Nikolai Kondratiev made a wonderful contribution to economic history with his long wave theory. He argued that the capitalist development was made of long waves. These waves are 45 - 60 years long and represent one cycle of global economic growth. They are successive sine curves highly linked to innovations in technology. According to this theory, technology is pushing the economy of brands into their 3rd wave of development. The first era was led by technological advancement in the production of goods, such as, large-scale plants, the second wave came with the technological advancements in media such as TV, Radio and Print and the 3rd wave, the present one, is led by the advancements in Information and Communications Technology (ICT).
In the 1990s, the developed world entered in to a new age, one of information.
Since then, the Information and Communications Technology (ICT) has totally changed our way of life, leisure and our means of communications and information.
First, mass production became mass customisation in the Information Age. IT and information tools are key elements that makes mass customisation feasible. In the Industrial Age, people served the machines. In the Information Age, technology serves the people. Nowadays, people apply knowledge instead of performing repetitive tasks. Whereas brands applied command and control structure in their 1st and 2nd wave of economic growth, Information Age brands apply common control structure. Finally, the most important asset and the key driving economic growth in the Information Age is knowledge, not capital. As demonstrated by Brain Acton, Jan Koum and WhatsApp, it is now possible for a group of relatively inexperienced people with limited capital to build a $19 billion business in less than 5 years. The great challenge for brands as a whole is how to reorganise themselves to gain the portion of the Information Age economic profits, and also, how to build a new global solidarity between the consumers of UK, China, India, Brazil, Canada, Germany, Mexico and so on.
The Information Age is introducing a new social and economic situation to brands. The theories and methods of brand-building developed in 70s are no longer relevant against the technologies of Information Age which mean brands need to think of very different methods from the ones in recent decades. First, consumers are creating and increasing their ‘collective knowledge’ about the brands - Chart 1 takes a look at visible spontaneous global mentions between 2012 and 2014 for selected brands. On the surface, it seems that brands are being more talked about than ever, but on average 48% of these conversations are passion less or neutral and 31% are negative. Secondly, as consumers are listening more to consumers than brands - this is weakening brand to consumer relationship, whilst strengthening consumer to consumer relationship. And thirdly, the abundance of collective knowledge is liberating the Information Age consumers to actively analyse the ‘intangible brand personalities’ against their performance in the ‘tangible’ world.
So how do brands address this new situation and grow their profits?
The key to it must be, as before, strong link with the consumers. The main element in the future profit growth will be fuelled by the economy of the Information Age - ‘knowledge’. Added value will lie in making consumers more knowledgeable by making the brand more knowledgeable.
Let us now focus on how brands can create knowledge to make consumers more knowledgable and deliver added value. Moreover, we will look at the areas where brands can truly add knowledge on top of the knowledge already possessed by the consumers of the Information Age.
Without a doubt, all the knowledge in the world is a direct result of the discoveries and inventions Humankind has made. With every new discovery or invention our minds receive new data and information and after analysing it for being justified, true and believable we store it in our memory as knowledge. Therefore, creation of new knowledge will require brands to make new discoveries or inventions and share them with the consumers as ideas.
The 3rd Wave of brands will add functions to demonstrate its ability of exploiting the ‘economy’ of the Information Age to turn the ‘non-functional characters’ into real ‘functional’ brand personalities. Knowledge will be at the heart of value addition not capital. However, unlike Capital, banks or venture capitalists can’t provide knowledge, instead it comes from creating new ideas.
- These ideas will come through the product itself
- They will be in its experience
- They will be in its application for the world at large
All of this will be governed by the principle of value addition to build a stronger relationship with the consumer and influence their preference to grow profits.
Let us now observe each of the three areas responsible for delivering future profit growth for brands.
First, brands will deliver added value through the product itself. In this, added value will come from enhancing an existing product or by creating a new product to replace the more traditional ones.
In the Internet industry, Google is reorganising the traditional ways of accessing the Internet. Google[x], the division of Google responsible for audacious ideas like Google Glass and self-driving cars, is making efforts to help the 4.5 billion people worldwide with limited or no Internet access. Project Loon, uses a network of balloons floating in the stratosphere, twice as high as airplanes and the weather. Using Wind Layers Loon balloons go where they are needed by rising or descending into a layer of wind blowing the desired direction of travel. Those wanting to use the Internet can connect to the balloon network using a special Internet antenna attached to their building. The signal bounces from this antenna up to the balloon network, and then down to the global Internet on Earth.
Project Loon was pilot tested in June 2013 in New Zealand. the pilot test has since expanded to include a greater number of users over a wider area. Project Loon will continue to expand the pilot through 2014, with the goal of establishing a ring of uninterrupted connectivity around the 40th southern parallel.
Secondly, brands will deliver added-value by enriching the product experience. This could be pre, during or post product purchase.
In the movie production and distribution industry, brands are redefining the Cinema experience. Disney, the largest media conglomerate in the world is encouraging the viewers to ‘Switch-On’ their electronic devices during Cinema screenings. For it’s theatrical re-lease of animated classic The Little Memaid, Disney encouraged the audience to bring along their iPads. To make viewers ‘part of the story’, the brand introduced special interactive screening where kids are invited to download the the Second Screen Live app on their iPads and use it to access games, additional content and compete with other participants in the Cinema as the story unfolds.
Thirdly, brands will deliver added-value by exploring the application of their products outside their ‘Core Categories’.
In the Smartphone sector, brands are making their products work with the ones made by automobile manufacturers. Apple, one of the leading Smartphone brands has introduced CarPlay. The aim of CarPlay is to provide direct access to iOS device functionality, control, and usage, directly via the selected manufactures native in-car control systems - knobs, buttons, or touchscreen. Integration is aimed for several functions that iOS devices currently incorporate, including: Siri Voice Control, Satellite Navigation, Telephony, Music and Messaging.
To move forward for the purpose of concluding this piece, we must remind ourselves of the one Golden Rule - as always, brands exist to deliver profit growth. And as always, they will achieve this by adding values. It is not for the first time brands are faced with challenges caused by the economic shifts, neither it is going to be the last. The ones most acceptable and adaptable to the new realities and economy of the information age will be able to look back with a strong feeling of great intellectual joy and achievement.
