When I spoke to a group of advertisers last Wednesday, there were a few stalwarts who wouldn't have anything to do with my premise that the traditional model of branding is broken. The next day, P&G's CEO Robert McDonald weighed in on my side of the debate.

 

Well, not on purpose, but the steps he outlined that P&G is taking to salvage its brands clearly evidence a response to the fact that all is not right in the world of branding. Sales are down for its storied, premium brands, as consumers skip buying products like Tide that can cost almost twice the price of comparable store versions. McDonald's strategy is to cut prices, up promotional spending (i.e.cut prices temporarily), and sell new, cheaper products.

In other words, he all but announced that the traditional branding model isn't just broken, but dead.

The fundamental premise of branding is that it's possible to attach sustainable perceptive attributes to goods and services for which people will pay a premium over purely functional qualities. Branding defines and manipulates the emotional reasons people buy stuff. Market share become a broad measure of brand performance in the short-term (i.e. recent sales), and long-term value (repeat purchase is a really good quantitative measure of loyalty).

Turns out that price is the most important brand attribute of them all, especially when it comes to mostly functional things that mostly function identically. The fact that consumers can too easily forgo buying P&G's premium brands isn't a temporary aspect of a down market, but rather the revelation of how attached they were to the other, emotional values for which they once paid.

I find it funny that our traditional definition of brands is responsible for sales and perceptual equity when times are happy and flush, yet takes no blame for lackluster sales, or the utter lack of utility for any of that invested value when times are tough. This is one of the drivers of my POV: even if brands did work, or worked imperfectly, I suspect we could improve upon our premises, and not simply look at the challenges as tactical or external to our deepest-held beliefs.

P&G's response is to all but throw in the towel on its premium pricing, and hope to ride out the recession; its implicit belief is that consumers will return to their profligate spending ways sooner or later. Then, the traditional branding model will work again, just like new. Or old.  

QED.

The Bulb Asks:

  • Could new brand strategy be useful, instead of new media tactics?
  • If you had to invent the idea of a "brand" today, would you define it in the same terms as you currently use (and try to find evidence of it in the same ways)?
  • If sensitivity to price is here to stay, what are the brand strategies to engage with consumers to prompt purchase? Entertaining them is not going to be enough, is it?

Original Post: http://dimbulb.typepad.com/my_weblog/2009/09/as-the-brand-turns.html

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