| © April 2002 Brand Meta 1
A VIEW ON THE FUTURE OF BRANDING
By Sicco van Gelder*
Abstract
The traditional perception of branding has been shortsighted and has cast brands as being
cynically manipulative. This is due to an overly skewed attention to one group of
stakeholders, namely shareholders. It is time for brands to prove their worth to consumers,
their guidance to employees and business partners and, as a result of these activities, their
value to shareholders.
* The author is founder of Brand Meta, a brand strategy and planning consultancy in Amsterdam, the
Netherlands. He has over a decade of experience with worldwide research and consultancy on major brands. He
can be reached at sicco.van.gelder@brand-meta.com.
© April 2002 Brand Meta 2
WHY BRANDING MAY BE IN PERIL
Brands and branding are hot topics. It is
almost impossible nowadays to open any
serious newspaper or magazine (be they
general or specialist) without coming
across an article that touts the importance
and value of brands. The arguments used
to support this assertion generally run
something like this:
(1) Products and services have become so
alike that they fail to distinguish
themselves by their quality, efficacy,
reliability, assurance and care. Brands add
emotion and trust to these products and
services, thus providing clues that simplify
consumers’ choice.
(2) These added emotions and trust help
create a relationship between brands and
consumers, which ensures consumers’
loyalty to the brands.
(3) Brands create aspirational lifestyles
based on these consumer relationships.
Associating oneself with a brand transfers
these lifestyles onto consumers.
(4) The branded lifestyles extol values over
and above the brands’ product or service
category that allow the brands to be
extended into other product and service
categories. Thus saving companies the
trouble and costs of developing new
brands, while entering new lucrative
markets.
(5) The combination of emotions,
relationships, lifestyles and values allows
brand owners to charge a price premium
for their products and services, which
otherwise are barely distinguishable from
generics.
If these are the arguments for branding
then it is no wonder that brands are
increasingly considered manipulative,
exploitative and objectionable. With
friends like these, who needs enemies?
Branding appears to be aimed at short-term
enrichment of corporations and their
shareholders. Consumers are cynically
duped into believing that they are
purchasing goods and services that have
qualities over and above those offered by
competition, while in reality they are
paying for fluff and hype. This view of
branding is reinforced by triumphant
stories, recounted by advertising
executives and consultants, of how they
helped turn their clients’ watery fruit juice,
boxy car or flimsy T-shirt into an instant
success through a creative application of
branding. It would seem only a matter of
time before the masses catch on to this and
the branded houses of cards tumble.
WHAT HAPPENED?
Some brands may indeed be cynically
manipulative and aimed at grabbing as
much money as possible while the going is
good. Such brands, however do not offer
lasting value to consumers or their owners.
Many writers of articles about brands
simply fail to separate causes and effects.
This is not because they are dumb or
uninformed, but mainly because they have
become caught up in the whirlwind, that
swept through the global corporate
establishment during the past decade,
called shareholder value. Simply put, this
business principle means that no-one
matters except for pension funds, financial
institutions and people with surplus cash
who wish to wager on the future value of a
listed company. The experience during the
last few years shows that these institutions
and individuals are often not good at
estimating such future value. As a result
they have undervalued perfectly healthy
companies with esteemed brands and
overvalued companies with petty brands
and lacking decent business models. This
© April 2002 Brand Meta 3
unfortunate situation has led even some of
the healthiest companies to develop brands
without substance in the pursuit of higher
share prices. Consumers, however, are
generally neither foolish nor short sighted
and they have refused to be tempted by all
the pointless excitement generated by such
brands.
Hopefully, this experience brings back the
realisation that shareholder value depends
on the willingness of consumers to
purchase and use a company’s goods and
services now and to continue to do so in
the future. The real value of a brand thus
lies in its ability to persuade and please
consumers. This does not necessarily mean
that the best product or service (in a
technical sense) will always win over
consumers, but rather that the knowledge
of what consumers need, how they behave,
what they think, how they perceive value,
and how they reason and decide defines
such outcomes.
Although none of this is new, the
management of many companies are so
involved in meeting (short-term)
shareholder demands that they are unable
implement policies aimed at improving
consumer experience.
WHY DO WE BRAND?
The main reason why brands have been
developed in the first place has to do with
competition and subsequent increased
consumer choice. However, contrary to
popular belief, consumers do not desire
choice per se. Choice is mainly a
mechanism that allows consumers to
obtain the products and services that they
want at a price that they want to afford. As
peoples’ wants, needs and budgets differ,
choice functions as a way to fulfil the
requirements of different consumers. Thus,
brands cater to this diversity.
In some cases, choice is also a mechanism
for consumers to gain information about
developments (e.g. trends) in a product or
service category, as is the case in clothing
stores and shoe shops.
This does not mean that choice does not
also cater to a need for variety, something
that helps bring colour to people’s lives.
However, variety is a fleeting affair and
brands that are introduced merely to
provide variety or as an alternative have
little raison d’être. This explains the
demise of many foreign beer brands in
China. Introduced during the 1990’s, with
the thought that Chinese consumers would
lap them up as an alternative to dubious
local brews, they withdrew within a
decade. Foreign competition had spurred
local Chinese brewers to improve their
quality, bottling, distribution and
advertising. Subsequently, Chinese
consumers chose to remain largely loyal to
their local brands, and to spurn expensive
and irrelevant foreign ones. Only those
foreign beer brand that were able offer
rewarding experiences, distinct from those
offered by local brands, are still active in
China.
