The brand is dead! Long live the label!
What sparked my thinking that the role of the brand is changing was some research a client carried out recently into what brands people most loved and why. Of the seven brands, five were selected because of the product: Dyson (‘revolutionary product’), Mercedes (‘best cars’), Banyan Tree (‘second to none product’), Korda (‘great quality product’), Apple (‘superb quality of product’). Only two were due to conventional brand elements: Red Bull (‘revolutionary branding’) and a vodka brand which couldn’t be recalled but was liked because of the naked male model in the ad – Absolut.
This lack of love for brands is supported by other newly released research. Havas Media’s Meaningful Brands  survey found that most of the 50,000 people it interviewed worldwide would not care if 70% of brands disappeared in the future, rising to 91% in the UK. Even in marketing’s new frontier, social media, 61% of consumers state they do not see social media as a place they want to interact with brands, according to TNS’s Digital Life  report. The consumer’s relationship with brands is not as rosy as we like to think.
Lack of attribution to brand as a motivation for purchase does not necessarily negate the role of the brand. However, it does strike me that there is an acute shift in the balance of power from brands to other elements, particularly product and distribution.
The growth of own-label is testament to both of these. Within the Grocery sector, Nielsen  reports that own-label now accounts for 43% of all purchases in the UK, while globally the recession has accelerated this trend with 61% of people purchasing more own-label with nearly all saying they will continue doing so when the economy improves. 71% of shoppers now say that they see little or no difference between brands and own-label products, according to Haygarth , and 44% of purchases are on promotion.
To add to the problem, retailers are increasingly acquiring, creating or licensing their own brands, like Sports Direct owning Lonsdale, Dunlop, Slazenger, Donnay and Karrimor; Tesco creating dozens of Venture Brands covering everything from pet food to sanitary towels; and direct-to-retail licensing growing across all categories, cutting out brand manufacturers. Whilst this supports the role and value of brands it also shifts the balance from traditional product brand owners to those who control the distribution.
Premier Foods illustrated this uneasy relationship between brand owner and retailer perfectly last year, with Tesco responding to proposed price increases by delisting 70% of Premier Foods’ brands such as Hovis, Kipling, Branston and Oxo causing significant loss of market share at a cost of over £10m. No brand is immune. Lehman Brothers disappeared overnight. Concord was grounded. Countless brands have gone into administration.
Technology and the digital environment are exacerbating this trend. Price comparison sites commoditise brands across all categories, likewise voucher and group buying websites. Easy access to information through the internet makes the consumer more informed. Facebook, Twitter and blogs make them more vocal and give them a global platform. No longer can Kellogg’s make cereals for anyone else. No longer can Coca-Cola get away with bottling tap water for its Dasani brand. Artisan producers now have immediate access to a global audience and low-cost marketing. Brands are becoming more like labels – which, ironically, is taking it full circle, back to brands being a mark of origin and a quality assurance before regulation guaranteed this basic level of quality.
Of course I’m being a little facetious but I think my point is valid. Are brands like Apple and Google so valuable as a consequence of their name or the quality of their products? Clearly this relationship differs between sectors and the brand does play an important role. However, all I am saying is that marketers and brand owners should be aware of the shift from brands being the differentiator of products to products being the differentiator of brands, and adjust their role accordingly.
As Abraham Lincoln said, “Character is like a tree and reputation like a shadow. The shadow is what we think of it; the tree is the real thing.” So stop manipulating the shadow and focus on the health of the tree.
William is a Senior Consultant in Deloitte’s Customer practice and works in the Marketing & Insight Service. William has significant experience in valuing and understanding the value of brands and what drives business value. Typical engagements include brand valuation, market research, brand and business strategy, benchmarking, marketing effectiveness, brand positioning and agency management and effectiveness. He works within Consumer Businesses, specialising in Consumer Products and Retail industries.
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