This
week’s discussions examined a lot of the aspects the make for effective
advertising on the web, but one aspect that caught my attention was the
deterioration of brand loyalty, or more specifically, the fact that consumers
today are far more informed than in previous generations and therefore have far
more buying power. Whereas in the past, a
brand could stand for something and therefore inspire trust, today consumers
are more likely to align with the product itself over the company.
In
Geoffrey James’ article, “Brand Loyalty is (Almost) Dead”, James writes, “The customer's predisposition to buy a
particular brand reduced sales cost while allowing the seller to charge more for the
product, even if it was virtually identical to a non-branded competitive
product.”
Building a brand used
to be incredibly important to a company’s bottom line because it would
inevitably reduce costs on advertising dollars.
A brand became synonymous with the quality and consistency of the
products that they were selling, so consumers would be able to identify a name
and a logo and instantly be “sold”. The
internet has slowly destroyed this idea for a plethora of reasons, but I will
highlight three.
First a foremost, the consumer
has become infinitely wiser as information on products and companies has become
readily available via the web. Thinking
of trying a new restaurant? Check Yelp
for user reviews beforehand and you will find a host of pros and cons that will
either sway or dissuade your from ultimately dining at said establishment. If you really dig around, the chances are you
will be able to paint a fairly accurate portrait of your proposed dining
experience without ever setting foot in the venue.
The same applies to other
businesses in all industries. Before I
purchase anything from Amazon, I always read the customer reviews. I pay incredibly close attention the bad ones
because it is important to know ahead of time whether or not there are any
particular areas where the product might fall short of my expectations. When making larger purchases (i.e. expensive
clothes, technology, auto, etc.), I will dig around for weeks so that I can
spend my dollars with the greatest amount of certainty.
Of course there are negatives to
this approach. All people are going to
be different and while there is safety in numbers, shouldn’t we also consider
the possibility that our tastes might differ from the 40, 50, or even 500 other
reviewers? It is also important to think
about the sort of people that spend their time reviewing a product. I have personally found myself reviewing
products or experiences far more frequently, but for the most part these
reviews were the result of extremely satisfied or extremely dissatisfied
opinions. I rarely take time out of my
day to review something that I am indifferent to or had a neutral experience
with, but who knows? Perhaps there are a
lot of people out there desperate to share their mediocre encounters.
The second reason that brand
loyalty is floundering is that a lot of products (especially tech products,
aside from design) are becoming essentially the same. James points out that due to outsourcing, you
might be purchasing two different brand name computers with parts being
manufactured in the same plant. In the
end, the only thing separating the products becomes the price, the customer
service, and perhaps the warrantee. The
product itself is not symbolic of the brand name. When I would purchase a PC in the past, I
would look for something that made it different, better, than the others, but
ultimately the company that assembles the computer from parts that are shared
among several different companies can only hope to charge you more for your
brand name. This might have flown in the
past, but I can tell you with confidence that I paid way too much money for my
Sony VAIO years ago and it ended up being a piece of crap. So why did I pay so much? Sony assured me I was buying a machine with
supreme capabilities, but all I did was pay for lies. Sorry Sony, I’ll take my chances with a lesser
known brand these days, my wallet and my anxiety will thank me later.
The choice is yours, choose wisely
The last reason that brand
loyalty has gone out the window, and a point that James does not introduce, is
that the internet has created such a low barrier for entry into the marketplace
that literally thousands of new competing products are being unveiled each day. The only way for these products to compete is
through design and cost. I purchased a
case for my Moto X Android phone from a company that has been around for just
over a year. Guess what? I love it.
The reviews were positive, but more importantly there was something
innately exciting about having a case that none of my friends had. I was something that I felt made me
unique. The flood of new products coming
out make this sort of feeling possible, it’s about finding your individuality
amongst a sea of conformity (a subject that is fascinating in itself and should
serve for an interesting post at a later date).
The point is, there are more options than ever and if you are not risk
averse to trying something new and the opportunity is there, then why not go
for it?
Nailed it.
The death of brand loyalty is
more closely aligned with older generations.
It is hard to forget that having the right toys, shoes, clothes, etc.
was a dramatically integral part of your youth.
Children are easy to sell, and while teenagers are fickle (today’s brand
might not be tomorrow’s), at least they can temporarily agree on what is cool.
Finally, James argues that
powerful brands like Coke and Apple don’t have brand loyalty. Coke has distribution loyalty and Apple has
product loyalty (products that work well together). If a store doesn’t offer Coke, buy a
Pepsi. If Apple makes a crappy product,
don’t buy it.
Recognize these?
What does this mean for
business? We know what it means for
consumers. We have the power now becausewe have the information. Do businesses
give up on brand building? I don’t think
so, I think companies will just need to recognize that building a brand is more
important than saving advertising dollars.
I would like to see brands take an innovative approach and really stand
for something. Look at Chipotle. Look at Johnson & Johnson. Look at TOMS shoes. Hell, even look at MTV. These brands stand for something that
coincides with what they are selling.
They are selling passion, an experience, hope, or a lifestyle, and with
that a guarantee and a promise that the company will not betray their
message. We may not be able to win more
sales with a strong brand in the age of the internet, but we can certainly win
over peoples’ perceptions. In the end
that might end up making all the difference.
No comments:
Post a Comment