What's in a name?
Brands today don't have the power that they used to
By Fred Koury
August 2008
There was a time when
brand was everything.
Today, we are past that time.
Don’t get me wrong, a
good brand at the right time
can command a premium,
but a good brand at the
wrong time doesn’t mean as
much as it used to.
Consumers are loyal to a
point, but in the end, they
too often go for price over
any perceived value of the
brand. In some economic
situations, a brand that cost
millions to build could
become almost meaningless.
Take Ford trucks for
example. Ford trucks are
probably the best branded
series of vehicles out there,
but with high fuel costs and
a sagging economy, what
does the brand really mean?
It’s the best in a class of
vehicles that are no longer
selling anywhere near the
levels they were just a few
years ago. A former Ford
nameplate, Jaguar, is another brand that has fallen on
hard times. Remember
when owning a Jaguar
impressed people?
Marshall Field’s was a
department store icon in
the Midwest, but it was
eventually absorbed into
another iconic American
brand, Macy’s.
There are other brand
names that have been
cheapened over time by
decisions to substitute inferior quality parts into what
had once been a product
defined by quality. To save a
few pennies here and there,
first one part and then
another were changed out
for parts of lesser quality.
The next thing you know,
people are looking at the
products and seeing them
for what they are: cheap
imitations of what they
used to be. Brand loyalty
erodes and sales fall
because the brand became
a great name on a bad
product.
So many companies have
devalued their brands
throughout the years that
many consumers view
generic or unfamiliar
brands in the same category
as the big names, simply
because the big players in
many industries don’t put
forth the quality that they
used to. If an unknown
brand is carried by a brand-name store, that mitigates
some of the aversion to an
unknown nameplate.
When it comes down to it,
the buying decision is often
all about price first and
brand second.
In other cases, it’s not so
much that the big players
have dropped in quality, it’s
that the small players and
generics have increased
quality to be similar enough
that consumers don’t notice
or mind the differences.
Campbell’s Soup tastes as
good now as it ever did, but
the “lesser” brands have
gotten good enough that
many consumers reach for
the cheaper alternatives.
Private labeling has also
eroded consumer faith in
name brands. People know
that many “store brands”
are being made in the same
factories as the name
brands, so why pay more
for a different package?
Generic alternatives have
made inroads in everything
from pharmaceuticals to
mouthwash, eating away at
the market share of well-established brands.
While branding may not
be what it used to be, it’s
still an important part of
business. If you can create
an identity that resonates
with your market, the premium returns are still there.
If you can stay competitive
on price, then even value-oriented buyers will gravitate toward a brand they
recognize over one they
don’t.
So building a brand as a
reputable company with a
good product or service is
still an important and fundamental part of business.
It’s just not the be-all and
end-all it once was. Invest
in your brand, but do so
with the knowledge that it
may be just one of the many
differentiating factors that
lead a buyer to you instead
of someone else.
FRED KOURY is president and CEO of Smart Business Network Inc. Reach him with your
comments at (800) 988-4726 or fkoury@sbnonline.com.
