In graduate school, I took a series of marketing and branding classes and learned that a strong brand name serves as a shortcut to decision making. In other words, without adequate information or the time to conduct exhaustive research, consumers rely on strong brand names as proxies for quality and value.
Do Brand Names Matter Anymore?
The question is whether people need such decision-making shortcuts anymore. We live in an era of instant information. We can find consumer reviews for almost any product or service under the sun, in just a matter of seconds.
What is the value of having a strong brand name then?
Authors Itamar Simonson and Emanuel Rosen ask this question in their book Absolute Value: What Really Influences Customers in the Age of (Nearly) Perfect Information (HarperBusiness 2014). They suggest that consumers have at their fingertips all the information they need to make rational decisions on their own. Thus proxies for quality—things like brand names, loyalty or positioning—are much less important than they once were.
To illustrate their point, the authors refer to brand expert David Aaker’s decision to purchase a computer from an unknown brand: “When David Aaker buys a no-name computer, you know that something’s happening to branding.” (Having sat in David Aaker’s classes in graduate school and having working with him on several brand strategy projects, I concur.)
The Shifting Balance of Power
In many ways, the role of marketing has become considerably less important. Information savvy consumers don’t rely on scripted marketing messages to make purchase decisions. Personal emotions and brand loyalty—i.e., the intangibles that were the traditional realm of marketers for decades—have taken a back seat to impartial reviews and detailed recommendations from other users and experts.
As the balance of power shifts away from marketers and toward consumers, the companies poised to win are the companies that consistently deliver absolute value in terms of operations, quality control, sales, service and delivery. The strength of their brands doesn’t depend on awareness and recognition, or even loyalty. Instead, the strength of their brands lies in the experience of hundreds—perhaps thousands—of consumers whose collective, self-recorded data points can make or break a brand where it counts the most: at decision-making time.
I’m reminded of how powerful this concept is by thinking about my own buying habits. When I travel, I don’t search out brand name hotels. I’m not loyal to any chains. Instead, I log on to TripAdvisor.com and look for small, out-of-the-way places with four and five-star reviews from like-minded travelers. When my first grader needs new shoes, I pull up Zappos.com and read what other parents have to say about durability and price. Armed with detailed, first-person information (including photos and video testimonials), I know exactly what to expect—even if it’s from a manufacturer that I’ve never heard of.
Brand Experiences Still Matter
I’m not unlike many consumers whom Simonson and Rosen describe as having an “open marriage” relationship with companies and brands. With instant access to near-perfect information, I am free to make the brand choices that meet my needs at any given moment. When I do make a choice, however, I expect not only a quality product but also a quality experience from start to finish.
That’s because the fundamentals of branding haven’t changed at all. A brand is still only as strong as the sum of everything that it does. The difference is that it is easier than ever to feed all of these experiences (good, bad and neutral) into a sophisticated online algorithm that can determine the success—or failure—of a brand.
For brand managers, this means a new set of added responsibilities. They need to provide consumers with useful and up-to-date content at every point of the decision-making process. They need to harness the power of consumer advocacy and facilitate word of mouth. And last but not least, they need to address the entire human-brand experience. Because at the end of the day, people buy from people—something that all the information and all the algorithms in the world can’t replace.