"Brands are dead," we've been told, and it feels like everyone's out searching for the smoking gun. Did the economy kill brands, or was it globalization? Maybe it's advertising fatigue?
We can muck around the crime scene all we want, but the simple truth is that brands are NOT dead. Nor are they "back." In fact, they never left. Not real brands, that is. What they are likely referring to on the death certificates are category placeholders: famous names that are interchangeable for other famous names. Everyone knows them, but not for anything much in particular.
In this soft economy, hard luxury has thrived. That's because these brands provide a not-so-little-thing called meaning, which translates into value. And more than ever it's about value: the interaction between price and what we get in return. In truth, that's what the economy has impacted most – a closer examination of what's behind the brand curtain as consumers have searched for more value, not just lower prices.
Yet brand managers, staring down the barrel of a lingering recession, often blame high prices for lost sales. It's reactionary, in order to move product. But we know that people don't choose a product in a purely logical way. Brand Keys proprietary research points to a split: rational factors make up only about 30% of why we choose what we choose. Emotional factors account for the rest.
And that's the luxury advantage. Luxury brands know how to create and foster emotional value. It's this distinction that enables them to continue to live so large, even in a time of constricted budgets. What luxury brands do well is exhibit clear brand values that lead to a meaningful emotional differentiation in the mind of the consumer.
To paraphrase Mark Twain, "The report of [brand] death is greatly exaggerated." Unfortunately, the same thing can't be said for category placeholders.
