Brand-aids

James Surowiecki has an interesting article in Wired about how technology-driven consumer empowerment has knee-capped the advertising industry's favorite crutch, The Brand.

Americans have become less loyal. Consumer-goods markets used to be very stable. If you had a set of customers today, you could be pretty sure most of them would still be around two years, five years, ten years from now. That's no longer true. A study by retail-industry tracking firm NPD Group found that nearly half of those who described themselves as highly loyal to a brand were no longer loyal a year later. Even seemingly strong names rarely translate into much power at the cash register. Another remarkable study found that just 4 percent of consumers would be willing to stick with a brand if its competitors offered better value for the same price. Consumers are continually looking for a better deal, opening the door for companies to introduce a raft of new products.

My favorite line: "Marketing types either don't see this trend or choose not to talk about it." (Link via Marginal Revolution)

Comments

[Sandy]

The iPod has made a lot more people interested in Apple than Apple made people interested in the iPod.

Err...except that the iPod has 70% market share despite lower cost/higher capacity competitors. If that's not a designer brand, I don't know what is.

Also, I doubt had Creative introduced the iPod that people would have taken much notice against the Archos Jukebox. It's the Apple brand that gave it popularity in the first place. Yes, after that you have to have products.

Perhaps the lack of difference among Sony, Toshiba, et al. they see is due more to the fact that they all boot up with "Welcome to Windows XP" which all comes from one company?

Either way there wasn't enough info in that article to make me start shorting Nike (for that reason, anyway).

[eli]

Maybe back then it wasn't all made-in-China garbage. If everything you buy now comes from the same sweatshop in Shanghai made by the same slave labor and with the same poor quality, it doesn't really matter which brand you buy.

[mike]

If you found that article interesting, you might want to spend some time over the the frontline website

[Warren]

Thanks mike, glad I'm not the only PBS booster around here. This post is well timed to make that link.

[dead_elvis]

"Err...except that the iPod has 70% market share despite lower cost/higher capacity competitors. If that's not a designer brand, I don't know what is."

Ah, but here's the thing about iPod's, and Macs in general- the competitors are competing on cost/capacity numbers, but the people who bought one in the first place are people who care about usability and aesthetics. I personally don't use an MP3 player, but often the reviews of the latest "ipod killer" includes something to the effect that the user interface sucks. Until competitors get that right, they are going to continue to be baffled as to how they are getting beat by a product offering "less" for more money.

Paying more for something that's name brand doesn't mean one is a label-whore, if the product really is better. I'd be real surprised to see Hyundai come up with a car that can actually match the ride of a BMW. Perhaps the notion of *coasting* on a brand is dead, but a brand that means high quality will always be worth a premium to a company that is willing to work to maintain it.

[Joe-Dokes]

The people who complain about the ipod, or say things like, "oh its apple, too expensive, Microsoft, Dell, will eventually own the market because the ipod is just too expensive." fail to realize is that the price difference between the ipod and the knock offs isn't that great.

For example the 20 gig ipod is cheaper than Sony's walkman 20 gig player.

The 20 gig ipod is only about 60 bucks more than the creative knock off and 50 bucks more than the Dell DJ. This is only a 15% to 20% premium for the real deal.

I believe that people are willing to pay a premium for a devise that works as advertised and offers tha value of seemless integration.

Regards

joe

[Lowdog]

joe-dokes, I think that's exactly what dead elvis said.

[Mo]

I like my Creative knock off. It doesn't have the spiffy wheel, but it's easy to use and astoundingly flexible. Plus,a fter the battery runs down (from what I hear,

[Iguana]

"Another remarkable study found that just 4 percent of consumers would be willing to stick with a brand if its competitors offered better value for the same price."

Somehow I doubt that anyone asked that in 1950 would have answered any differently.

[Iguana]

Sorry, I didn't mean to come off like a jerk. The article is interesting just not a be-all end-all. Plus I don't think brand loyalty has changed, it's the quality of so many so-called good brands that has changed. I'd still be buying Chevy's instead of Toyota's if Chevy's were made as well.

[SixSigma]

What's the old axiom: I know that half my marketing dollars are working, I'm just not sure which half?

Just thought I'd pitch that in there for no apparent reason, but onto brand marketing.

Marketing deparments and companies have been moving for years and years now towards "style" marketing vs. "value" marketing. They still use words like "value", "long lasting", etc, but their intent is to make the product viable in the target demographic they are looking for.

And towards this end, I think they've done extremely well. Take the post above, Chevy vs. Toyota, only make it more generic to just cars. When a person purchases a car, they do so because they want transportation, but also the "style." No self-respecting liberal professor at NYU is likely to arrive to school in a Ford truck, just as no self-respecting farmer in rural Tennessee is likely to drive to the grain store in a Volvo.

Of course there are exceptions, and I've been wrong before...