Wednesday, June 18, 2008

The Power of Branding (Part 1/2)

Dear Wingman,

Is “branding” a valuable information-providing tool for consumers, or a tool by which firms persuade consumers to pay premiums for goods that they don’t really need?

William B.

Suffice to say, branding is both, and so much more. Its primary purpose is to increase awareness and familiarity of a product’s existence and secondarily, to differentiate or provide information about a product. When done properly for long enough duration, branding differentiates a product from its competitors and makes a product less of a commodity.

In the case of cola, there are probably hundreds of cola makers out there, but branding has led us to only think of Coke and Pepsi primarily, and each has their dedicated following. For me, I understand the flavor differences of Diet Coke and Diet Pepsi, and they both taste fine to me and I usually will only purchase whichever is on sale at the given time that I am at the grocery store and in want of 12-pack of diet cola. My diehard Pepsi drinking friend, Andy, will purchase the Pepsi pretty much at any price if he was out of Pepsi at home. Of course, Andy rarely runs out of Pepsi, because when it goes on sale at 3 for $10, he’ll literally fill his cart up with 12-packs, take them home and stack them in his garage (he once had two twin towers that were 8 feet high (true story).

Branding plays a key role in these two examples of cola drinkers. I, as a consumer, will only choose the Coke or Pepsi brands when they are on sale, but I am not likely to purchase R.C., the store brands, Jones, or some micro-brew cola at BevMo. Andy will only purchase Pepsi, because he’s been brainwashed as a consumer to thinking it is a superior product, and his mom may have put it in his bottle as a baby.

Certainly we can make the argument that we don't 'need' to be drinking soda, but branding and repetition has made us want to drink soda. We stick with the brands we know because of the consistency of the products and the expectations that we have come to learn.

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