The end of brands?


Reading the article of Li et al. about ‘Consumer Informedness and Firm Information Strategy’, I thought of an article I once red on The New Yorker called ‘Twilight of the Brands’ and I believe it is interesting to share with you. Let me quickly summarize both articles.

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In Li’s article the researchers found that product and price informedness increases trading out and trading down behavior in respectively the commodity- and differentiated segments of a market. In other words, consumers are more likely to search for better products in case they know a lot about a product in the commodity segment and are more likely to search intensively for the lowest price in the differentiated segments in case they know a lot about the prices in that segment. The internet provides those consumers with a lot of information and therefore the competition has heavily increased lately.

James Surowiecki argues in his article that brands do not matter anymore. In the past a brand was one of the most valuable assets of a company because they were the vehicles through which organizations could build relationships with customers. Customers had to rely on their past experience when choosing which product they wanted to buy. Nowadays company cannot coast on past performance anymore. Companies like Asus and Acer are major players, not because of their name, but because they provide the cheapest computers with sufficient quality, and, consumers know it.

I believe that consumer informedness urges companies to change their focus. Marketing is not about customer relationship building anymore. It has to do less with brand name. Companies should more than ever focus on creating the value that customers want and to let them know it. Do not tell your customer that YOU built what they want, tell them you sell what THEY WANT. That is also in line with the conclusion of Li’s article that ‘Differentiated information strategies will allow consumers with heterogeneous tastes to find products they like’.

What do you guys think? Is the end of customer reliationship management there and are brands not important anymore?

Sources:

Li et al. (2014), “Consumer informedness and firm information strategy”

James Surowiecki, “Twilight of the Brands”, http://www.newyorker.com/magazine/2014/02/17/twilight-brands

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