Thus, the reason why we brand is that
brands provide specific consumers with
specific rewarding experiences.
Experiences that make consumers happy to
part with their money, and make them
satisfied in the process.
DEVELOPMENTS
If competition is the driving force behind
branding, we need to understand the issues
that face brands in the coming decade to be
able to anticipate the future of branding.
There are five major developments that are
partly related to one and other
(1) Progressive globalisation, which
entails increasing economic, social,
technological, regulatory and political
© April 2002 Brand Meta 4
interaction between societies across large
parts of the globe. This process is not new
but the pace at which globalisation
develops intensifies with the introduction
of the Euro, China’s admission to the
WTO, the prolific spread of the Internet
and (mobile) telecommunications
networks, and the worldwide development
of mega-distribution power, to name but a
few. Large parts of the world’s population
are affected by these changes.
(2) Conversely, the ever-quickening pace
of globalisation leads to the revival of local
identity and pride among those affected. In
many countries, this is expressed through a
renewed historic awareness, national pride
and a search for roots and authenticity. We
are happy to reap the benefits of
modernisation, but unwilling to commit
ourselves to world citizenship. We cling to
what binds us locally, underscoring our
differences with other societies, shunning
cultural homogenisation.
(3) The economic developments that have
been the effects of the deregulation of trade
and industry in many parts of the world
have led to an increase in educated and
marketing-savvy segments of consumers
across the world. This process is likely to
continue with leaps and bounds, and will
mean that consumers will become
increasing critical of what they are offered.
This entails that consumers will seek out
more tailor-made products and services,
which affects the way in which these are
produced.
(4) The improvements in (basic) health
services and the decline in birth rates in
North America, Europe and large parts of
Asia-Pacific have tremendously increased
the number of aging consumers. This
(often wealthy) generation has differing
needs to younger consumers, as well as a
wealth of life experience.
(5) Finally, there is the emergence of what
has been dubbed the Now Economy. Aided
by an improved inter-operability of various
kinds of IT systems (ERP, Supply Chain
Management, CRM, e-commerce, GPS,
etc.) companies will be able to
individualise consumer offers, develop
profound consumer understanding, and
optimise the consumer experience. How
much of this is hype and how much is
substance is difficult to determine at the
moment. However, it is clear that such
technological developments will become
increasingly pervasive in our professional
and private lives.
IMPLICATIONS FOR BRANDING
All these developments have the following
implications for the future of branding.
Branding needs to be increasingly
consumer-oriented and driven by the
readiness to provide individual consumers
with worthwhile experiences. This implies
investments in product and service
innovation, consumer understanding,
consumer-oriented ordering and delivery
systems, and brand-based employee
training and guidance.
Brands will increasingly need to balance
on the tightrope of modernisation and
tradition. As more brands are stretched
across borders, they will need to offer
distinct value to consumers in competition
with local and global brands with their own
specific innovation power and market
adaptation requirements (e.g. category,
culture or needs-specific).
Brands will increasingly need to prove
themselves to sophisticated consumers.
Not only brand claims will need increasing
substantiation to consumers, but also the
ethics and behaviour of the company
behind the brand. This implies increased
company transparency, which currently
goes against the grain of most companies
© April 2002 Brand Meta 5
that jealously guard such sensitive
information. NGOs and the media will play
increasingly important roles in monitoring
these issues.
Product brands will be provided with
service enhancements that bring consumers
into increased contact with employees.
Conversely, service brands will decrease
their human contacts with consumers
through further automation of services.
Both movements entail that efficient
handling of these contacts must be
combined with a clear understanding of the
required brand experience across consumer
touch-points.
These developments may be difficult to
accept for aging consumers, who will start
to make up the bulk of consumers,
certainly in terms of spending power.
Services thus must be differentiated to
accommodate individual consumer needs
and preferences (e.g. cash home-delivery
services by banks).
Consumers’ increasing power over
manufacturers and retailers, which is a
function of competition, spending power
and technological developments, mean that
they will increasingly require more realtime
gratification from brands. From
ordering a customised car from the comfort
of their homes to the immediate
effectiveness of drugs, consumers’
expectations will need to be met with more
urgency than ever before.
NO COMPLACENCY!
It is clear that the days of brands as great
wealth generators are numbered. As
competition catches up with the traditional
power brands and as consumers become
more discerning, brands will need to work
not only harder but also smarter to prove
their worth. The increased focus on
consumers means that employees and
business partners need to be instilled with a
clear sense of the brand to be able to
deliver on the brand experience. In
addition, they will need to recognise the
differences between consumers and tailor
the brand to meet differentiated brand
experiences for different consumer
segments and ultimately individual brand
experiences for individual consumers.
Shareholders will need to recognise those
companies that take on this challenge and
reward them accordingly. Share prices
must reflect companies’ current
endeavours on behalf of their brands and
the current and future company value that
these activities affect. The use of brands
for manipulative purposes will be
penalised and the use for value creation
rewarded. |
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