Future of Brands

Importance of purpose rises in a difficult year

But disintermediation sits on the horizon

Divining the future of brands, always an imprecise exercise, became especially challenging this year, because breathless political debate clouded the crystal ball. Incessant tweeting and posting around Brexit and Trump forced brands to examine their purpose. Meanwhile, technology-enabled disintermediation portended an uncertain future, potentially altering brand relevance and purpose.

As the culture convulsed, many brands faced a choice: proactively voice an opinion on issues like refugees and immigration, or unwillingly be dragged into the conversation. Avoidance no longer seemed an option. People had demonstrated power with their votes and could do the same with their spending.

Intense public scrutiny required brands to change some of their practices. In the UK, people pressured brands to stop advertising in the Daily Mail, objecting to some of the tabloid’s headlines about immigrants. Google and YouTube modified ad placement policies after advertisers complained about their messages appearing adjacent to extremist content.

Most brands avoided political comment, unless events directly impacted their businesses or conflicted with their values. US-based Google opposed the Trump administration’s immigration restrictions because the company relies on a diverse workforce. In one of its stores in Norway, the Swedish brand IKEA constructed a small, grim room with cement walls, replicating the living space of a mother and four children in the Syrian war zone.

Inevitably, some attempts to link with current events stirred controversy. Coca-Cola received criticism for a Super Bowl ad created to celebrate inclusion and diversity. After complaints of insensitivity, Pepsi immediately withdrew a TV commercial intended to illustrate the possibility of mutual understanding, even at a protest demonstration.

These circumstances revived discussions about the meaning and importance of brand purpose. Purpose was not intended to be an attractive shell added to unify and protect the brand. Rather, purpose was organic, the spine that gave the brand sturdiness and upright appeal. The question was, what else will consumers expect, and how will those expectations change the role of purpose, and of brands themselves?

Technology and disintermediation

What will consumers expect in a future where technology disintermediates them from brands— where consumers choose a detergent brand once, and then depend on technology to keep the laundry room stocked? In that future, the consumer’s primary relationship will be not with the detergent brand, but rather with the e-commerce and logistics provider.

What is the purpose of a brand in that world? The outcome depends on how the Internet of Things evolves, and how many products come to be replenished automatically. In many cases, the brand consideration set will disappear, challenging a brand to find a creative way to reenter the mix. This prospect challenges brand purpose and changes the purpose of marketing.

Persuading the consumer to add a brand to her consideration set would not be useful, because the consideration set no longer would be relevant to the way she purchases. At some point, the consumer will need to choose a brand, and that is where the engagement with the consumer will happen. It may be that the entry point will differ by category, and marketing will adjust as required.

Regardless of the engagement point, differentiating may come down to service. The cost of entry for a brand in a production-driven economy was that the product needed to work. In a knowledge economy, where technology makes it easy to replicate the product, the cost of entry is to do good.

Change and choice

In a future of automatic replenishment, the multinational consumer products companies may become more engaged in marketing than the individual brands they own. This possibility goes back to the future, to a time before the proliferation of choice, when brand selection was simpler and more limited. It is as if the ever-expanding brand universe will begin to contract into just a few brand-dense galaxies.

But even a future of automatic replenishment should not reverse the “big bang” that generated brand proliferation—human beings and our desire for choice. We like to shop. We usually want to make the purchasing decision. We also rely on brands to simplify choice and to help us make rational decisions, or to get an emotional lift from irrational decisions.

Even with brand disintermediation, there is likely to be a balance between how much choice people will want to surrender and how much they will want to retain. In the instances where the consumer makes a choice, brand purpose may be a more important determinant.

The nature of purpose will depend on the individual consumer, the product category, and the brand. Brands will need to ask what the brand means to the customer, to the employees, to shareholders. Heritage brands may need to return to the past, to the idea or purpose that originally animated the brand.

 

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Methodology and valuation by Kantar Millward Brown


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