we buy the brands we're conditioned to buy, and not just because we're
suckers. Brands, if they're doing their job right, stand for qualities
we understand, such as reliability or value, and they make it easier to
chose in categories where we otherwise would find choice difficult.
Brands help us order a chaotic world of variety. When in doubt, we buy
what we know.
But we're entering a new era where the number of available products is exploding thanks to the infinite shelf space effect. That chaotic world is getting more chaotic by the day as our choices expand with Amazon's inventory and Google's reach. The problem is we can only recall so many brands, and down there in the niches the Nikes and Apples may not be of much help.
This would lead to a classic "tyranny of choice" problem were it not for the fact that at the same time there's been a parallel explosion of information about those abundant products. That information, ranging from product reviews to "rank by bestselling", also helps us choose wisely. In a sense, information is increasingly serving the same role as a brand, bringing order and structure to a chaotic marketplace. More importantly, information can scale with massive variety in the way that brands can't. So what does this mean for brands?
The short answer is radical change. Although I've been giving talks on this for a while, I'm prompted to expand on this here by John Hagel, who has posted an interesting analysis on how he sees the changing role of brands in an era of empowered consumers. We start with some of the same assumptions and then diverge a bit, which is always good fun.
John begins by mentioning an influential article in Wired last year by Jim Surowiecki (of The New Yorker and The Wisdom of Crowds fame) entitled "The Decline of Brands." It discussed the implications of three big trends in the consumer landscape, which are, in my words:
- There are more brands than ever, yet the power of individual brands is falling (measured by the price premium they can command).
- Historically brands were a proxy for
quality, which varied widely from product to product. Now, with globalized manufacturing, those
differences in quality across brands are shrinking, and consumers know it.
- The reason they know it is that it now takes little more than a Google search to become a remarkably sophisticated buyer. Likewise, they can "rank by price" or "rank by rating" with one click. For discriminating consumers who want to shop smart, information power is replacing brand power.
The consequence of this, John says, is that brands are shifting from being about things to being about customer experience:
In the first half of the 20th century, consistently high quality products were relatively scarce. Product brands prevailed. Over time, more and more products entered the market and shelf space became the scarce good. Power shifted to retailer brands.
We’re now on the cusp of another major shift in brand power, driven in part by the growing role of the Internet as a shopping platform....If a product is out there, the customer can easily find it and buy it. As shelf space constraints evaporate, what becomes the scarce good? It is something that is becoming ever more valuable – our attention.
In broad strokes, we are moving from product-centric brands to customer-centric brands. Product-centric brands represent promises about products (or retailers) – “buy this product from us because you can trust that it will be a quality product at good value.” Customer-centric brands offer a radically different promise – “buy from us because we know and understand you as an individual customer and we can tailor an appropriate bundle of products and services to meet your individual needs better than anyone else.” In other words, customer-centric brands promise that, if you give them their attention, they will give you a better return on attention than anyone else.
Sounds good, but the problem, as John acknowledges, is that "relatively few customer-centric brands exist today". Indeed, he doesn't name any. I think the reason he's struggling to find examples is that he hasn't gone far enough. Yes, the center of gravity of brands is shifting from products to customers, but I think John trips over the fuzzy term "-centric". Instead, I suspect that tomorrow's most powerful brands probably won't be companies at all. They'll be the customers themselves.
I've written a lot here about the importance of filters in driving demand down the Long Tail. Some of those filters are trusted aggregators, from Amazon to Google, which use smart software to help you find the good stuff. But others are individual tastemakers, from celebrities to critics to editors to simple mavens with influential blogs.
As product brand proliferation leads to brand dilution (following Surowiecki's argument), brand power will shift downstream from the producers to the consumers. So the fact that Jessica Simpson is wearing something becomes more important that what she's wearing. Likewise for the fact that Instapundit bought that camera. Or that Jon Stewart praised that book (like Oprah did before him).
It's the Martha Stewart effect, multiplied by a million niches.
So, in a Long Tail market, the brands that matter most are the tastemakers. These are the filters you trust, who point you to the niche (or mainstream) stuff you wouldn't have found on your own. And because you trust them, you're willing to follow their recommendations, voyaging down the tail with confidence. In the Long Tail, great filters become brands.
If you want more, here's some recommended reading:
"The new riches will come from servicing the new niches. From hyper-individualization to millions of new niche producers to full transparency to no-cost inventory, mass will soon make way for niche. Neglect at own risk."
"Amateurs-turned-professionals post reviews, criticisms, software, and God knows what else on the web -- an untapped gold mine for marketers, and a source of worry or opportunity for corporations at large."
"Demanding consumers are in a constant 'ready-to-know' state of mind, expecting any information deemed relevant to be available instantly, at their own terms. Think of it as the Google effect (demanding and getting instant answers) permeating all aspects of daily life."
- Curated Consumption
"Millions of consumers following and obeying the new curators of style and taste in an ever growing number of B2C industries. So stop listening to your customers, and tell them what to do!"
A nice bit of counterbalance from the levelheaded folks at PSFK: Is 'Curated Consumption' a Marketer's Lie?