Has the Brand Bubble Finally Burst?
Traditional thinking is that consumers will pay a premium for a brand name vs. an unbranded or store brand product. That thinking has faced a stiff challenge in the face of the recent economic downturn and changes in consumer sentiment. This is especially true of luxury brands. Witness the recent demise of Hummer, a once iconic symbol of status and wealth — now the object of derision and the poster child of conspicuous consumption.
In this “new economy”, a brand name must deliver more than familiarity, more than fame, more than fancy packaging. These tried and true methods have worked in better times, based in part of the theory that a known evil is better than an unknown evil. In other words, most people are reluctant to try something different and unproven. And that’s part of the problem. Big brands have banked on this comfortable “I-know-you, you-know-me” relationship. But with pressure on the wallet, consumers are reaching out for less expensive choices. Wal-Mart, for example, recently took Hefty and Glad bags off the shelves in favor of its own store brands. To add to the sticky mess, well-established brands have created “brand children” or brand extensions, which have only added to the crowded clutter on the shelves. Just how many varieties of Cheerios can the consumer stomach? Frosted? Mulit-grain? Honey Nut? All this in an attempt to increase market share.
What has been lost in all of this is the basics of branding, which involves creating a unique marketing position, a point of differentiation. Brands need to get back to the basics of being better, not just famous. Apple has done a great job of this with their iPod. Imagine giving your kid a knock off mp3 player for a birthday present. They have invested in their industrial design, intuitive use, and ease of the iTunes interface. There are any number of mp3 players with more memory and perhaps even more functionality, but it’s not enough to unseat the iPod.
But this differentiation requires an investment. It means understanding what your products and services really deliver to your customers, benefits they don’t get from competitive products. Do you know the answer to that question? Are there any real differences? Or are you relying on name recognition alone to carry the day? It might even require rolling up the sleeves and creating something “new and improved!”
The easy ride is over, and probably will be for some time. Good. It means getting back to what great brands should have been doing all along… improving, innovating and enhancing the customer experience.
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