According to some experts, the power of brands has weakened because customer feedback on the Internet has flipped the marketing dynamics on its head. John Foley, an author and the CEO of LEVEL Brand, recently reacted in a post disputing the idea and clarifies what is really happening. We agree with him and enjoyed his post enough that we wanted to share it. Leave John a comment below with your thoughts.
I read James Surowiecki’s article in The New Yorker
regarding the demise of brands. It seems that every year some pundit is proclaiming one of two things: either brands are unnecessary and dying, or that they’re the most important asset in business. Surowiecki asserts that power brands have been weakened as a result of all of the direct customer feedback on the Internet. That theory neatly fits similar observations he made when writing his book, The Wisdom of Crowds
, as well as observations made by IT people and one marketing professor quoted in the New Yorker
Here is my response to Surowiecki and the other pundits: there’s a difference between brand and reputation. In its simplest form, a brand is a promise. A reputation is the performance
of that promise as perceived by a third party.
It’s important to distinguish between these two when doing brand work because the marketer is in control. They can directly manage the price, trademark, logo, positioning, value proposition, distribution and promotion. The marketer can only influence a reputation: what customers, media, shareholders, community, and other key stakeholders say about the product or service. Product performance reviews fall under the purview of reputation, not brand. While reputation certainly has a tremendous impact on the brand, consumers still rely on brand names as a starting point for making mental shortlists when considering a purchase.
Surowiecki uses Lululemon Athletica
as a basis for his theory, but the problems regarding Lululemon are not a sign that all brands are weakening. The problem was this: their product failed and the now-former CEO did not understand or respect his customers
. These issues damaged the Lululemon reputation and ultimately hurt the brand. However, it’s a mistake to extrapolate from this example across the whole brand landscape.
There is no doubt that consumers have become better informed as a result of the Internet. In today’s marketplace, product or service performance has become table stakes in competing for customer loyalty. Customers are willing to be loyal to a brand that shares their values and consistently performs. We are constantly told that people are not affected by brands or advertising, but the actual purchasing data does not bear out that fact. People don’t want to be perceived as being followers, and Americans in particular will always claim their individuality. Research often does not accurately reflect actual consumer behavior.
Marketers continuously measure the direct impact of brand and reputation strength against sales. There are many companies with superior brands that enjoy a competitive advantage. And in some cases, companies such as Tiffany, BMW, Apple, Louis Vuitton and 3M realize a significant premium as a result of their brand and reputation strength.
We all know that rules have changed for building strong brands and strong reputations. But the reality is that enlightened companies, regardless of their size, continuously invest in and protect their brand and reputation, and outperform their competitors. As competition continues to grow, the importance of brands and reputations has never been greater.
If it were as simple as getting good product reviews on the Internet while understanding there’s no product loyalty, the job of the marketer would be easy. However, understanding and effectively managing the relationships between the manufacturer, customer, employee, investor and other key stakeholders continues to make brand work more challenging and rewarding.
Long live brands.