Wholesome Marketing Ideas, Bite Size

Wholesome marketing ideas, bite size

Sunday, June 19, 2011

In brands we trust

The haloed Apple logo
Why do consumers trust brands?

If you’re after a perfectly rational explanation, you’d say: because brands deliver on their promise. Tide washes whiter, Disney is fun, Apple is cool, and BMW is the ultimate driving experience.

In other words, we believe something like this happens: 
  • The consumer listens to or watches the ad, and is intrigued by the promise made by the brand;
  • The consumer tests the promise by buying or test-driving the product;
  • The consumer is convinced by the evidence they see and experience in the test – the proof of the pudding is in the eating;
  • They purchase or repurchase the brand, and brand trust is cemented.

But there is a fly in this soothing balm of an explanation: the proof, it turns out, is often not in the eating.

For many (most?) product categories, consumers have no way of testing the promise made in the advertisement. 

First, the promises themselves are vague: how do you test if Apple is cool?

And secondly, even if the consumer simply wanted to test product quality or performance, they'd have a tough time. 

Consumers lack the expertise to determine which digital camera is superior, they lack the means to test which car is best, they lack the time to determine which washing machine is most durable, and they lack the patience to find out which wall paint dries fastest.

But wait. We live in a networked world. Surely, consumers get their information from expert reviews, they bone up on independent product tests such as those conducted by Consumer Reports, they call up peer reviews such as those on Amazon.com, and they can get data from sources such as J.D. Power’s automobile quality ratings.

There is certainly plenty of information out there.

But how well do consumers use this information?

Consumer Reports' tests of cars, for example, put dozens of makes of automobile through dozens of stringent tests (check out the video).

The results tend to show that Honda and Subaru consistently outperform BMW and Mercedes on most of these tests. And the German brands are consistently in the bottom half of cars tested in terms of reliability. 
2011 Consumer Reports Test Results. Source: Consumerreports.org

Yet consumers tend to be more willing to pay price premiums for the German brands over the Japanese ones. (Yes, the German brands may be more fun to drive, but that's probably because of this).

So when it comes to buying, do consumers ignore the data; do they put their faith in the brand?

Faith trumps empirical evidence? Where else have we heard this recently?

Yes, exactly. Think back to last month when the empirical evidence of an intact world on May 22nd did not shake Harold Camping's belief that the end of the world was nigh. Nor did the death of the "living god" Sai Baba convince his millions of followers around the world that he was a mere mortal, or even of his demise.

It turns out, the parallels between brands and cults have been researched, as have the parallels between religious faith and faith in brands. Recent papers have found, for example, that:
  • the Macintosh community behaves a lot like a cult: it is a strong network of adherents, with faith in a savior (Steve Jobs), and opposition to a common perceived evil (the PC);

There are also claims by Lindstrom that religion and brands excite the same parts of the brain.

If consumers put faith in brands, what does that make marketers? 

Let's just say, evangelists.

Spread the word. 

But before you go, check out this mash-up from The Netherlands:

most recent           table of contents 

See also Brand mimicry

Source page for Consumer Reports graph of auto test results 2011


Sherry Chris said...

Hello Niraj,

I am an Ivey graduate 2001 and was one of your students - I just started reading your blog thanks to Cam Bramwell, a fellow classmate.Great blog! I recently launched a new brand by licensing an established name and building the launch on a very strong social media platform. I was hoping to reach out and share more with you, as I thought it may be of interest.

Sherry Chris

Niraj Dawar said...

Hi Sherry, good to hear from you. Let's connect over e-mail. I've sent you an e-mail to your Ivey lifetime account.

Niraj Dawar said...

I received an e-mail from a reader asking whether consumer willingness to pay a premium for German cars over Honda and Subaru shows that investments in marketing (brand building) have a higher return on investment than investments in quality. Good question. Your thoughts?

Socrates said...

It may fit into the context: a song
parody making very professional and
hilarious fun of the old media and
and ad industry, the changes in that
industry due to the digital revolution:

Jared Breski said...

@Niraj - To your question I'd say that investments in marketing have a greater ROI over the short term, but investments in quality have a greater ROI over the long term.

In fact, I'd argue that an investment in quality will actually generate marketing by itself because, basically, people like to talk about their higher-quality experiences.

For example, there is a tiny burger shack in downtown Toronto called The Burger's Priest which opened not too long ago. Its menu has little other than burgers and fries and they do absolutely no marketing. That doesn't stop them from having a lineup out the door at all hours of the day. This happens because they made an investment in the quality of their burgers and people like to share this higher quality experience again and again with friends.

Amir Bhatti said...

Hi Niraj,
I would agree to Jared's comment that investment in quality helps brand building.
Just to give you an example, Hyundai came up very quick and have better quality vehicles than any other. Their paint technology is unsurpassed. They offer more features in their cars than any other when it comes to comparison and price tags. They literally invested in "quality", and you can see the Hyundai branding has topped for the recent few years - After Hyundai, the top six automakers were Ford at number two, followed by a tie for Honda and Nissan and another dead-lock for BMW and Mercedes-Benz. Refer http://www.autoblog.com/2011/03/08/hyundai-tops-brand-keys-customer-loyalty-survey/

With some due diligence and research done, consumers may change their faith and the willingness to pay premium for a Benz or Bimmer may have their previous experiences behind to buy the same, again, it could be affordability, driving pleasure, no bad experience etc.

Personally, driving Benz from teenage, when it came to buy a second car for my household, I did research and bought a Hyundai, Santa Fe. The best value money can buy in that range!!

I am from Winter Section 2008, student of Don Barclay.

Niraj Dawar said...

@Jared @Amir, I agree, marketing and quality have different payback horizons. And as both you and Amir point out, quality feeds into marketing. Still, in the auto sector the superior quality of Honda and Subaru is not a new story -- its been true for years -- yet they do not attract the highest price premiums. What gives?