Via Science20

A research firm has just bestowed the title “world’s most valuable insurance brand” on a mainland Chinese company. Other outfits issue similar announcements in diverse industries, despite that in 2014 The Economistmade this remark about brands: “Their importance may be fading… no one agrees on how much they are worth or why.”

The decline of brands: We should have seen it coming, when mass customization first began to overshadow mass production. Scholars point to info tech to explain the growing irrelevance of brands; online customer reviews and social media now substitute for the “shorthand” information packages that brands once provided.

IT is not the only force that undermines branding; the other force is confused management. But, like the movie villain who has a last-minute change of heart, IT will be the one that ultimately saves the brand.

Scholars in the 1980s declared that branding is the most powerful idea in marketing. Companies devoted the ‘90s and ‘00s to measuring their “brand equity.”

In Germanic languages the word brand archaically meant “burning.” The brand or symbol burnt into a calf’s haunch indicated ownership, identifying the calf as belonging to a ranch that was known by the same symbol. As the word began to be used in the consumer product context, it lost the “burning” connotation, at first meaning only the manufacturer’s symbol or logo.

From there, the meaning expanded. Brand became a sign that customers could take confidence in the uniformity and consistent quality of the manufacturer’s offerings. Later, it grew to mean an identity or image seen as a corporate asset; the value of the asset was called brand equity. Today’s managers use brand to mean a unified company-wide view of quality and customer service that defines the company culture and differentiates it from others.

Unfortunately, “brand” has ceased to carry these positive connotations. Uniformity, differentiation, and ownership of offerings are things of the past.

Name-brand stores issue discount coupons. The coupons say, in small print, “Good at participating locations only.” Carry the coupon to a store location, and you are told, “Sorry, we are not a participating location.”

Needing help with a bank account in foreign country X, you are relieved to find the name-brand bank has a branch in your home country. You phone, and are told, “We share the name, but we are a different corporate entity. You must call country X.”

Code-sharing means airlines are no longer airlines; they are simply travel agencies. You book a flight on airline A, only to find that the flight is “serviced by” airline B.

Department stores used to be powerfully branded. Now they are just mini-malls, leasing space to other entities. There is no Macy’s shirt department. To choose a shirt you must travel from the Levi’s sublease to the Tommy Bahama sublease, to… And thus no difference between Macy’s and Mitsukoshi’s.

Franchising and its growth further erode branding. Franchisors enforce less than total uniformity among franchisees who sport the same logo. Ask a question, and a franchisee may reply, “Take that up with corporate, we are just a franchise.”

Outsourcing of manufacturing means a garment bearing the brand of your favorite athletic shoe company was not in fact made by that company. The actual manufacturer may not uphold the stated values of the name-brand firm.

A global branded fast-food chain deletes beef products from its menus in Hindu neighborhoods. The company then backtracks on its brand definition, saying the brand means fast, inexpensive service, rather than a consistent menu.

A hotel chain has announced it will use big data to personalize your experience. Your room’s configuration, instead of being comfortably predictable, will be an algorithm’s (probably faulty) idea of what you want. As soon as all major hotel chains do this, you will get something like what you want at any chain! So much for brand differentiation.

“Place branding” is a standard tool of touristic and economic development. Ironically, it defeats itself if it succeeds. New buildings invade traditional neighborhoods. Tourists find small match between their guidebooks and the reality. Hong Kong’s appearance transformed totally between 1976 and 1994, the changes including disappearance of the Aberdeen boat community, the Kowloon YMCA, and other landmarks.

All these experiences erode the meaning of brand. The “burning” question is: What will replace brand as a focus for customer confidence?

In a globally hypercompetitive economy, there is constant downward pressure on the salaries of front-line personnel, and on the budgets for training them. It was IT (cell phone videos) that broadcast the recent misdeeds of the three major USA airlines – including the physical dragging of a peaceful passenger from a United flight – damaging their brands nearly to the point of no repair. Yet it was poor management policies that led to the misdeeds in the first place.

Quality of personal service will continue to be a differentiator only for premium-priced luxury brands. Confirmed passengers in the first-class cabin are never bumped from a flight! For the rest of us, quality will depend on our interface with the vendor’s A.I.s (artificial intelligence algorithms).

Savvy vendors will let you talk back to the A.I., to fine tune your interaction with it, and its idea of your preferred flavors, sizes, and services. The new brand differentiators will be the “personalities” of each vendor’s A.I

Sources:

Yiu, E. China’s Ping An rated top insurance brand. South China Morning Post, May 2, 2017, page B1.

Tenet Partners, Top 100 Most Powerful Brands of 2016. https://tenetpartners.com/top100/most-powerful-brands-list.html , accessed 5/6/17.

The Economist, What are brands for? August 30, 2014. http://www.economist.com/news/business/21614150-brands-are-most-valuable-assets-many-companies-possess-no-one-agrees-how-much-they, accessed 5/6/17.

Singh, H. Big data hotels make you feel more at home. South China Morning Post, May 2, 2017, page C2.

Metric Marketing. The Importance of Branding in Your Marketing. http://benchmark.metricmarketing.ca/marketing-resources/why-is-branding-important-to-marketing/, accessed 5/6/17.