In the recent book Absolute Values, Itamar Simonson explains that the rise of brands was the result of an information-poor environment. Historically, brands served as proxies for quality, with brand loyalty being a way to reduce consumer risk. Eventually, tools like Consumer Reports and J.D. Power’s quality rankings offered consumers more information about these brands. With the rise of the internet, access to information about brands and products became endless. According to a PricewaterhouseCooper poll, 80% of consumers look at web-based reviews prior to making major purchases. Another 25% of U.S. respondents in an Ernest & Young poll stated that brand loyalty did not affect their shopping habits.
Now, consumers are extremely well-informed and far more likely to research a product than rely on a brand name. The rise of Social Media platforms, like Facebook and Twitter, offer new venues for consumers to discuss products. A “dud product” can become a laughingstock in a matter of hours on the internet.
Some argue that too much information is available to consumers, causing many to become overwhelmed. Thus, brand loyalty becomes more important. However, Simonson explains that most “consumers learn very quickly how to get a great deal of information efficiently and effectively.” Many sites, like Amazon for example, offer customer reviews and rankings alongside the products sold, leading consumers directly to the review information they seek.
Some brands are retaining their value, however. For example, brands like Coca-Cola, where value of the brand association is integral to the experience of the product, are retaining their value. Other types, such as luxury brands that confer status, are also retaining value.
However, for the majority of brands, relying on a name or logo is no longer enough. This may not be a good thing for producers, but it is a great advantage for consumers. Now, consumers are educated on products and make better decisions. Competition between brands has also heightened, causing a rise in quality and a drop in price on many products. New businesses and “upstarts” are finding it easier to break into the market and compete with larger, more established companies.
When determining a brand’s value, there are a number of resources available to consumers. One such resource is CheckPoint, which offers consumers information on businesses such as payment rends, public record filings, collections, and background information. Their Intelliscor Plus data is reported by an impartial third party, thus, is free from bias.
Despite this outlook for producers, it isn’t all bad. Using the motto “you’re only as good as your last product,” producers should become more concerned with creating quality, lasting products. Positive product reviews and rankings will go much further in today’s consumer world than simply relying on a brand name.