Why Branding Has Value
I have written about this before, but critics of all things capitalism are usually particularly critical of branding, arguing that building brands has no value except to somehow beguile customers into overpaying for things or buying things they do not need. Now, I can be sympathetic to this when I see folks who have paid a fortune for certain fashion items (*cough* Louis Vuitton bags *cough*), but in generally branding actually has real consumer value. One important value of branding is predictability. McDonald's was traditionally a classic example of this -- walk into any McDonald's in the world and you will be pretty sure what will be on the menu and what it will taste like.
I wrote about this before when travelling in Europe. I know that I like some orange juice brands and don't like others. I know for sure I like Tropicana and so I buy that because I am confident I will get something I will like. In Europe, I had no idea what to buy -- I might pay for something I would enjoy, but I might also find myself having paid for something I really did not like.
I was reading a travel blog and thought that this quote really represented the epitome of why brands matter
I’ve been to Hyatts all around the world within every brand of the chain’s portfolio, and I don’t recall ever staying at a property which was miscategorized. There’s no mistaking a Park Hyatt for a Hyatt Regency, or a Grand Hyatt for an Unbound Collection. When I pick a property within the Hyatt portfolio, my expectations are met and the experience is standardized around the world. Hyatt Houses and Hyatt Places are almost identical properties regardless of where in the world they pop up.
I cannot say the same for the expansive Marriott portfolio. Just last month I stayed at the JW Marriott Copacabana in Rio, and nothing about that property represented the other JW’s I’ve visited. Certainly not all generic Marriott hotels are created equally, and I’ve found a very large variation in property conditions, common spaces, room sizes and other factors at Marriotts.
For example, let’s look at Courtyard properties. Within the last year I’ve stayed at the Courtyard in Durham, North Carolina, which resembled an updated Super 8. Then, not two months later, I visited the Courtyard in LaGrange, Georgia, which was more akin to a full Marriott hotel branded property. Compare those two with the Courtyard Seoul Times Square, which has an executive lounge with a rooftop patio, and I don’t know what to expect when booking a Marriott property, even within a single brand.
ErikTheRed:
These remarks are usually from the same crowd that thinks any retail transaction where an item sold above cost is exploitative. Sadly, this level of idiocy is not uncommon.
April 23, 2018, 9:38 amThe_Big_W:
Yep, and branding is all meant to sell potential buyers on how the product fits their lifestyle. See Yeti and its success with sportsmen and outdoorsmen.
But it is also extremely fragile. Watch Yeti destroy (in two days!!!) the value of their brand by openly and spitefully snubbing the NRA, which counts as its members and overly large number of (former) Yeti customers.
It is perhaps the worst brand miscue I've seen in my lifetime and I'm old enough to remember New Coke....
April 23, 2018, 11:02 amBistro:
I know what you mean which is why when booking international or even within the states, I google the property in question and have a gander at it before confirming the reservation.
April 23, 2018, 12:46 pmjimc5499:
Back in the 80's I used to travel for work quite a bit. I used to drink Budweiser because I could get it everywhere I went and I knew how much I could have and have no issues the next day. I like beer and would try almost anything provided I had the time to lose any effects.
April 23, 2018, 12:49 pmjdgalt:
As I see it your argument stumbles at paragraph one. Brands promise predictability but the promise isn't kept, and quite often, the brand name is kept, or even moved to a different product, to fraudulently hide a failure of predictability.
The first example that comes to mind for me is A&W root beer. When I was growing up 40 years ago, A&W was the greatest, the Ben & Jerry's of soda products. But its maker changed hands and the new owner decided it wasn't worth maintaining that quality, and they no longer even pretend to try. Today I know at least three better brands.
Since you use the example of hotel chains I can show one from there, too. Red Lion hotels, when they first appeared in the mid '80s, were well built, conveniently placed, and wonderful places to stay. Then a lower-quality chain, Doubletree, bought out Red Lion and swapped the names on all of them, so that the well-built luxury ones are all now Doubletree (but with some amenities and service removed or downgraded) while the old, crap Doubletree hotels are now all Red Lions.
Brands would matter if there were a way to enforce the promises that they purport to make to customers.
April 23, 2018, 1:35 pmJohn Moore:
I think you not applying the concept right - you are complaining that brands change over time, which is true. But, brands do promise a particular experience at a point in time. If I go to a Sleep Inn, I know exactly what I will get. If I go to a Comfort Inn (same hotel chain but different brand), I know exactly what I will get, but it will be different from a Sleep Inn.
And all of this may change over decades. That doesn't invalidate the concept.
April 23, 2018, 3:48 pmJohn Moore:
"Louis Vuitton" definitely has brand value, just not a value that a lot of us care about. It is used to signal one's position in the fashion hierarchy, which is basically a form of signalling one's suitability as a mate. At least, one can trace a lot of fashion to that impulse, even if few men are likely to care about the Louis Vuitton purse carried by the woman who is doing the signalling.
April 23, 2018, 3:50 pmgr8econ:
The value of branding is in setting expectations. It works for other things as well. Think about John McCain's brand.
April 23, 2018, 6:59 pmTodd Ramsey:
I think in our highly developed economy we take the central point of branding for granted. In the poorest countries, it's useful to know that when you buy a bottle of Nestle Pure Life water, you know you are getting a consistent product produced with the highest standards of safety. In the U.S. with our highly developed production and distribution system, the quality of packaged goods is so high that we take it for granted. When was the last time you bought a mass-produced food item at the grocery store that wasn't perfect in terms of safety, size, consistency, and free of transport defects?
April 24, 2018, 6:55 amThat's the true value of branding, which we collectively use millions of times daily without thinking about it. The Louis Vuitton bag is the exception that we notice, not the rule.
cc:
There are two types of branding. The first, which saves you time, is knowing what you are getting. If you only like a certain type of ketchup, you can find it. This is information signaling.
April 24, 2018, 8:22 amThe second type is lifestyle branding. It is meant to signal to others that you are rich/hip/pretty/outdoorsy/a sports nut. Examples include the Louis Vitton purse or Starbucks coffee or camo pants. Lifestyle branding is a risky game for the manufacturer because fashions can change in a heartbeat.
marque2:
Interesting about Tropicana. They seem to have an east coast and west coast version of OJ. East of the Mississippi, they seem to put more of the orange zest in the juice than out west. Alas, living in CA, I miss the east coast Tropicana.
But that does lead to an interesting point. Brands are consistent over a region, not necessarily over the whole world. Partially because of regional tastes, partially due to regional rules, and partially to regional supplies. Chicken McNuggets in Germany taste much different than nuggets in the US (and the German ones make me sick to my stomach - never fails). Nestle Quick, has an almost sickening amount of salt in it, in central American versions. Heinz Catsup is really sweet in Europe, more sour in USA, etc.
April 24, 2018, 12:25 pmslocum:
I think expensive bag and shoe brands are pure female status competition -- men aren't expected to know or care.
April 25, 2018, 1:11 pmDaniel McGillicuddy Griswold:
Holiday Inns are consistent in North America. Internationally, not so much. Many foreign ones are more upscale.
April 26, 2018, 4:54 pmI love real sugar Coke in Qatar. I won't drink the high-fructose American Coke.
Heresiarch:
Attacking brands is a de facto admission by capitalism-haters that human nature is more or less a constant. If it weren't, they'd be trying to get people not to buy the brands. Another in a long list of quixotic attempts to make people incapable of ruining their own lives, or, seen another way, to make what's in people's heads irrelevant to prosperity.
April 28, 2018, 10:53 am