Do brands still matter in our economy?
Mega-trends in digital, mobile, social media and big data have caused a seismic shift in the way we as consumers consume products and services, which has inevitably resulted in significant changes in brands and the ways of brand building. Companies are investing more in Research and Developments (R&Ds), which in turn is driving the constant birth of new technologies that even incumbents are struggling to adapt which has resulted in the disruption of many existing industries and development of new brands.
However, through the test of time, brands have and always will continue to influence our lives — in fact, their scope and influence has grown monumentally. Even though at the flip side of the coin, there are thoughts that we as consumers do not need to be bounded by the price premiums to be incurred due to our consumption preference, I strongly take the stand that brands (and because of the brand equity built over time) will always be essential to consumers and will bring about both tangible and intangible value to stakeholders in the economy overall.
Consumers Protection
The strong brands of today not only raise a particular level of expectation. Instead, they often evoke a higher emotional, purpose-driven connection as companies seek to strengthen relationships not just with consumers but with all stakeholders of their business and industry.
As branding and reputation converge, and with the pervasiveness of social media, brands are forced to be responsive and like it or not, vulnerable to mass (at times unwarranted) criticism as both good and bad news travels and are amplified. At the end of the day, consumers make their “voice counts” by making their choices through their wallet. Therefore, companies need to constantly stay relevant to their consumers which creates a cycle and a battleground on innovation as whichever companies that do well will see themselves moving ahead of the competition.
In a nutshell, brands need to protect consumers because, in lieu of sustainability, companies must provide innovative, relevant and quality products and services at competitive prices.
More Choices for Consumers
Imagine a scenario: In a market (heavily regulated and planned — yes there are such markets in some parts of the world), there is only one, at most two suppliers to choose from. As consumers does not have the option to switch, there will be a higher chance of remaining at status quo for that supplier(s) as there will be less incentive and motivation to innovate and develop new ideas.
On the other side of the coin, brands in open competitive markets provide the means of competition by allowing companies to differentiate one competitor from another. Additionally, note that brands encourage and support competition on the basis of values and not just on price — this is why consumers are at times willing to pay much more for “branded” goods as compared to “non-branded” goods that serve the same needs.
As such, it can be assumed that efforts in trying to open up economies and markets may be futile due to the absence of brands in providing the competition in quality, innovation or reputation between products and services.
Adaptation and Growth of Consumers
When new and innovative products are push to the markets, while ‘pioneers’ and ‘opinion leaders’ adopt quickly, their benefits usually need more explanation and a longer period of time to reassure the mass market to drive consumption.
Therefore, the presence of brands not only helps to filter choices but can play an ‘educational’ role, to help overcome consumption uncertainty and cognitive dissonance. Because of brands association, consumers get minimally intrigued, at times interested and excited in newly launched products and services. Sometimes, such products and services can disrupt existing and traditional markets.
As brands help consumers to adapt and grow, it will inevitably result in the a more competitive market and economy. Products and services that consumers “do not need/want” will be ousted and if these companies do not change innovate, they will follow suit. This can be observed as in 2019, only 52 US companies (10.4%) have been on the Fortune 500 since 1955.
Crossing Borders — Geographic and Cultural
Brands are critical in achieving success when companies take the step to go cross borders and are a momentous source of global competitiveness. They can help eclipse cultural borders by speaking an ‘international language’, by fulfilling the same needs and wants of localised consumers (think of the brand perception when you see “Made in Japan”). Also, strong domestic brands are essential to provide an effective response to foreign competition. (if you are a Singaporean, will you support a product/service that has a label that shows “Made in Singapore”?) As a localisation strategy, strong brands will draw stakeholders to communities, stimulating the domestic economy. Additionally, developing economies seem to be reaping the fruits of investment in brand building in increasing their competitiveness (think of China brands such as Alibaba, Tencent, Tiktok etc). While some major domestic brands may not be truly globalized brands yet, they are certainly growing in brand value and are set up for success, to change the global competitive landscape in due course.
Accountability
As brands become stronger, this will bring about better business performance such as sales. However, the increased prominence also means increased visibility and vulnerability. Social media and the ease of communication from technology have ensured that businesses need to adopt transparency in their conduct.
This means that inevitably, brands, especially strong ones help to ensure businesses are accountable for their actions. Strong brands are scrutinized by stakeholders proportionately, if they are acting lawfully and meeting/exceeding the expectations of society such as environmental and ethicality concerns.
Conclusion
Innovation drives new ways of how businesses are conducted, consumption behavior which results in differing ways of how brands carry out their brand building activities. However, the role of brands is as or even more important — brands are integral in driving a knowledge-driven, innovation first, effective and vibrant economy. As such, brands will always be a necessity in an open economy where companies compete and consumers have the ultimate power of choice.
Disclaimer: This article does not reflect my present nor my past employer’s view, all views above are solely from my own personal standpoint.
