Episode #0104 - Are Brands still valuable to consumers in 2022?

Pricing College Podcast

In today’s episode, we want to talk about brands. Are brands still as important in 2022 as they were maybe back in the 20th century?

Notes on the time-stamped show:

[00:00] Introduction

[02:05] Building a brand is associated with your value management system, and it is a continuous process.

[04:28] How is your brand connected to your pricing, value management system, and customers?

[08:34] Market preferences change. And you must be willing to adapt and make your brand always relevant. How?

[15:13] Your brand should always be aligned with your customers if you want to remain attractive. To accomplish this, avoid having arrogant beliefs about oneself and be open to feedback.

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How Can You Increase the Value of Your Brands in an Evolving Market?

I think there’s not a clear-cut answer about it. A lot of these brands used to have a lot of loyalty. People will just buy brands, snacks and beverages. People would buy without question. But over the years, could be due to changing consumer preferences, people buying from different channels, stores vs. online. These brands are less powerful in a way. But what’s happening in retail, I’m sort of seeing the reverse. Like big sports brands moving away from distributor type stores, just expanding their brands. Focusing on themselves, rather than putting themselves in contact with other brands. “We’re strong enough on our own to have our own store. We’re confident enough that people would come.” Maybe that is due to provenance heritage. They’ve got a reputation for being the best. Which may be the retail don’t.

I think maybe a brand is, it is your value management.

It takes a lifetime to build a brand, they say, and you can destroy it in an afternoon. I think you’re building your value management system. What is the company that you’re doing? What do you sell? And as we’ve said many times in this podcast, that’s a work in progress. It’s never set and forgotten. You never reach value-based pricing. It’s always a constant journey. It’s the same thing with a brand. Clearly, you build a brand this year. Ten years later, the wind may be changing. You look at the oil. You need to reinvest and posh into electric cars. It’s a constant evolution.

The minute you feel that customer value changes, the minute you do your value exploration. You find what your customers value this year, next year, the world has changed. What’s happened in the last six months? Inflation’s bad. There’s a war. We’ve got Covid residing. We’ve got many things happening that people wouldn’t have forecasted. Things change and move.

You see, in a short period of time, a new entrance becomes an old hut.

What seems fresh and new, maybe it’s not gonna last the test of time. You look at Netflix… I even saw in the papers this week, Underarmour. You know, a clothing brand that was usurping Reebok and Nike. They’re probably getting profit downgrades this year when they’re losing popularity. It’s a constant evolution. Will brands last forever? I think the answer there in nearly all cases is no.

I think the interesting point of saying, you know, you’ve got a brand. What is a brand? What is a value management system if it’s not attached to customers? An understanding of the value chain? I don’t think you can think of a value management system in any other regard because that would become as abstract as a brand, if not associated with the person that’s buying.

I think this is where a lot of companies have gone astray with branding.

And a brand is associated with pricing and pricing power through branding. They’ve forgotten the source, the reference point which is the customer. Often what the customer values are very different from what the company values, or thinks what’s the most valuable about the business. Aidan, you mentioned oil there.

For many years, the value management in oils and fuels was based on their supply chain. How smart the supply chain, the engineering, and the procurement was? Not necessarily about why people bought the fuel in the first place. This goes right from the B2B to the B2C perspective. It was always based on the fuel company’s perspective of value. And how really clever they were in engineering the oil. But over the years, you see these massive changes in how people buy and what they value.

Fossil fuels, they don’t want anymore. It’s considered unsustainable, for humanity, for the earth. Now they’re moving to electric cars. And we see petrol brands trying to associate their brand with more electric cars, and cleaner energy over time. I’ve read that they’re putting battery recharging in every petrol station. So, some connotations with a brand, and some are trying to make their brand more sustainable.

But I think, that’s my point on the value management system. It’s very important to connect it and the brands with customers.

And the customer changes, how they buy. We can see from the new generation, that they’re very addicted to TikTok. They go through brands by the day, depending on what the influencer says is a powerful brand. A brand emerges, becomes very successful, and is gone overnight. So maybe there are different, you have to think about brands, depending on different ages, groups, as well as value drivers, and behaviours. Segmentation, my point here, is very key with a brand.

You know, I think brands, what people associate it with. It comes with values.

Oftentimes, the people that run the company might want it to be something different than what customers see and what they do value. You look at McDonald’s, probably the most famous brand in the world. What does that brand really mean? Means you know what you’re gonna get. You know it’s gonna be fast. You know they have a clean toilet. Is that what the company wants to promote?

I think we’re all aware now, of what they’re saying, “Go woke,” or “Get woke or broke.” Where these major brands, Gillette’s an example, have gone for, almost chasing the new, even though they’ve been around for a hundred years or more. They’re known globally. But they go chasing these new hip and fresh. And some people rebel against that and push back.

