Death Of The Brand

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The term “brand” is thrown around pretty indiscriminately these days. Newbies in the workforce are urged to “build their brand” (which I would imagine is mystifying advice when one is slopping Special Sauce onto Big Macs); marketers obsess over “brand identity”—and you can trust me on that one.

What does it mean? What is a brand, exactly? — and why would I be writing about its death?

Anyone who has ever seen a John Ford western knows what a brand originally was: an indelible mark, a burn scar really, indicating ownership of cattle—or, horrifically, of a slave. A unique, readily-identifiable symbol of ownership was wrought into iron by a blacksmith, producing a literal branding iron. The iron was heated over red-hot coals and was then used to mark a poor cow/bull/steer/calf as proof of ownership by a particular individual or ranch. Such irons were also used on other livestock, of course; fuzzy sheep could be problematic.

“Brand” gained wider meaning when goods were shipped in wooden crates. To identify particular products or makers, an iron shaped in the form of initials or a unique trademark was heated, and the iron was used to burn a mark into the wood. Just like branding cattle, minus the mooing and the pain. The practice morphed into using ink or paint with a stamp or stencils, and eventually, printed labels (think of those glorious chromo-lithographed orange crate labels).

Even after actual branding of crates ceased, the term “brand” remained associated with a company’s name or line of products. The practice continues to this day.

Back in the day, a familiar brand was an assurance of quality and an indicator of reliability. In the early 20th century, Americans (and eventually, Earthlings in general) learned to associate the Ford brand with automobiles that were austere and unglamorous, but dependable and damned-near indestructible. Keep in mind that this was in an era when cars were largely toys for the wealthy, and were neither reliable nor indestructible.

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Model Ts may have been inexpensive, but they weren’t cheap: Ford pioneered the use of high tensile strength vanadium steel and other then-exotic materials when other makers were barely a step away from the blacksmith’s anvil. (If you think Steve Jobs pioneered the concept of “saying no to the hundred other good ideas you have”—study a Model T some time. They are spare, starkly-functional creatures.

With the concept of brand led by Ford and (perhaps) warped by others, the 20th century was the century of the brand. Henry Ford preferred to let his products speak for themselves, but many companies spent more on marketing and advertising than they did for engineering or product design, and they vigorously defended their brands. Sometimes, the defense was difficult to understand: why wouldn’t you want people to use “Xerox” as a synonym for “photocopying”, or “Kleenex” as a synonym for “tissue”?

The thinking was that ubiquitous and indiscriminate usage of a brand-name would lead to the brand-name becoming generic and meaningless. I learned this first-hand when I moved to the South as an adolescent, and discovered that “Coke” referred to any sugary carbonated drink. If everything is a Coke, the brand-defenders reasoned, then “Coke” means nothing, and the brand becomes worthless.

It is a curious rationale, seemingly at odds with the goals of marketing and sales, but ultimately it is a pragmatic one: if a company can’t consistently differentiate its products from other, similar products, how can they ensure that buyers will choose their particular brand of products?

Dominance of major brands crumbled in the latter third of the 20th century , paralleling broadcast television’s loss of dominance. As consumers became aware of how much of the cost of major brands was the cost of advertising and marketing , rather than the cost of production of the goods, alternatives appeared. One somewhat-surreal alternative proliferated from the ‘70’s through the ‘90’s: generic brands, which were basically not brands at all. Packaging of generics was, well, generic: a simple name like “Corn Flakes” or “Creamed Corn” was printed in black on white boxes or labels. Packaging graphics consisted of the item name, maker info, and a bar code (new during that period). Period.

Producers of generic products can survive only if they have a large number of guaranteed sales outlets, as generic products are unable to differentiate themselves in a competitive environment. Can you imagine 20 different non-brand white-box “Corn Flakes” duking it out for shelf space at Walmart? No: usually, the producers of a chain’s “house brand” also produced the lower-cost (and possibly lower-quality) generics. Without the guaranteed outlets, such products couldn’t make it. Ultimately, the appeal of such white box goods faded, possibly due to their wildly-varying quality and difficulty of differentiating the good from the bad (“were the good ‘Corn Flakes’ from Kroger, or Ralph’s??”).

Name-brand products include the costs of preferred store placement, flashy displays, and bonuses to store managers (sometimes as cash “spiffs”, often as trips or merchandise) in their marketing costs. Such items are simply viewed as costs of doing business. For example, heavily-advertised Mucinex may sell for $8-10 at Target or Walgreen’s, while its generic equivalent, guaifenesin, can be found at Dollar Tree for a buck. The two are equally effective; the higher-priced name brand yields larger margins for both maker and seller, but also has to pay millions for advertising and promotions. Without the guarantee of hundreds of Dollar Tree outlets, the maker of the generic would likely be forced to go the higher-cost, higher-margin route.

In the audio world, electronics chains have always had house brands: Lafayette Electronics had Criterion, Radio Shack had Realistic, and today, Best Buy has Insignia (and others). As anonymous OEM suppliers are able to produce increasingly- sophisticated electronics products for an ever-greater number of “manufacturers” under an infinite number of brand names, there is a real risk of audio products becoming commoditized, appearing interchangeable.

As if that’s not daunting enough, the huge direct marketplace of Amazon provides direct access to millions of customers for companies that would previously have limited themselves to being OEM makers. Scanning through Amazon listings, many products look very similar indeed, differentiated only by brand name and perhaps minor cosmetic differences. Many of the products look the same because they are the same, made in the same factory to the same design with the same parts and components. The brand names are largely unfamiliar and may only exist for one production batch.

How, then, can buyers choose? Price is a major determinant, of course, and is coupled with feedback from other buyers. For many buyers, brand names are inconsequential: hesitation over here today-gone tomorrow “brands” is largely overcome by Amazon’s liberal refund policies. And in the big picture—let’s not even think about Alibaba.com….

So: are brands dead? Is this piece’s melodramatic title justified?

Truth be told, the lower end markets have always been more price-dependent than brand-reliant.

In years past, entry-level hi fi buyers would’ve waited for the Washington’s Birthday sale at Radio Shack, or some similar promotion. So penny-counters will likely read the fine print in Amazon listings, or buy used, or wait for b-stock or promos. None of that is new. The sheer volume of ephemeral brand names in today’s market, though, is new, and many of those products are essentially the same, despite the fact they may bear a dozen different names. That serves to reinforce the idea that brand names don’t matter.

Further upmarket, though, companies live and die on the basis of their ability to engender loyalty from their customers. Brand loyalty is no longer as strong in the automotive world as it once was; certainly, one rarely hears of “Ford families” or “Chevy families” as was commonplace in the ‘60’s and earlier.

Big ticket audio products are another story, though: brand loyalty is how companies survive. Loyalty may be based upon the simple desire for everything to match; by fondness for a “house sound”; or by the desire to move up in the product range, based upon a favorable experience downrange. When economies are challenged or challenging—as they are now—brands that have a lengthy history and are viewed as familiar, stable, and reliable, have a huge advantage over new companies. Status is also an issue: products from new brands are rarely seen as aspirational, unless those products are outrageous and hugely expensive.

The bottom line is that bottom lines are suffering at many companies in many markets. Things are tough all over, and price matters. At the low end of the market, price is generally a more important factor in making a sale than a brand name. Bigger ticket sales are more brand-reliant, with the buyer seeking more status or long-term value from their purchase. When more is being spent, familiar brand names generally offer more peace of mind than do unfamiliar ones.

Nobody ever said it would be easy!