Given the extraordinary focus on interaction and transactionality, the bemused 21st century marketeer can wonder what, if any, role branding has in a digital economy. This dilemma is not misplaced since the bulk of the literature on digital marketing is obsessively focused on ‘conversion’, often construed as a shorthand for sales.
Indeed, sales is the Holy Grail for any business. Without it there is no revenue, and without revenue there is no business. This, however, misses the point of business, which is profits. A business that has sales but no profit will soon be consigned to the bankruptcy courts. This is where branding comes in — brands are the engines of profitable sales. So, the obsession with sales should, ipso facto , include brands. It is in this context that branding becomes important as conversion is seemingly driven more and more by price, fuelled by the likes of Amazon and Softbank subsidised e-commerce initiatives.
The question this poses is, ‘Is branding dead? Will the spiral to the lowest price and commoditisation continue?’
Relax marketeers, doomsday is not nigh. But that is no reason for celebration because the task of branding in a digital economy is far more complex than putting out a television commercial and putting up your feet.
Branding has not changed
The good news is that the purpose of branding has not changed; but the principles have, with the profusion of consumers and marketeers. In gentler times, branding was a mark of ownership, whether by crayons made of charcoal and ochre or singed on cattle with a branding iron. As more producers and consumers came into the economy, these traditional marks of ownership began to acquire nuance, such as unique selling proposition, brand image, and brand personality.
In the last century, the evolution of the mechanics of branding was in lockstep with that of the socio-economic environment of the time. For instance, post World War I, salesmanship drew inspiration from the profusion of entrepreneurs and the availability of media. Advertising executive Rosser Reeves’ principle of the unique selling proposition was a result of the impact of manufacturers differentiating their products through proprietary technology and manufacturing processes. The concepts of brand image and personality, popularised by David Ogilvy, Al Ries and Jack Trout, were a consequence of evolving consumer needs for self-gratification. Then came brand expert Jean-Noël Kapferer’s idea of the brand prism.
Each of these branding principles was rooted in a socio-economic milieu dictated by affordability and the diversification of consumer needs and expectations — physical and emotional. Since the phenomena were discrete, marketeers were able to come to grips with them at a comfortable pace.
The 21st century seems to break this pattern. There is a completely new generation of consumers — the millennials; simultaneously, the advent of technology seems to have changed the rules of marketing, whether it is in manufacturing, communication or consumption. That a change in both, the emergence of a consuming cohort with different world views and the means of sating them, has occurred at the same time is coincidental. This does not mean the underlying drivers of consumer choice and their preparedness to pay a premium for brands has changed.
The consumers
Two factors have impacted the evolution of consumerism. First is an increase in the overall affluence of people, leading to increased affordability. There has been much debate about increasing inequality and concentration of wealth. Notwithstanding these, the number of people who can afford manufactured goods, beyond basic needs, has grown manifold in the last 30 or so years.
The second factor is the general levels of knowledge and access to media have improved. The proliferation of the media, which began with cable television circa the mid-1980s, has since only expanded and been democratised with the rise of the internet and mobile technologies.
These two factors together have given consumers confidence in their abilities to prosper and live well. No longer did they need the reassurance of brands and catchlines to allay their anxieties. For example, one of the first principles that marketeers observe is that they do not sell a soap, but the promise of beauty. While this was sound advice in the 1970s and 1980s, it sounds anachronistic today as consumers are more sophisticated and have wider access to information.
The second implication of this development is the ability to reach consumers at a micro level. In many ways, this has been a long-cherished goal of marketeers. Segmentation, or the tailoring of brand propositions and marketing messages, to sub-groups of a larger set has been a trusted weapon in a marketeer’s arsenal. However, it is one thing to be able to fine-tune brands for smaller groups of consumers, but altogether a different challenge to be able to reach them efficiently.
Universal access
While consumers have undergone a seminal change, changes in the business environment have been seismic, affecting all aspects of business. This means that consumers today have access to nearly any brand at an affordable price. For example, mathematically, the inflation adjusted price for a 55 cm Sony television is negative today compared to 1985. Consider another example: the street price of a Maruti 800 when it was launched in 1983 was ₹52,500. When its production was discontinued, it was estimated to cost ₹2.10 lakh — an annual price increase of 3.9 per cent per annum, when the average annual inflation rate in the same period was 6.1 per cent.
The single biggest impact of digital technology has been that it allows access to pretty much anything a consumer may like to have, regardless of whether it is available in the consumer’s home country or not. So, a denizen of Chennai has the same access to designer brands as, say, a person living in San Francisco.
Branding in a digital economy
In its essence, branding is the relationship products have with consumers. Digital media, per se , does not impact branding, but helps consumers acquire brands of their choice regardless of boundaries of time and space. In establishing this relationship, the emerging consumer is the core and brands have to pay heed to her/him. The key differences in today’s consumer versus the earlier generation are:
1. Brand usership is not a way of keeping score. Consider the classic battle between Surf and Nirma in the 1980s and 1990s — the focus was on being smart and cheap. Today, price is not a barrier for a majority of detergent buyers — the discriminators would be what resonates with them.
2. With greater awareness among consumers comes greater responsibility for brand owners to resist flummery and be more purposeful. Products have become commoditised and brands that espouse platitudes are destined to feel a consumer’s indifference.
3. Digital branding is not mass-marketing, but, micro-marketing. Today, tools are available to present multiple facets of the same product or service to different users.
4. Consumers engage differently across the digital ecosystem. Brands should use each element of this ecosystem appropriately rather than the one-shoe-fits-all approach of conventional marketing.
5. Digital media is the universe of the emerging consumer and not an alternative. Therefore, digital strategy is not a supplement or a complement to the ‘mainstream’ — it is the mainstream.
6. Consumers are not averse to paying. To avoid the never-ending spiral of unprofitable pricing, the mantra of conversion should be ‘profit per conversion’. Conversion by selling cheap can drive volumes, but every incremental sale made at a loss will only increase the firm’s losses. After all, if Apple can sell a phone at $1,000, so can Samsung.