Theres a piece on brands by James Surowiecki in Wired. Its stuffed with interesting observations and dubious assertions.
Brand numbers are up:
Since 1991, the number of brands on US grocery store shelves has tripled. Last year, the US Patent and Trademark Office issued an incredible 140,000 trademarks – 100,000 more than in 1983.
So is brand noise:
The average American sees 60 percent more ad messages per day than when the first President Bush left office.
Brand loyalty is down:
Consumer-goods markets used to be very stable. If you had a set of customers today, you could be pretty sure most of them would still be around two years, five years, ten years from now. That’s no longer true. A study by retail-industry tracking firm NPD Group found that nearly half of those who described themselves as highly loyal to a brand were no longer loyal a year later.
The added value of the brand is in question:
Look at Nokia. In 2002, it had the sixth-most-valuable brand in the world, valued by the consultancy Interbrand at $30 billion. But the very next year, Nokia made a simple mistake: It didn’t produce the clamshell-design cell phones that customers wanted. Did consumers stick around because of their deep emotional investment in Nokia? Not a chance. They jumped ship, and the company’s sales tumbled. As a result, Nokia lost $6 billion in equity.
[T]he long-term value [of brands] is shrinking. They’re becoming nothing more than shadows. You wouldn’t expect your shadow to protect you or show you the way. It only goes wherever you do. The truth is, weve always overestimated the power of branding while underestimating consumers ability to recognize quality.
Marketing types either don’t see this trend or choose not to talk about it.
Finally, this piece disappoints because Surowiecki appears to hold to the old fashioned wisdom about a “rational consumer. This is where Adam Smith and Karl Marx came down on the same side. The consumer is a most concerned with price and quality. All the rest of epiphenomenal. Smarter, better informed consumers see through branding and marketing. They go for value.
The trouble with this approach is that it ignores academic work that was started by Sid Levy and Irving White in the 1950s. Over half a century, marketing scholars and professionals have developed a sophisticated understanding of what value is and how branding contributes to it.
It is now not unusual to suppose that value comes from two sources. It comes from utility, the ability of the product to solve problems in the world. And it comes from meaning, the cultural significance with which the product is charged.
This means that the product is only half done when it emerges from the lab and the plant. It is not complete until marketing, defined here broadly to include design, advertising, and consumer co-participation, gives it cultural meanings. Thus does marketing engage in “meaning manufacture. Utilities and meanings, these are the two founts of value.
Is there a problem? Of course, theres a problem. Living as we do in a dynamic world, consumers are more various and more changeable than before. Creating current meanings requires deep knowledge of the culture and constant adjustment to its changing trends. The best brands are a little like sailing ships. They have the deep ballast of long standing meaning, the deck cargo of recent meanings, and tall sails that must be repositioned often to adjust to constantly, sometimes whimsically, changing consumer taste and preference.
To say that brands are having a hard time adding value is merely to say that they find themselves charged with the task of responding to a world that no one thought was possible. (Remember when capitalism stood accused of producing a monolithic, static culture?) It should also be observed that both marketing professionals (Lafley at P&G) and marketing scholars (see references) are hard at work trying to figure out how responsiveness might work.
Brands may becoming more like shadows, as Surowiecki says. Indeed we must hope that this is so. It will make them more nimble and fluid than they used to be. “Shadow management, perhaps this is a new brand strategy. But it will take a subtlety and responsiveness that the marketer has yet fully to master. As the Elizabethans used to say: “Pursue your shadow and you will never catch it. Run from your shadow and it will follow you anywhere.
Fournier, Susan. 1998. The Consumer and the Brand: Developing Relationship Theory in Consumer Research. Journal of Consumer Research 24, no. March: 343-73.
Levy, Sidney J. 1959. Symbols for Sale. Harvard Business Review 37, no. 4 July/August: 117-24.
Levy, Sidney J, and Dennis W. Rook. 1999. Brands, consumers, symbols, & research: Sidney J. Levy on marketing. Thousand Oaks, Calif: Sage Publications.
McCracken, Grant. 1988. Culture and Consumption: New Approaches to the Symbolism of Consumer Goods and Activities. Bloomington: Indiana University Press.
______ 2006a Culture and Consumption II: markets, meanings and brand management. Bloomington: Indiana University Press. (Due out Spring.)
_______ 2006b Flock and Flow: managing change in a dynamic marketplace. Bloomington: Indiana University Press. (Due out Fall.)
Prahalad, C. K, and Venkatram Ramaswamy. 2004. The future of competition: co-creating unique value with customers. Boston: Harvard Business School Press.
Roberts, Kevin. Lovemarks. a book and a blog here.
Evelyn Rodriguezs Crossroads blog here.
Surowiecki, James. 2004. The Decline of Brands. Wired. here.
Surowiecki, James. 2004. The Wisdom of Crowds. New York: Doubleday.
White, Irving S. 1959. The Functions of Advertising in Our Culture. Journal of Marketing, no. July: 8-14.
Zolli, Andrew. 2004. Rip. Mix. Brand. American Demographics. November, pp. 44-45.
Are you gone? I have a friend who consults for a major retail chain owner. He reports numerous examples of sales for certain items (fragrant candles, eg) stagnating at low-price. Then presto-chango, with a slight repackaging and bump up in price, sales increase. Surely this is not some isolated phenomenon. I know the chain he works for. They’re major and growing. Let me know if you’ve seen any other examples of this.
But this is precisely an example of pricing that sends a message, pricing that is to say that speaks not to the rational consumer but the cultural one. Thanks, Grant
The work of Roy Williams, at the Wizard Academy near Austin, is one place where IMO the marketing rubber meets the speed-of-change road. He’s predicting that the power especially of luxury brands will attenuate more and more in the next 20 years. The brands that prevail will be the ones that can survive the transparency of rapid word of [e-]mouth. Less marketer impact, more peer influence. Quality, "keeping it real," are the robust branding strategies that have a chance with the next generations.
I was actually quite cheerful when I read about the demise of Brands. That’s nice I thought, because how many things do we really need? How many more disappointments can I bare?
In a world where hierarchies are (slowly) crumbling the attribution of identity and status no longer needs the scaffolding of branding. Quality is almost universally guaranteed by engineering and digital copying encourages equality and the expectation of something for nothing (and chicks for free).
Value is based on scarcity and a vertical scaling. I think the long tale of blogging, teenagers producing their own music with GarageBand and shopping centres filled to the roof with boxes of things penetrates the dream factory and rips the mirrors away from the great illusionists of our time. Abundance is killing brands.
Well just a little bit.
I for one would rather have a sharply shaped pen costing pennies than a Mont Blanc.
Don’t you have to separate brands into categories? There’s the quality-assurance brand, which works on the premise that quality can’t be checked prior to use, so an established name with a track record of performance is favored. This is the kind of brand Sureowicki is writing about. There’s the mental association brand, where you think of something pleasant when you see the package or the logo (e.g. Corona Beer’s vacation theme, or York Peppermint Patties humorous skiing/surfing theme). There’s the social identity brand (practically all beer brands other than Corona, most SUVs, etc.) Some brands may manage to score more than one of these at a time, but the techniques for generating them (and their market impacts) are different enough that just talking about “brands” seems slightly silly.