Greater choice will make brands more important
But many factors will make choosing more complicated
Having a strong and valuable brand will become even more important in the next 10 years as consumer choice increases. But building and sustaining brand strength and value will become more challenging.
Technology will continue to lower barriers to entry for new competitors. Influenced by millennials, consumer expectations will rise around issues such as healthiness, authenticity, personalization, and sustainability.
In this world, saliency, functionality, and emotional appeal become table stakes. A brand will need to build its business around a compelling core purpose that can be clearly and persuasively communicated.
Success will require a brand to be meaningfully different in ways that are genuine for the brand and relevant to consumers. Brand will need to permeate all parts of the organization and be manifest in everything the organization does.
Not every brand will need to save the world. But no brand can degrade it. All brands will operate within a commercial ecology where the benefit provided and the profit extracted is in balance.
Consumers will not always engage with brands in a predictable hierarchical progression, from awareness to functionality to emotional connection. Rather, consumers will respond to a weave of factors that include functionality and emotion as well as strands of meaning or purpose.
In addition, a fractured media landscape will complicate brand building. Brands will need to contend with the disconnection between the need to build salience and the need to build scale, the introduction of newer marketing tools more suited for reaching narrow target audiences and building niche brands.
Need for purpose
The economic and demographic evolution of consumerism drives the preeminent importance of purpose. Worldwide, even in developing markets where consumers
still have fundamental product efficacy concerns, people recognize that although products and services can make life easier and more enjoyable, material wealth alone is unsatisfying.
Maybe people understood this point intellectually, but the recession provided a teaching moment with emotional impact. When consumers worried if they could afford to buy more stuff, they questioned whether all their stuff was necessary. Emerging from the recession, consumers rejected just logos and “conspicuous consumption” in favor of “considered consumption.”
Now, more than six years since the start
of the global financial crisis, those lessons seem embedded in our evolving purchasing attitudes. Yes, we consumers want more "stuff" and more experiences. We want the good life, but we also want to feel good about living the good life. Our own happiness is diminished if it comes at the expense of others or of the earth.
In practical terms, some factory conditions in Asia still don’t stop us from buying cheap jeans. And better times and short memories could resurrect more profligate spending habits. However, an important demographic factor – the rising millennial generation – suggests that changing consumer attitudes are not just temporary coping strategies.
Millennials like to have stuff too. Sometimes they want ownership; other times they prefer to share. But they respect brands with a larger purpose. And how brands behave along the supply chain is important to them. They’re quick to post opinions on social media. Understanding these consumers is critical. It can’t be faked.
Future brand success in each of the 14 categories analyzed in this report depends to a great extent on addressing the concerns of these millennial consumers and those who share their views. (Please see related story.)
The need for purpose is closely related to the need for meaningful difference. This fundamental requirement for brand success will become even more important as brands excel in functionality and consumers choose a brand more because the brand helps them express who they are or aspire to be.
People have always relied on brands to express how they see themselves or want to be seen. The difference for the future is that we’ll select a brand not only for the status
it signals, but also because it mirrors and even validates our personal values. Or we’ll choose a brand because of how it makes us feel because of the experience of the brand, or its design and style, or its unmatched convenience. Some quality, or combination of qualities, will distinguish a successful brand from its competitors.
The need to be meaningfully different
applies to brands in developed and also developing markets such as China, where members of the rapidly expanding middle class are becoming much more sophisticated consumers. In fact, in developing markets, the need to establish meaningful difference is more urgent as more competitors, often imitators, enter the market and expand choice.
Even the most valuable global brands have room to improve. Over the past 10 years, the BrandZTM Top 100 Most Valuable Global Brands ranking has increased to a strong score of 123 in Salience, but slightly less in being seen by consumers as Different or Meaningful. More important, scores in Meaningful and Different are not only lower that Salience scores, they’re flattening, while salience is trending up. Salient, Meaningful and Different are the three elements of Brand Power, one of the BrandZTM measures of brand equity.
Trust and privacy
The consumer need for brands to have purpose and meaningful difference broadens the definition of trust. Up until now, consumer trust in brands has been self-centered, i.e., “I trust brands that fulfill their promises to me.” But consumer trust will come to mean “I trust brands that fulfill their promises to me... and also do good in the world, or at least don't do harm.” The wider concern for societal welfare will vary by consumer. Most consumers will confer trust pragmatically, with self-interest being the first – but not the exclusive – priority.
In developing markets, trust remains more fundamental. In China, consumers don’t always trust brands to deliver products of consistent quality and safety. But trust also incorporates larger societal concerns, which in China are expressed in more communal or nationalistic ways. The most trusted brands will not only deliver reliable products and services, but they will also do their part to help strengthen the nation and improve life for the Chinese people.
In developed markets, most brands – or even categories – are trusted to perform reliably, but values and motivations are another
matter. As consumers, we trust banks to keep our money safe, but we’re less impressed with their values. In the future, being a valuable global brand will require being trusted for more than functionality.
Privacy is a related trust issue. Currently,
we react to each new breach of personal data as if it’s a natural disaster: shocking,
but unavoidable and soon forgotten. But this complacency will soon be tested by more pervasive home and auto connectivity. As brands embed themselves more fundamentally into our lives, the privacy transaction changes from retail (receiving a benefit for providing a piece of personal data) to wholesale (receiving a more general benefit as every data point of daily life is vacuumed and analyzed). Brands won’t be able to function without trust.
Personalization and disruption
Access to volumes of data will enable brands to further personalize products and services that are, by definition, more meaningfully different. The larger challenge for brands will be to gather and use data responsibly and sensitively, understanding when "personalized " becomes just too personal.
Along with discretion, creativity will be an important determinant of brand success. In the future, access to data will become like functionality is today – a baseline. Data will enable brands to see how people actually behave and react to various circumstances, but data and analysis alone won’t supply the product or service idea that helps people manage, simplify or add enjoyment to their lives. That will still require imagination and a "Big Idea."
Along with personalization, experience will offer another way for brands to be meaningfully different. Brands will be more open to collaborating when necessary to provide a distinctive brand experience. But experience won’t always be about use. It can also be about service or aftercare.
Finally, competition and disruption will increase. For many categories the barriers to entry are getting lower. With enough vision, capital, and boldness, it’s becoming more possible to break into just about any category, even banking, where regulations and licensing requirements traditionally repelled challengers. And societal trends, like the sharing society, open possibilities for entirely new categories. Even strong and valuable brands will need to disrupt in order to grow.