There is the old concept of, when you build this brand and cater to a certain audience, that audience may not seem to be the vanguard but to be a vanguard, you have to be smaller. Maybe you’re gonna burn your existing customer base. And if you’ve got something in a life cycle, it’s tricky. But people try to be something to everyone. I don’t know if that’s always possible without sub-brands and different stuff. You get into very complex areas.

Just another point I’ll make, you could build the best business in the world and with just a period of a couple of years, the market could change.

The example, I’d give is cosmetics and those sorts of personal products. I’d argue, that 50 or 60 years ago, most people use soap and water. And maybe perfume of you have more wealth. Then it moved into the post-war era, the wonders of chemistry, the better living through science… people started using mass-produced products. All these sorts of stuff. And now what we’ve seen is the best thing in the world. The whole trend is moving in the opposite direction. Back to freshness, cleanliness, simplicity.

Lack of chemical compounds, you’re almost back with soap and water. And that’s what we’ve seen as the most progressive and advanced things. You know, you build a brand, and you think of all these Palmolive, these sort of companies whose brands and portfolios were worth billions. But now, are they worth billions? Will they be worth billions ten years down the line? It’s debatable.

I’ve seen some big companies who almost create more brands because they know that the younger generations love brands. So even in B2B, they think, “Okay, my answer to decreasing sales is to create more brands because we will attract more people.” But having brands and them being good brands, and very different people, they want the product to perform. As we go, we’ve said before that based on the value management system, which has to be in itself, in some way, associated with a performance history, reliability, all that sorts of risks, in a way proven to actually solve customer’s problems. And it can do it well.

That is the heritage. The problems behind the brands.

I’ve also seen the opposite happen where you have companies that don’t want to create any new brands that could really drive the market and appeal to changing consumer taste and stay with the traditional brand because simply that was a cash cow. They thought, “You know what, this sugary drink, is the best thing and we didn’t really have to move quickly with the market. As a consequence, they lost huge amounts of market share to up and coming entrance that are into more healthy beverages. Simply because of the thought that the brand was strong enough on its own and they didn’t need to move.

But those powerhouse brands are also suffering at the moment.

So either end of that spectrum, you really can’t just rest or take an easy option here. You can’t just create brands because you know, we’re a brand-driven world now. Create brands that are real, based on values, and service history. You can’t have an arrogant opinion about who you are. You can’t just leave brands. You’ve got to actually know when to kill them off quickly and when to change. Sometimes just because you want to lead the market with a traditional or a new brand, doesn’t mean it’s going to happen. You’ve got to almost take the feedback response and do something with it.

You can’t just set and forget if the market doesn’t respond how you wanted them to, what do you do with them?

You don’t always necessarily kill it off but you have to make a decision. You’ve got to start tracking and monitoring your brands, just as close as you would do with your sales or your prices.

You know, Joanna mentioned soft drinks there. One thing I think is interesting is Coca-Cola and also Pepsi. They’ve invented new products, you know, Coke Zero, which I think is branded as Coke without sugar. Slightly different colouring, but it’s still called Coke. I think it’s smart because it’s transitioning to a new sector. Just one thing I’d also add, Dr Marten’s boots have been basically, the exact the same product, I don’t know how long, but it seems 50 or 60 years… those black boots with a yellow sort of trim on the edge.

But they’re seen as edgy, counterculture, up and coming, and youthful. They seem to have that aspect as if they’re permanently growing on the outside. It is really unbelievable for a company to be doing that when you consider that our parents wore, our grandparents probably wore them also. I think when the kids are wearing them, they’re probably feeling the same way that people did 30 years ago, which is very impressive branding. Never really going fully mainstream but always been slightly on the way out. On the outside looking in. I suppose what a lot of brands want to accomplish while still being profitable. I don’t know if it had so much to do with what we’re discussing but I find it interesting.

Yeah, I think it does. It’s brand alignment.

Alignment to your customers, knowing the context. Not just putting a brand out there and just either innocently or arrogantly assuming, it’s going to be a winner. Sometimes it’s not always a winner. Sometimes you’ve got to objectively observe your brands and the market just to see if you’ve got that alignment. Those that do it authentically, not afraid to take the negative feedback from the market, are going to be the winners. You just have to adapt quickly and then over time, you’ll get there. You’ve also had to have a performance history.

And Dr Martens, they haven’t let generations down. People felt cool and parents probably handed on Dr Martens which seems to last forever. They’ve got reliability there as well. But beyond the actual product itself, it’s got that counterculture feel and it does it very well. Anyway, thanks for listening. I hope you enjoyed that podcast and feel free to get in touch with us with any questions you have. Thank you.

Thanks. Have a great weekend. Bye.