The new interface – What a brand is
In the Sixties, Seventies and Eighties business media talked about ‘products’ and ‘services’. From the Nineties onward there was a shift to using the term ‘brand’. Today that word is pervasive, but it is still not well understood, not even by business media.
During the Eighties and even beyond, the widespread perception was that a brand was a visible trademark, and it was valued as the sum of investments in accounting items such as spend on advertising and packaging. This approach featured in textbooks of the time.
What the approach did not take into account was the concept of the premium over and above cost, that consumers would pay for products and services, and the differential that investors would pay over and above the value of shares measured in real asset values.
In an attempt to understand the differences, and find ways to manage them for profit, a new concept of the brand began to emerge. In its most concentrated form, the brand was defined as ‘a relationship between a product or service and a consumer’.
If the relationship is strong, the premium between cost and retail price will be high. If not, consumers the brand will be less desirable, and the premium will be lower.
Nowhere is this more evident than with tablets. Many components are made by the same companies. The difference between a 32gB and 64gB tablet from the same manufacturer is slightly less than N$1000. A scan of the prices of memory and a simple division exercise will show that there is no way that memory should be that expensive.
The prices of the various tablets range from N$1500 to N$8000. Sizes may differ but the functionality remains the same. The difference has to lie in illogical and subjective feelings towards products. The emotion in the relationship pushes the retail price.
The high end tablets belong in the category ‘cult brands’. At the lower end, commodities, substitutable products such as salt, have a far lower premium attached, but even this category has its higher and lower premium brands.
Can it just be emotion?
Daniel Kahneman, a psychologist who won the Nobel Memorial Prize in Economics, did groundbreaking work on the way in which people think, with sufficient impact to earn him the prize. He showed that people form their thoughts rapidly and intuitively. If their judgment comes into question, they will retreat to the basis of facts.
The factual logic of the thing has to be there, and it has to be immediately available. If not, the consumer cannot provide justifications when questioned. Although the consumer may not know or understand the facts, their presence may be enough.
In order to understand this, consider a medical diagnosis. The doctor’s diagnosis may not be understood(and may even be wrong), but the fact that medical terms are used by a trained person is sufficiently comforting.
If you still don’t understand, consider the fact that at least one study pointed to the fact that automotive advertising was best used after the purchase of the vehicle.
The simple rule of branding is that if two brands approach parity, the brand with the strongest emotional attachment will win the day.
This does not mean that all brands have to aspire to the same place ‘in the heart’. There is a wide range of emotions and feelings. A brand can be ‘fun’, ‘trustworthy’ or create a ‘sense of safety’, for instance.
It is not realistic to expect the customer to form a personal friendship with the brand, but the emotion should be aroused when the customer is exposed to the brand. This is where the bottom line will be impacted.
For simplicity’s sake, the best outcome is probably to select two factors, the first being the physical benefit of using the brand and the second being the emotion that arises out of that benefit. In this way, the brand can be managed and watched, and new factors can be identified as the brand evolves.