The roles that brands play in people’s lives are not static but evolving. While brand names once were used to differentiate basic commodity products and provide a promise of consistent formulation and quality, now they confer a whole range of other benefits, including status, emotional well-being, and a sense of belonging.
The importance of these different benefits and emotional rewards varies according to a number of factors, including the cultural norms of different countries and the development of specific categories. In order to survive in today’s crowded and complicated markets, brand owners and marketers need to stay abreast of these changing needs and expectations. But those that want their brands to do more than survive—those that want their brands to succeed and thrive in the future—need to stay one step ahead. They need to anticipate the next set of needs that brands will satisfy for their consumers.
So what is the next step on the evolutionary continuum of brands?
As regular readers of this blog will know, I believe that in developed economies, most brands in established categories have hit a wall when it comes to effective product differentiation. Consider your digital camera. Do you know—or care—if it takes the very best pictures? Or do you just want a device that is easy to use and captures your vacation memories? Lacking a meaningful and detectable product difference, many brands now seek to appeal to other differentiators: self-esteem, social desirability and altruism.
Some brands, like Dove, Innocent and Red Bull, have successfully engaged people on an emotional basis, but in general, brand-building has given way to undifferentiated sales promotion. In many categories, what passes for development and innovation consists of trivialities: new flavors, scents, colors, and packaging options (e.g. 100-calorie packs). There is little real, discernible differentiation across brands.
To be sure, in developing economies around the world, there are still many people for whom the availability of shampoo represents a big step up from their former hairwashing standby, a bar of soap. As markets and categories develop, the idea that a product has been tailored to meet a specific need is appealing in its own right. But the more familiar consumers become with brands and marketing practices (and the more competitive the category), the more they come to expect from a brand. In order to remain competitive, brands begin to “ladder up” to meet higher order functional needs (e.g. from cleansing to dandruff control), and then from functional to emotional benefits (e.g. from “your hair will look good” to “you will feel great because your hair looks good.” Each innovation is designed to differentiate the brand in some way, or to negate a competitive advantage.
However, more often than not, such product innovations are readily copied and matched by competitors, and thus in developed markets, we are faced with crowded shelves full of comparable products. With so few substantive reasons on which to base their choices, people resort to the one obvious yardstick: price. As a result, consumers in developed economies tend to be less brand loyal and more price sensitive than those in developing economies. According to BrandZ, in countries such as the U.S., Germany, and the U.K., half as many people are defined as brand loyal as those living in countries with developing economies such as China, India and Brazil. And people in developing economies are more likely to say it is very important to get the right brand (55 percent versus 41 in developed markets).
For some broader background on this point, please check out “The Doomsday Brand Scenario,” a post I wrote back in 2007 before the global economic downturn of 2008 had taken hold. The tough economic times we have faced since then make the value of strong brands and marketing even more clear. The recession has been far more effective than any meta-analysis at highlighting the benefits of building a strong brand and the risks attached to marketing a “me-too” brand or a mediocre product. But the question of how best to continue to develop brand differentiation remains.
I will continue to explore these ideas in subsequent posts, and I really do hope that people will feel free to contribute their thoughts and ideas. Please share your reactions.
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September 28th, 2009 at 2:57 am
Hi nigel,
Good post.
I’d like to add 2 thoughts:
Firstly one can (sort of) make the assumption that the people in the developed countries can speak English. About 17% of the world population can speak English - a lot of those living in developing countries, but one can assume that they are the more ‘developed people in the developing countries’.
This leaves about 83% of the world market available to marketers. These are the people you talk about in your post!
The second thought: In South Africa we live what you are talking about in your post. (High brand loyalty rather than price sensitivity; also that premium price often imply quality).
As an example: Think about the difference it makes to your life when you get tap water in your house the first time and you buy your firswt washing machine! No more spending a large portion of your day at a commun al washing hole. I saw this in India as well.
Now you need to decide between washing powders for the first time in your life. Obviously for the first few times you will probably mix your whites and coloureds, and destroy a lot of your clothes - so instead of being able to show of your bright new clothes which tells everybody you are wealthy enough to have running water and a washing machines everybody laughs at you!!
No wonder you study the labels when you buy.
You will use advertising as a source of information rather than entertainment.
You will not risk changing brands easily after the first experience of destroying all you outfits.
I am glad you will be posting a lot more on this subject!! It is important for marketers to understand this.
Erik.
September 28th, 2009 at 6:00 am
Nigel, that’s why I view the consumer-brand dynamic as a 4 stage relationship: Wallet, Mind, Heart and Life. (have mentioned this here before and in a number of longer posts on my blog)
The relative proportions across a brand’s constituency will define that brand from the bottom up.. And so if you are not happy with the composition of your constituency, you can either fire them, try to evolve them to where ever it is you desire or find new brand followers. And from this perspective, it integrates with Treacy & Wiersema’s Value Disciplines model (operational excellence, product leadership, customer intimacy) as it subsequently aligns the organization to better fulfill the chosen core competency.
From a brand (manager’s) perspective it reflects the extent to which the purchaser is deemed (or treated as) a buyer, consumer, customer or partner. That evolutionary development is further outlined in what I see as the six key (ISPIED) forces of brand value. Iconic value, Societal value, Potential value, Integration value, Experiential value, Design value
From a consumer relationship perspective it reflects the extent to which the brand is engaging and/or required to engage in higher order ‘responsibility/activity.’
Taken to its logical conclusion it opens the door for the possibility of a business model paradigm that can build on Rappaport’s famous dictum, “Without sustainable* customer value, there can be no sustainable shareholder value” to guide the achievement of more balanced outcomes between the maximization of shareholders, customer and stakeholder value without diminishing the brand’s relative, future competitiveness - because as much as we talk about brand building for the longterm, if we don’t have the shareholders on board….
This will be part of a blog post that is not yet ready for prime time. cheers Miro
September 30th, 2009 at 8:17 am
Erik and Miro, thanks for the comments.
Erik, as you know Link ad pre-test results confirm your belief that people who are less familiar with brands use advertising as a source of information. In China we have to split results across five separate databases to reflect this difference depending on where the ad is intended to air.
Miro, your six forces of brand value make good sense. Is there a specific post you can point us to?
October 2nd, 2009 at 10:14 am
Nigel,
the requested link. Hope it has value for you
http://miroslodki.wordpress.com/2009/02/18/the-six-forces-of-brand-value/
Your follow-on series of posts about Maslow’s Needs Hierarchy also links back to my WMHL model, except I would suggest you have it backwards. Instead of thinking of it in terms of the brand as some monolithic entity,
“So could it be that the next step for brands is to move into the space described by the pinnacle of Maslow’s pyramid, self-actualization?”
one needs to view this from the bottom-up varied customer perspectives.
The blend of customer perceptions, attitudes and interactions defines the weighted average of the brand - which is separate from the positioning/imaging the brand seeks to have itself seen as. But in the 1:1 intimacy brands strive to achieve…the specific individualized reality and value judgements/requirments, trumps the collective.
cheers
Miro