The Death of Brands

Adbusters_CorporateAmericaFlagThe always insightful James Surowiecki says that successful brands can no longer rely on past success as consumers care less and less about what brand they are buying, writing for the New Yorker:

Twelve months ago, Lululemon Athletica was one of the hottest brands in the world. Sales of its high-priced yoga gear were exploding; the company was expanding into new markets; experts were in awe of its “cultlike following.” As one observer put it, “They’re more than apparel. They’re a life style.” But then customers started complaining about pilling fabrics, bleeding dyes, and, most memorably, yoga pants so thin that they effectively became transparent when you bent over. Lululemon’s founder made things worse by suggesting that some women were too fat to wear the company’s clothes. And that was the end of Lululemon’s charmed existence: the founder stepped down from his management role, and, a few weeks ago, the company said that it had seen sales “decelerate meaningfully.”

It’s a truism of business-book thinking that a company’s brand is its “most important asset,” more valuable than technology or patents or manufacturing prowess. But brands have never been more fragile. The reason is simple: consumers are supremely well informed and far more likely to investigate the real value of products than to rely on logos. “Absolute Value,” a new book by Itamar Simonson, a marketing professor at Stanford, and Emanuel Rosen, a former software executive, shows that, historically, the rise of brands was a response to an information-poor environment. When consumers had to rely on advertisements and their past experience with a company, brands served as proxies for quality; if a car was made by G.M., or a ketchup by Heinz, you assumed that it was pretty good. It was hard to figure out if a new product from an unfamiliar company was reliable or not, so brand loyalty was a way of reducing risk. As recently as the nineteen-eighties, nearly four-fifths of American car buyers stayed loyal to a brand.

Today, consumers can read reams of research about whatever they want to buy. This started back with Consumer Reports, which did objective studies of products, and with J. D. Power’s quality rankings, which revealed what ordinary customers thought of the cars they’d bought. But what’s really weakened the power of brands is the Internet, which has given ordinary consumers easy access to expert reviews, user reviews, and detailed product data, in an array of categories…

[continues at the New Yorker]

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  • http://joenolan.com/blog Joe Nolan

    Really interesting piece here. Thanks for the post.

  • http://about.me/carlollacar O_U

    So as designers and creative directors, can we stop with the guerrilla campaigns and product placements? Maybe this will help reduce copycat brands and push out more meaningful, sustainable, human-centric products and services? ie. Social impact design, social entrepreneurship, etc.

    • Simon Valentine

      doesn’t that require smart people, and a lot of them?

      :/
      next up: “can’t be smart if everybody is smart, can still only be normal”
      …said by a pseudo-smart person

  • Liam_McGonagle

    Just one more time . . . just one more purchase . . . my happiness will finally be complete . . .

  • X.

    .

    • gustave courbet

      I am Jack’s complete lack of surprise

      • X.

        I am Jack’s broken heart.

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