The role of brands evolves with market maturity

A few days ago, the Financial Times reported on a study of how attached consumers are to brands, conducted by Havas Media. According to the article (I’ve not seen the original research), “The research shows far stronger faith in brands in faster-growing markets, with respondents in Latin America saying 30 per cent of brands made a notable positive contribution to their lives, compared with 5 per cent in the US and 8 per cent in Europe.”

The FT then quotes Umair Haque, director of the Havas Media Lab as saying that the fact that only 20% of brands “have notable positive impact” should be worrying boards.

I’m not so sure.One point that jumps out in the article is the fact that consumers in what the FT calls “faster-growing markets” have more faith in brands than in Europe and the US. Again, I haven’t seen the original research to judge the methodology and the questions asked, but to me, it sounds like there is a confounding factor that is not incuded in the FT’s analysis: robustness of market institutions.

Mexicobrands_pt

One of the original purposes of brands was to provide consumers with a certain guarantee of safety and quality. Brands allow customers to recognize a manufacturer’s goods and to know what the quality of the product is likely to be. In mature markets like Europe and the United States, robust institutions and enforcement agencies make sure that anything on the market meets minimum safety and quality standards. This is not always the case in less mature markets, which means that brands still play an important role of quality assurance.

In that context, it makes sense that brands in mature market are less likely to affect quality of life. Generic or store-brand products might be marginally less good, but they will generally deliver the same good or service. So the quality-of-life question is less relevant in a mature market when applied to an individual brand as opposed to a broader class of product or service. In this context, the lessened “faith” of consumers in mature markets could be a sign of successful market institutions and not failure of the brands themselves.

What do you think?

My thanks to Neville Hobson and Shel Holtz, who covered this item in episode 624 of their For Immediate Release podcast, which is how I found out about it.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s