Maintaining Optimism in the Face of Reality. Occasional observations on the state of the world, society, business and politics. Usually anchored by facts, always augmented by opinion.

Musings on Declining Brand Value  | e-mail post

Alex Tabarrok's post on Marginal Revolution, "Brands on the Run" points to an interesting article in Wired about "The Decline of Brands," in which James Surowiecki describes the lack of enduring value that brands are able to maintain in the present day. The reason for the decline in durable brand value: "a new breed of hyperinformed superconsumers," a phrase that reminds me why I stopped subscribing to Wired after its second year.

Although in some respects, I can agree with Surowiecki's analysis, I think the hyperinformed superconsumer, while clearly a factor, is hardly solely responsible. Some other thoughts:
And of those hyperinformed consumers, who certainly are responsible for a portion of this decline? I can't help but wonder if many people aren't often undervaluing their primary information cost, their time, in their pursuit of the better deal. If I could buy a no-name DVD player for $30 less than an identical Sony product, would I? While unlikely, I can't rule it out. However, I know I would rapidly expend more than that $30 worth of time validating to my satisfaction that it is indeed an identical product in all relevant respects (including its reliability and longevity, an attribute that I think too few people value). At higher price points, however, it becomes worth it.

Of course Taborrak points out that superior information flows can also raise the profitability of product evaluators, pointing to the example of Roger Ebert in the movie space. I would add to that Consumer Reports as an obvious example, although they are a non-profit. A trusted product evaluator could to whom I could pay $5 to validate a genuine $30 savings might get me to buy that no-name DVD player. But, consider the very false economy if you end up paying for bad information, in this piece from HBS Working Knowledge, "The Hidden Cost of Buying Information."

I also agree with Taborrak's suggestion that brands may maintain value if they move from the "attribute space" to the "lifestyle space." I think the biggest winners there will be retailers, Pottery Barn being a great example. The premium charged on their products is quite impressive.

An additional thought: is "design" the new "brand," at least in many product segments? While I haven't thought much about this, I think the argument could be made that it has become something like that. And I'm speaking in the case more of more superficial or even package design, not genuine product design, as that is a legitimate value component of the underlying product.

e-mail post | Link Cosmos | [Permalink]  |  | Wednesday, November 10, 2004
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