Wired Article about Branding
Comment by Trademarks and Technology Blog
One of my favorite topics. So, sorry if this drags out. There are two basic points I want to make about these two articles and here are the quotes that I wish to discuss: "Americans have become less loyal" (from wired) and "If consumers don't actually have 'goodwill' towards a brand, in the sense of driving consumer behavior towards brands, then perhaps we run the risk of overweighting goodwill in our legal analysis" from Mr. Goldman's blog.
I think it is generally true that Americans have become less loyal. I think that is a good thing. No longer are Americans wow-ed by a manufacturer's primateur. They demand the product sell itself rather than rely on the manufacturer's name alone in making a purchasing decision. As both articles point out, this is made possible by the plethora (cornucopia, if you will) of information about products on the web. The most well known, of course, being epinions.com but almost every retail site has consumer reviews of products in some form or another (see amazon.com, buy.com, mysimon.com, fatwallet.com, etc.) Mr. Goldman seems to think there is too much information available. In the land of retail consumerism I fail to see how this is possible. If you know what product you want it's pretty easy to go to Google or Amazon's A9 site and instantly retrieve information about any product you can dream of. This is not a bad thing. In the past consumers were afraid of new products because they were unknown quantities, if your friends/family had never heard of it, it was hard to compare against products that nobody had any complaints about. For this reason, it was difficult to break into oligopolistic markets; particular ones where the big names had been around for a long time and advertised heavily. This was true even if the product was superior - history is rife with superior products squeezed out of a market by bigger names with bigger ad budgets. A few factors have contributed to the general reversal of this problem: more cable channels (to sub-divide interests and provide more advertising time at a lower relative cost); the internet (low-cost advertising, low-cost customer service mechanisms, product reviews and ratings); increased competition in the delivery channels (there are more package carriers now, rates are lower, and it is generally easier to get product from point A to point B) These three factors alone have contributed to the large influx of individual producers who can distribute from their garage rather than try to get into a big-box retailer; in fact the individuals can be sold in the same channels (amazon.com, ebay, etc.) as the big-box retailers. All of these together have eroded the need by consumers to rely on brands as an indicator of quality.
That is not to say that branding no longer serves a purpose as the Wired article suggests. Mr. Goldman is correct that branding provides an important product-distinction fuction - it is still necessary to brand so that consumers can differentiate product A from product B consistently. Moreover, Mr. Goldman suggests that "goodwill" may be out the door if consumers are willing to jump from product to product. He views "goodwill" as "brand loyalty" and I'm not sure that's entirely accurate. I believe it's not entirely accurate because I disagree with the Mr. Goldman's assessment of the primary function of brands and trademarks. No doubt branding is changing, and companies are moving from a paradigm of product-quality to a paradigm of lifestyle-association. Now, instead of spreading one brand across multiple demographics we are starting to see the same (or very similar) products, with multiple brands (and perhaps with tweaked options) depending the targeted demographic. In trademark-law terms, I think it will begin to manifest itself in tradedress terms rather than strictly trademark terms. Niche marketing is beginning to take hold and I think we'll see more of it before we start to see less of it. To this end the brand becomes part of the product itself rather than a designation of the product. Consumers begin to see the product (which is virtually identical to competing products) differentiation as the brand and accept that across the product category quality will be approximately equal. In this way, the brands that pay more to advertise will be able to continue to charge a premium on the brand because there is a certain "cool" factor attached, rather than any assumption of quality. People are seeing off-brands not as of "inferior quality" but rather as "not as cool" and that is an important distinction because it allows competitors into the market if they brand themselves as a "stripped down" version of the product or if they market themselves as "uber-chic." So, producers are playing not with our perceptions of quality but rather our perceptions of ourselves and Americans' desires to differentiate themselves. So, people are no longer "Sony" people because they believe Sony has superior products, but rather because they like the consistent styling that Sony uses on their products and want to project that style to others. In this way, the brand now encompasses much more than the name "Sony" but it also encompasses the "brushed steel" look and the "steel and white" coloring. Look at Apple, they've virtually hypnotized an entire nation with the color white. So, while the brand as an indicator of quality is rapidly disappearing, it is being replaced by brand as an indicator of self; and this designation one could argue would engender even greater "goodwill" because people are more loyal to themselves than they have ever been to quality.
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4 comments:
Jeffrey, this is a very interesting post. Thanks for the excellent thoughts. Two observations:
1) There is a literature on the impact of more information on consumer decision-making. See, e.g., Schwartz's Paradox of Choice; Malhotra, Information Load and Consumer Decision Making. I'm still not sure I've been fully persuaded yet, but I can say this: consumers don't need *more* information, they need the *right* information, which is why gatekeepers and filters will continue to play important roles.
2. Your point about brands as status symbols is 100% correct. However, I would note that not all brands play this role. For example, I think many consumers would not use brands associated with low-value consumer packaged goods as associative tools; I have a hard time imagining people trumpeting their association with Tampax or Depends. So I think we need to recognize that brands have multiple facets and roles that they play for consumers.
Eric.
I think Eric's comments have a tiny flaw in point 2. Branding isn't any longer about trumpeting an association.
The reason why Tampax and Depends still have a "brand" is in their dedication to a level of consistent behaviour (the production of a quality product) that is invisible.
This "invisibility" in and of itself is the value of the brand given that it is unlikely that people use online tools to aggressively inspect the competing claims of incontinence in the same way that they are likely to use online mechanisms to choose a digital camera.
Brands are becoming psychoactive.
The relationship to a manufacturing entity is ideally based on a personal relationships metrics.
Does it do what it says it will do?
Does it react to me in a consistent fashion?
And if I'm looking for edginess, then can it deliver that?
These associations are more akin to group dynamics and less to the numerous statistical surveys that posit historic success.
I think this is in line with Eric's point in point 1.
Brands, in a transparent company environment, are less about information than they are about profile building.
The nice thing for traditional manufacturers is that tradition profile building is a long term exercise and one in which many are likely to participate.
All of your (both eric and keith) comments are well-taken and I'm particularly intrigued that brand decision making from the producer's stand point could be viewed more as a group dynamic model than from a more traditional statistical analysis (which I suppose would nonetheless play some role in interpreting the success of the group dynamic).
I'm not entirely convinced that even the "status" attachment isn't creeping into the low-value consumer packaged products as well (see e.g., the "Special K" commercials which brand them as a lifestyle cereal). And I suspect other grocery items may follow (another example, the growing artisnal cheese industry). And even Tampax is getting into the game with product diversification for more active females (e.g., their thong lines of products, etc.)
Interesting comments; I would also like to respond to Eric's comment #2. I think that even with products such as Tampax or Depends there is going to be a bit of "trumpeting" going on: not in public, but in the context of the community that uses these products. I would bet that even tampons become a bit of a status symbol (oh, you don't have a Tampax? Well forget it, I'll borrow from someone else. I just can't stand anything else...) in a given group of women. Therefore, they can indeed function, as Jeff mentioned in the blog, as a source, albeit smaller than some other things, certainly, but a source nonetheless of identity for the consumer.
I would posit that people are not only capable, but are constantly searching for ways to set themselves and their groups off from others, and that they will use just about any tool available. So, perhaps nearly all brands can play the role of status symbol, in the sense that it differentiates one or one's group from others, in the context of a particular community.
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