Branding in the service economy

Nigel Hollis
Millward Brown

Service brands lie somewhere in the middle of a continuum that runs from packaged goods at one end to raw material extractors at the other. The strength of your brand is most obvious when the other variables in the mix – sourcing of raw materials, manufacturing, distribution and the like – no longer yield significant competitive advantage. This is why packaged goods manufacturers invest so heavily in their brands. Consistent quality, minimal product differentiation and widespread distribution means that in most packaged goods categories effective brand building can make the difference between success and failure.

Service companies typically have more ability to flex their 'product' to meet people's needs than a tangible product company, and service adds a whole new dimension of human interaction that is largely missing from tangible brands. This does not mean, however, that service brands are less dependent on branding. Brands exist in the minds of consumers and every single experience, good or bad, contributes to the way people think and feel about them. Service brands are probably even more dependent on how their customers feel, even if that influence is often hidden by service contracts and renewal periods that may hold disgruntled consumers hostage long after they would have abandoned a product brand.