For almost as long as the discipline has existed, it's been an article of faith that the ultimate aim of marketing is to create brands. The received wisdom is that branding benefits both producers and consumers, whether that is of products or services, or companies and their eventual acquirers.
For many years, this actually made sense. As Western society became more atomised though the 20th century – and producer-buyer relationships became more remote – for buyers, a brand served as an assurance of readily identifiable quality and consistency, and therefore built loyalty. So, along with the idea of lifetime employment grew the idea of building lifetime engagement with brands.
Product Davids vs Brand Goliaths
This, of course, worked in the post-war boom years as the basis of the multinational consumer giants' march across the globe. Massive spending on brand development and bought marketing communications was used to influence a customer's predisposition to buy a particular brand, reducing sales cost while allowing the producer to increase margins on products.
Even if the product was virtually identical to a non-branded or branded competitive product, this approach also served as an effective barrier to entry, stopping the entrepreneurial product Davids taking market share from the brand Goliaths. In doing so, I'd argue that it also significantly stifled innovation, a factor in allowing more efficient manufactures from the East to start their assault on Western markets.
For some Goliaths however, the happy sound of ringing tills has continued. But for how long? One of the most profound effects of the pervasion of the internet has been disruption of business models and an associated disintermediation of professional disciplines and interests and liberation of entrepreneurialism. So much so, I'm certain it is in the nature of internet to devalue the traditional concept of a brand, even to make it irrelevant.
Brand demolition
The first way it does this, is to punch a great big hole in the idea of partial truth telling that is the basis of so much traditional brand differentiation. The Web is awash with the wisdom of crowds. User reviews and competitive data abounds. As it's now so easy to find out if a product or service gets a thumbs up or down, this means buyers ultimately no longer need the brand as emblematic of quality or assuring of content. Indeed, for those still wedded to the idea of brand building, this process can lead brand demolition in short order as every new purchase is increasingly a fresh initiative.
A more insidious way that pervasive connectivity is destroying brand loyalties is that it is the foundation of rapid globalisation, providing the infrastructure for outsourcing to the developing world, accelerating the earlier Eastward trend. As a result, savvy consumers realise very many products – and, dare I say it, including many counterfeits of those products – are pretty much the same, regardless of whose brand has been stuck on them, particularly once they reach the stage of the product adoption lifecycle where brands have traditionally tried to extract high volume and high margin.
The exception that proves the rule
PCs are a case in point. With few exceptions, PCs (regardless of brand) are a replacement market, standard devices assembled from standard components manufactured by the same Chinese subcontractors. The only real (as opposed to imagined brand promise) differences are the look and the name.
As a result, in the PC market, much of the smartphone market and in many other tech product categories, brand loyalty is a phenomenon of the 20th century. No wonder IBM sold off its PC and, recently, low-end server businesses and Google its Motorola Mobility purchase to Lenovo.
Isn't Apple the exception that proves the rule however? I'd argue (heretically) that actually, Apple doesn't command brand loyalty, it's just great at creating 'complete product' lock-in, launching a series of devices that work together well in a proprietary service environment. One false step – and they have made many in the past – and the world would indulge in an orgy of post-Jobsian criticism and searching for alternatives. Hence Apple's aggressive use of patent litigation to slow down any company that it thinks buyers might prefer, threatening the outrageous margins on which its stratospheric share price is predicated.
Vorsprung durch Technik
Power has now shifted fundamentally and irrevocably from the producer to the consumer and the ROI of brand marketing will continue to decrease. So what should companies do? The good news for entrepreneurs is that one of the solutions may be to return to pre-branding dominance days. This is done by investing in building and promoting great products rather than by building and promoting brands.
Evidence of this approach is already appearing. Take KIA cars in the UK for instance, which makes no claims for its vehicles. Rather, its advertisements tell prospective customers to go to its website and read owners' reviews in an example of customer reality rather than brand fantasy. That, I'd count as real Vorsprung durch Technik.
Product Davids vs Brand Goliaths
This, of course, worked in the post-war boom years as the basis of the multinational consumer giants' march across the globe. Massive spending on brand development and bought marketing communications was used to influence a customer's predisposition to buy a particular brand, reducing sales cost while allowing the producer to increase margins on products.
Even if the product was virtually identical to a non-branded or branded competitive product, this approach also served as an effective barrier to entry, stopping the entrepreneurial product Davids taking market share from the brand Goliaths. In doing so, I'd argue that it also significantly stifled innovation, a factor in allowing more efficient manufactures from the East to start their assault on Western markets.
For some Goliaths however, the happy sound of ringing tills has continued. But for how long? One of the most profound effects of the pervasion of the internet has been disruption of business models and an associated disintermediation of professional disciplines and interests and liberation of entrepreneurialism. So much so, I'm certain it is in the nature of internet to devalue the traditional concept of a brand, even to make it irrelevant.
Brand demolition
The first way it does this, is to punch a great big hole in the idea of partial truth telling that is the basis of so much traditional brand differentiation. The Web is awash with the wisdom of crowds. User reviews and competitive data abounds. As it's now so easy to find out if a product or service gets a thumbs up or down, this means buyers ultimately no longer need the brand as emblematic of quality or assuring of content. Indeed, for those still wedded to the idea of brand building, this process can lead brand demolition in short order as every new purchase is increasingly a fresh initiative.
A more insidious way that pervasive connectivity is destroying brand loyalties is that it is the foundation of rapid globalisation, providing the infrastructure for outsourcing to the developing world, accelerating the earlier Eastward trend. As a result, savvy consumers realise very many products – and, dare I say it, including many counterfeits of those products – are pretty much the same, regardless of whose brand has been stuck on them, particularly once they reach the stage of the product adoption lifecycle where brands have traditionally tried to extract high volume and high margin.
The exception that proves the rule
PCs are a case in point. With few exceptions, PCs (regardless of brand) are a replacement market, standard devices assembled from standard components manufactured by the same Chinese subcontractors. The only real (as opposed to imagined brand promise) differences are the look and the name.
As a result, in the PC market, much of the smartphone market and in many other tech product categories, brand loyalty is a phenomenon of the 20th century. No wonder IBM sold off its PC and, recently, low-end server businesses and Google its Motorola Mobility purchase to Lenovo.
Isn't Apple the exception that proves the rule however? I'd argue (heretically) that actually, Apple doesn't command brand loyalty, it's just great at creating 'complete product' lock-in, launching a series of devices that work together well in a proprietary service environment. One false step – and they have made many in the past – and the world would indulge in an orgy of post-Jobsian criticism and searching for alternatives. Hence Apple's aggressive use of patent litigation to slow down any company that it thinks buyers might prefer, threatening the outrageous margins on which its stratospheric share price is predicated.
Vorsprung durch Technik
Power has now shifted fundamentally and irrevocably from the producer to the consumer and the ROI of brand marketing will continue to decrease. So what should companies do? The good news for entrepreneurs is that one of the solutions may be to return to pre-branding dominance days. This is done by investing in building and promoting great products rather than by building and promoting brands.
Evidence of this approach is already appearing. Take KIA cars in the UK for instance, which makes no claims for its vehicles. Rather, its advertisements tell prospective customers to go to its website and read owners' reviews in an example of customer reality rather than brand fantasy. That, I'd count as real Vorsprung durch Technik.
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