Brands: Think people, not products

Today 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:

1. There are more brands than ever, yet the power of individual brands is falling (measured by the price premium they can command).
2. 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.
   
3. 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 20^th 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:

From Trendwatching.com:

• Nouveau Niche

"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."

• Garage Influentials

"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."

• Ready-to-Know

"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?

And finally, a book that I've ordered but haven't yet read that seems on point: Communities Dominate Brands, by Alan Moore of the UK marketing consultancy SMLXL.

Comments

[Bryan William Jones]

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.

So, perhaps one strategy for building revenue and attracting advertisers an information portal (like Wired) could follow would be to establish a community of trusted reviewers to write about products. Of course this has been attempted in one form or another many times (to a limited extent even in Wired), but in the past, it has always been hampered by the print medium (remember the CueCat? Of course you do) and by the limited reviews for products that appeal to the mainstream. Some companies (epinions & Amazon among others) have tried to get around this by having consumers write about their experience and then establish some sort of moderation system for those reviews. The problem with this is that the customer reviews are an unknown quantity and most consumers do not go looking for those customers who may write a shaky review here and there with the quality often being dubious.

If one could build a system with good writers who bring with them some degree of reputation or celebrity, who would then become the tastemakers and integrate it into an Internet based product clearinghouse, this model could possibly succeed on the Internet where others have failed. This really would have to come from a company/organization who already has some degree of credibility in the market place and build off of that recognition. Seems to me that the right folks would be Wired, the Wall Street Journal in their upcoming weekend editions and a few other select entities.

[Hashim]

when I slide down the long tail looking for a product I trust the BRAND of the recommendation system.

I trust Google's brand to give me the best website. I trust Amazon's brand to show me related products.

[Raanan Avidor]

I love the sentence "Brands help us order a chaotic world". If I understand correctly the long tale - you need good filters to get the information that will help you choose the product you need. I've just started shopping for a new digital camera. I (might) know what I want, I (might) know how much money I want to spend, and I'm totally lost. Hundreds of sites want to help me decide what camera to buy, but none does it. None of those sites help me filter my choices to less then 20 different cameras. I get too much noise. A good filter will let me enter my input (I want this and that feature for this price) and the output of the filter will be: This is the camera you should buy, with maybe two more options. Can someone help me choose my new camera?

[Edward Cotton]

I think the overall comment that brands are in trouble is valid, but for certain categories quality is essential, but the brand image will still count for something.

Think of luxury goods for example.

Here advertising and image will continue to play an important role, but for other categories it will be tougher to fake it.

Also, I am not sure if it is true that there are NO customer-centric brands.

I would think the following could qualify:

Skype: 45 million users- great product
Flickr:Redfined the photographic experience
Easy Group UK: Value oriented holding company- no fluff just affordable products
Innocent Drinks: $30 million UK juice company

These companies FUSE- customer benefits (quality, value, innovation) with positive values- something you feel good about. The feel good comes from the combination of product delivery and brand personality.

These brands feel less like corporations and more like real people.

This is the new branding.

Many of these companies have the advantage of being new.

The massive challenge for many big brands is to become more like these new companies.

This was something the Cluetrain guys talked about a while back.

[John "Z-Bo" Zabroski]

Why are you going to pay money for Communities Dominate Brands by Alan Moore... when you can download for free Seth Godin's book Unleashing the Ideavirus?

http://www.sethgodin.com/ideavirus/01-getit.html

In my humble opinion, Godin's work with the concept of the Ideavirus is more inline with your thoughts. In fact, Godin addresses how "hits" will continue to survive in today's globalized society. Granted, Communities Dominate Brands will probably come in handy, but I strongly suggest you lean on Godin's thoughts than Moore's.

Why do I advocate Godin so much? You seem as though you are unfamiliar or at least unaccepting of the phrase "Viral marketing." The concept has been around for awhile and I am worried you might be renaming something that already exists.

Helpful links:

Wikipedia: Viral Marketing

The Transparent Corporation, Marcia Stepanek, eWeek, November 4, 2003

Next Wave: How to build buzz on the blogs, Red Herring, August 4, 2004

One-to-One Marketing a False Trail, Elizabeth Albrycht, CorporatePR, October 1, 2004

Tell Me About It: How Business Blogs Work for You, Michelle Megna, SmallBusinessComputing.com, March 9, 2005

Diametrically opposed viewpoints:

The Toughest Virus of All, Clay Shirky, Clay Shirky's Writings About the Internet, July 11, 2000

Why blogs could be bad for business, Neil McIntosh, The Guardian Online, September 29, 2003

[Brian Phipps]

I think what we're witnessing in brands is a transition from Brands 1.0 to Brands 2.0 (for want of a better term). Brands as symbols and slogans are on the way out; working brands are on the way in. From the customer's perspective, brands are tools for getting things done. Google is a great case in point. If you want to make your products fly off the shelf, give wings to your customers. Those "wings" are the new generation of brands.

[Joe Laz]

Yahoo! Shopping launched some new features today that touch on this idea of people as filters who offer shopping recommendations and long tail merchandising. You can see it at...

http://shopping.yahoo.com/shoposphere/