Posted by Anthony Gunn and Tim Bearup
In an article appearing in The New Yorker entitled “Twilight of the Brands”, it was proposed that because consumers are so well informed and much more likely to investigate as to the true value of a product, that there is a reducing reliance on logo’s and brands. The article concludes that brands are at best fragile, and at worst becoming completely irrelevant.
Authors of a recent book, “Absolute Value: What Really Influences Customers in the Age of (Nearly) Perfect Information”, Itamar Simonson and Emanuel Rosen, argue that consumers are becoming more rational and that brands are less needed as a mental shortcut due to review websites such as TripAdvisor and the many shopping websites available.
Yet market-research company, Millward Brown, stated that in 2013 Brands account for more than 30% of the stockmarket value of the companies in the S&P 500 index. Depending on the method used to calculate the value of a brand, the value of the Google brand is somewhere between USD65bn and USD160bn, Apple between USD100bn and USD145bn,and IBM between USD40bn and USD105bn.
Just last month Brand Finance released their report detailing the most valuable Australian brands. Woolworths remains in the top spot with a value of USD9bn, QANTAS up to 15th position with a value of USD1.3bn, and Commonwealth Bank the largest of our banks, up to position 3, with a value of USD7.5bn.
Brands such as Apple, Harley and Coca-Cola have fans that are loyal beyond what others may consider normal. This brand love can stimulate consumers’ positive word of mouth, repurchase intentions and create resistance to negative information. Nick Cooper of Millward Brown says that the “emotional bond puts credit in the bank”.
Whilst some brands have ‘fanatics’ that have such an emotional attachment that may drive them to tattoo their body with a logo, not all companies will have customers like Mike Fontaine who has collected over 75,000 pieces of McDonalds merchandise and memorabilia. But all companies want customers that have a level of love and affection for their brand that they may not fully understand. Those that have emotional associations to a brand that causes them to pay a premium for the products.
In the recently released corporate reputation index, which surveyed 12,700 consumers and measuring consumer-facing companies by products and services, innovation, workplace, citizenship, governance, leadership and financial performance, produced by research consultants AMR, Toyota Australia was voted the most reputable company in Australia. This is in light of Toyota making thousands of workers redundant when it decided to shut down its Australian manufacturing sites.
So, in a modern world with enormous amounts of information at our fingertips and where anyone can share their views and reviews of a product with a large audience, will we see the decline in the value of brands or like Toyota, should companies double their efforts to build brand equity in the good times, so that the credits are there to see them through the not so good?