Dear Wingman,

Is “branding” a valuable information-providing tool for consumers, or a tool by which firms persuade consumers to pay premiums for goods that they don’t really need?

William B.

A brand provides a guarantee of reliability and quality. Consumer trust is the basis of all brand values. So companies that own the brands have an immense incentive to work to retain that trust. Brands have value only where consumers have choice. Think back to the last time your mobile phone dropped a call, either you kept blabbing for a a minute before you realize the person you called stopped giving you the obligatory, "uh huh," every other sentence. Well whatever mobile phone provider you have, you've always been promised a very good network.

• "America's most reliable wireless network" - Verizon Wireless
  
• "The country's largest and fastest digital voice and data network" - AT&T
  
• "The largest voice calling area and the largest mobile broadband network" - Sprint
  
• "Stay connected across the nation with America's Largest Network" - Alltel
  

When your competition is touting the same or similar features in their brand, what are you going to do to differentiate? Here's what some of these companies did:

• Verizon Wireless has been conducting ongoing field testing, and that they've been pounding into our heads for the last several years, "Can you hear me now? Good!"
• AT&T Wireless is actually not the old AT&T you grew up with. SBC (who owned Cingular Wireless), bought out the old AT&T Wireless business, and changed all those old customers to Cingular customers. After SBC completed the acquisition of the rest of AT&T, they strategically changed they rebranded it as "the new AT&T." It created some confusion to some with all the name changing, but ultimately, AT&T is a stronger and longer known brand, and they wanted to leverage that. Strategic partnerships with other great brands like Apple and their iPhone also helped boost their own brand.

What do people think of when they think of your brand?

Labels: Branding

# posted by Ray Huang @ 11:37 AM
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Dear Wingman,

Is “branding” a valuable information-providing tool for consumers, or a tool by which firms persuade consumers to pay premiums for goods that they don’t really need?

William B.

Suffice to say, branding is both, and so much more. Its primary purpose is to increase awareness and familiarity of a product’s existence and secondarily, to differentiate or provide information about a product. When done properly for long enough duration, branding differentiates a product from its competitors and makes a product less of a commodity.

In the case of cola, there are probably hundreds of cola makers out there, but branding has led us to only think of Coke and Pepsi primarily, and each has their dedicated following. For me, I understand the flavor differences of Diet Coke and Diet Pepsi, and they both taste fine to me and I usually will only purchase whichever is on sale at the given time that I am at the grocery store and in want of 12-pack of diet cola. My diehard Pepsi drinking friend, Andy, will purchase the Pepsi pretty much at any price if he was out of Pepsi at home. Of course, Andy rarely runs out of Pepsi, because when it goes on sale at 3 for $10, he’ll literally fill his cart up with 12-packs, take them home and stack them in his garage (he once had two twin towers that were 8 feet high (true story).

Branding plays a key role in these two examples of cola drinkers. I, as a consumer, will only choose the Coke or Pepsi brands when they are on sale, but I am not likely to purchase R.C., the store brands, Jones, or some micro-brew cola at BevMo. Andy will only purchase Pepsi, because he’s been brainwashed as a consumer to thinking it is a superior product, and his mom may have put it in his bottle as a baby.

Certainly we can make the argument that we don't 'need' to be drinking soda, but branding and repetition has made us want to drink soda. We stick with the brands we know because of the consistency of the products and the expectations that we have come to learn.

Labels: Branding

# posted by Ray Huang @ 11:19 AM
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