By Kevin Gray and Koen Pauwels
Is Branding on Its Deathbed?
Most readers would probably at least agree that marketing has not been the same since the arrival of the World Wide Web and, more recently, mobile technology and social media. Globalization has also been a disruptive force and the full impact of Big Data and IoT have yet to be seen. Our new world, brave or otherwise, is still unfolding and the only prediction that’s a reasonably sure bet is that the marketing world will be very different in 20 years than it is now.
How has branding been affected by all this? First, just to review, branding is:
“The process involved in creating a unique name and image for a product in the consumers‘ mind, mainly through advertising campaigns with a consistent theme. Branding aims to establish a significant and differentiated presence in the market that attracts and retains loyal customers.”
It can take many forms, depending on company size, industry, level of economic development in a country and national culture. Some branding is quite simple and aims for noticeability on a supermarket shelf (see, for example, Byron Sharp’s 2010 book How Brands Grow and its recent sequel) while other branding strategies try to build strong emotional bonds between a product or service and consumers (e.g. David Aaker and Kevin Keller’s work).
The value of branding can be assessed in different ways. Central to this is the notion of brand equity, the basic idea of which is:
“That the owner of a well-known brand name can generate more money from products with that brand name than from products with a less well known name, as consumers believe that a product with a well-known name is better than products with less well-known names.”
In the 1990s, marketing research established part of this equity comes from consumers believing the branded product is better than the sum of its perceived attributes (known as the “Marlboro effect”, as it is especially strong for cigarettes) and part of it comes from consumers perceiving their branded product’s attributes to be better than they actually are (the “perception effect”).
Some Questions
We do not claim to know the future but, thinking ahead 10-15 years, we do feel there are some important issues marketers should be asking themselves now. Here is just a sample:
- With brand fans connecting with each other (in brand communities) and engaging rival brand fans in social media (“dancing with the enemy”), to what extent is brand equity driven by the overall impression (e.g. “Apple is simply the best, even though the current iPhone is inferior to the Samsung equivalent on many attributes”) or by colored attribute perceptions (e.g. “my iPhone is better on every attribute than the Samsung equivalent”)?
- Through social media, online product reviews, specialist blogs and online retailing, will the consumer finally become king and direct company actions? Or will companies adapt and relations stay basically the same?
- How can marketers influence given the proliferation of choice and strong price competition?
- Will detailed behavioral insights from Big Data and nudging through the application of behavioral economics combine to build brands?
- Will nudging have more differential impact through branding than through other aspects of marketing, or less?
- Will online reviews seriously undermine the importance of brands as carriers of information?
- Conversely, will social media counteract online reviews by enhancing the importance of brands as a means by which consumers can communicate and express themselves?
- Will lower-tier brands without a strong brand identity quickly lose their value, just as they are the first to loose market share when a private label (store brand) enters the category?
- An FAQ: has omni-channel marketing made branding too unwieldy, even if branding still has some payoff? Or is branding more important than ever when consumers more easily choose and switch channels?
- Will branding grow in importance by bringing coherence across channels, categories and cultures? Will we finally see the “global village” or will cultures continue to evolve on related, but clearly separate paths?
Your Thoughts?
Of course, we don’t have the answers to these questions and there are surely many other significant questions we have not posed here. We would be interested in your thoughts.
Kevin Gray is president of Cannon Gray, a marketing science and analytics consultancy.
Koen Pauwels is Professor of Marketing at Ozyegin University, Istanbul and Honorary Professor at the University of Groningen.
Kevin and Koen would like to thank Peeter Verlegh, professor of Marketing at VU University Amsterdam, for his helpful comments on a draft of this article.
5 comments
Thanks Kevin & Koen for the insight really helpful. We’ve dedicated a whole week to the subject – Future of Branding Week in London – https://futurelondonacademy.co.uk/en/course/branding
Typo time…”Thanks to you both…” and “…in many C-Suites.” was chopped off. Even a big tablet often defeats me…
Thanks toil you both for your thoughts. My feeling – and I suspect Koen would agree – is that different industries, companies within industries, and countries will be affected differently and will face different challenges over the course of the next decade or so. The key at the company level will be to come up with the appropriate mix of strategies and tactics, and to execute them effectively. There also seems to be increasing confusion between marketing and direct marketing and, though marketing researchers are often loath to admit it, branding and marketing in general is not taken as seriously as I think it should be.
Great topic. To me a fundamental question is how much tomorrow’s cohorts eg Gen Z care about brands, and if they care about different “brand aspects”. For example – the brand experience versus the brand Image. How did Samsung’s Smartphone originally become so successful – or Google, for that matter, Amazon too?…..to me these are about the experience, the encounter, and little to do with a traditional AIDA/funnel approach. Having said that, one hypothesis is that Fame is still going to be a strong driver for brand equity whatever cohort we’re looking at, and without wishing to quote John Kearon, saliency too. We’ve actually just completed a study looking at the dimensions that Keep Brand love strong across time and across Generations – and come up with more People-driven factors. Can share – perhaps at an Esomar Event or an online webinar.
“That the owner of a well-known brand name can generate more money from products with that brand name than from products with a less well known name, as consumers believe that a product with a well-known name is better than products with less well-known names.”
I think the key word here is “believe”.
Whilst in Don Draper Land it may be easy to get people to believe that one cigarette is better than another by communicating that message in some resonant sort of way cigarettes are more or less all the same – A blank canvas as Don would say.
In most cases however the consumption experience impacts upon people’s beliefs about a product as much as what is communicated. If consumption doesn’t meet up to promise then perception is altered and future behaviour (loyalty) potentially changed. That’s always been the case. However what’s probably changing most are the varied ways in which people experience a brand (touch points) which in turn makes brand management more challenging.