By: Irving Gaither – Madison Advisors
In February 2014, a New Yorker magazine article entitled “The Twilight of the Brands” identified the reasons that consumers are starting to abandon their prior reliance on brand loyalty in purchasing products. The use of online information to shop and compare items, and to listen to other purchasers on the pluses and minuses of products is now the way most customers buy products.
For established brands, this makes selling products at a premium price an increasingly difficult thing. If you are selling a product that is superior to other producer’s products, then you may charge a premium price. But performance numbers are quickly matched by other producers, and often there is a number of products that are so similar that it is difficult to identify them sitting side-by-side outside of their brand names. Past performance is no longer a selling point for many consumers; what the product is and how it performs NOW is what is critical to the purchaser. There are two situations where this isn’t true – when the quality of the brand is integral to the use of the product or where the brand confers status (think Louis Vuitton).
For the consumer, the information age means they are making better buying choices (hopefully), and competition has improved quality and lowered prices. It also means that upstart companies find it easier to compete with established producers. If you make a product that works well at a competitive price, you will quickly become the next Asus, Roku, Hyundai or Kia. We have gone from stable consumer markets to tumultuous ones, but if you can make a great product, the world will beat a path to your door (or store website).
Let’s look at the sales situation that is a bit outside of this “new” sales paradigm – where the quality of the brand is integral to the use of the product. In the past, Coca Cola was a brand synonymous with this type of product. Wherever you went around the world, if you purchased a Coca Cola, it would taste exactly the same and it would not make the consumer sick (because the water was pasteurized in the bottling process). World travelers really built the Coca Cola brand, and as world economies improved citizens of the world had enough ready cash to buy one bottle of Coke. Coca Cola has such a foothold in the US and other countries that they have increased market share in consumable beverages using their bottling companies if not their Coca Cola syrup to provide regional and local beverage favorites in every country they have a bottling plant.
So how can a company making copiers and printers break itself away from the pack and differentiate its solutions and services from the others? Check back next week for a couple of solutions!
Reference: The New Yorker, Financial Page, Twilight of the Brands, by James Surowiecki.