Are Strong Brands on their death bed?

The advent of the internet and specifically e-commerce has brought with it a great challenge to organizations that traditionally relied on their strong brand name to either increase or maintain market share.

Critics have predicted that digital technologies will hasten the demise of brands because customers will have ready access to information they need to make purchase decision, and ‘’Brand’’ will hence become irrelevant. Others have predicted there would be an increase in brand importance due to the fact that there is too much information online (Information overload).

Taking a quick glance at the mobile phone industry over the last decade, there has a tremendous shift in market share from big players such as Blackberry, Nokia to the likes of Samsung, Apple, HTC,Huawei etc. Why is the question that you may ask?

Part of the reason has been the free and availability of mobile phone reviews and technical specifications forums online where customers can review a mobile phone based on their preference and technical capability of a phone regardless of brand. This is replicated across different industries such as automobile etc.

Have you ever wondered what a company that wants to take over or merge with another company looks for?  Major factors considered are

Company value (This Is the purchase price of acquired business for 100% of shares),

Brand Value (Brands, trademarks, trade names, domains etc)

Customer Value/Goodwill (The worth of existing repeat customers known in person)

In the past century acquiring companies concentrated on acquiring companies with strong brand values. Recent trends are showing the contrary, acquiring companies have moved from investing into businesses with strong brands to businesses with strong customer relationship. An example in Kenya was the takeover of Essar (Yu Mobile) by both Safaricom and Airtel. There is also talk of Nokia merging /taking over Alcatel.

It seems acquiring companies are developing an affinity for customer value which has the benefits of loyalty and ability to cross sell products and services.

Technology has further reinforced the trend as it has allowed companies to directly interact with customers, bypassing middlemen hence reducing cost of sale and marketing.

This has allowed companies to optimize customer lifecycle management based on detailed data and analysis of customer needs, improve efficiency and quality across value chain due to constant client feedback. In the end, the value of direct engagement with customers relative to traditional branding and media campaigns has dropped while the effectiveness of such marketing has grown. Many organizations have therefore created facebook pages,twitter handles, online chat forums and other feedback mechanism on their websites to tap into the opportunity.

Marketers have to walk a tight rope to ensure equilibrium between traditional brand management and building customer relationships.

In the short term, strong brand communications are and will remain important especially in attracting new customers and enhancing desirability for higher price premiums, for how long is the big question ?

https://viffaconsult.co.ke/are-strong-brands-on-their-death-bed/