When I was doing the IPA Excellence Diploma course, I picked up this from John Millar & David Muir’s book ‘The Business of Brands’…
For a company, good branding achieved certain things…
i) INCREASE the cash flow, as the number of purchases increased
ii) ACCELERATE the cash flow, as strong brands grow and diversify more quickly
iii) EXTEND the duration of the cash flow, as brands create habit in people
iv) REDUCE RISK, as brands help guarantee the continuation of cash flow
But of course the world of branding is going through some big changes right now…
People have started beginning to change the relationships they have with the companies who supply their goods and services. Relationship is maybe the key word here; people talking to other people, because technology has made mass conversation possible, and desirable…
I’ve covered lots on social media before, or course, like Bonfires & Fireworks, so let’s skip over that for now…
However, much is made of how preposterous this when you come to thinking about how people would form relationships with the everyday branded objects…
…The Ad Contrarian goes off in a most eloquent rant about it here, part of which is…
“These new humans want a direct relationship with their peanut butter maker and their muffler manufacturer. They want a relationship with the company that makes their socks and their chairs. And their
pickles, and their half-and-half, and their mayonnaise, and their
cookies, and their tires, and their chewing gum, and their toothbrush,
and their umbrella, and their dishwasher, and their napkins, and their
toaster, and their gasoline, and their horseradish…”
…and so it continues (thanks to Jo for the heads up).
Now, I agree, it’d be completely unwieldy and unlikely to expect people to have a ‘relationship’ with all of these different companies… they’ll still seek out and talk about/talk to the companies they think are remarkable, but it’ll be one in a hundred perhaps.
But for the most part, a relatively unremarkable FMCG product is just a relatively unremarkable FMCG product. Why would you want to form a relationship with a ‘soap powder brand’.
Yet this is where I think the ‘private label’ issue is the key one…
Why form a relationship with hundreds of individual companies, when you can build a strong, reciprocal relationship with one company who can deliver you all the products you wanted, of comparable quality, at a lower price.
Of course, the ‘price’ factor is often raised as the biggest factor in the private label vs brand battle… but that’s only half the story I think; competition from private label products, and inferior brands, has always been around in the competitive marketplace of the last few decades.
The double whammy is that not only is private label cheaper, but it comes from a company people have an increasingly close relationship with.
People don’t form relationships with brands. They form relationships with people, and with companies (who’re just big groups of people).
Supermarkets have lots of people on the ground, and lots of initiatives, which are all fixated on building relationships with their customers (in order to prevent defection to other supermarkets). Relationships between people and supermarkets are really quite strong.
So I guess maybe the question for the producers of ‘dull FMCG products’ is ‘how do I get people to form relationships with my brands?’. Because to justify price differentials, there needs to be a relationship differential.
In time though, I wonder if there’s a need for FMCG producers to act more like supermarkets… it’s not the individual brands and products they should look to for forming relationships, it’s the companies themselves…]]>