover how the concepts of physical and mental availability drive market penetration and customer acquisition for growth.

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Published August 18, 2023 By Michael Hawkins