๐ง You’re Probably Overestimating Your Chances
Why being on your consumer’s shortlist matters more than you think
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“Our brains are not wired to accurately perceive probabilities.
We overestimate rare events and underestimate common ones.”
Daniel Kahneman
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I came across a great illustration of this yesterday,
in an interview with a car manufacturer CMO.
They made following observations:
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– Pre-purchase, car buyers have a 3-5 brand shortlist
– In 70โ80% of cases, they buy from that list
– In 20-30% of cases, they buy other brands
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However, the following comment struck me:
โIf youโre not on the short-list, you have a 30% chance of being chosen.โ
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Really?
Looks high to me.
Let’s look at the numbers.
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– We take a market with 20 brands.
– 3 brands on the short-list capture 70โ80% of sales.
– The remaining 20-30% are split among ALL other 17 brands and their chance of being selected is roughly equivalent to their market share.
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How does it look like in detail?
A. Shortlisted Brand
– Total probability of shortlisted brands: 70%
– Number of shortlisted brands: 3
– Each brand gets an equal share of the 70%
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Probability of being chosen:*
70/3=23.3%
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B. Not Shortlisted Brand
A non-shortlisted brand with 5% market share captures 5% of the remaining 30% of purchases.
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Probability of being chosen:
5%ร30%=1.5%
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Thatโs a massive difference.
Being outside the consideration set means youโre left with a fraction of the remaining 20-30% that is roughly equivalent to your market share.
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THE MISCONCEPTION
The misconception comes from thinking that all brands outside the shortlist have a direct shot at the remaining 30%. In reality, your market share dictates how much of the 30% you can realistically capture.
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* ๐ง Is It Fair to Assume All Shortlisted Brands Have the Same Chance?
The assumption that each brand on the shortlist gets an equal share seems reasonable, but is not always accurate:
– If a brand dominates in visibility/trust, it has an advantage
– Ad campaigns or discounts can skew choice
– Habitual purchases might have a strong default
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๐ Why This Matters for Marketers and Business Leaders
If your brand isnโt on the consumerโs shortlist before they enter the market, youโre competing for crumbles.
This means:
– Brand awareness and mental availability are key
– You need to be in their mind before they start shopping
– Being “discovered” at the last minute is unlikely
โป๏ธ Your network appreciates a repost
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I’m Julia Kinner
My consulting firm JK & Associates SA focuses on growth strategy and execution for digital products and services.
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