Part 1: Back To Our Future

The history of brands has always fascinated me. From humble beginnings, designating livestock ownership, brands soon took on a more noble purpose as symbols of quality. Branded products provided reassurance to consumers that their products were safe and well made, long before consumer protection laws existed. Of course the discourse around the role of brands has evolved significantly since those times, yet safety, quality, reassurance and trust have remained essential tenets of strong brands- the bedrock upon which their enhanced value is built. 

Nonetheless, recent studies have suggested overall levels of consumer trust in leading brands has started to erode within developed markets. In this series of articles, we look into why that might be. Perhaps the parameters by which consumers mentally assign trust to brands has shifted whilst brand owners continue to frame their activities within a paradigm that hasn't sufficiently evolved.  Meanwhile, in other aspects of consumer expectations, we can see a case for brands to admit to well-intentioned missteps from their recent past and return to prioritising high quality, customer centric solutions, generating fair and sustainable profits, for the benefit of customers, communities, colleagues and the climate.

Professor Byron and Brands

Brands have long been described as mental shortcuts for a combination of tangible and intangible facets that, taken together, help consumers make purchase decisions. In recent years discussions around the science of brands have frequently focused on the excellent, research based, work of the Ehrenberg-Bass Institute for Marketing Science and specifically Professor Byron Sharp's seminal book, "How Brands Grow".

Professor Sharp proves that, since consumer convenience plays a major role in purchasing choices, brands that come to mind (mental availability) and are readily available in the specific purchasing channel (physical availability), on the occasions consumers are shopping, are likely to grow faster. Sharp's summarised seven rules for brand growth are:

1. Continuously reach out to all buyers of the category (communication and distribution) — avoid being silent.
2. Ensure that your brand is easy to buy by communicating how the brand fits with a customer's life.
3. Get noticed and grab attention frequently and consistently- regularly is better than episodically. 
4. Build and refresh memory structures, respecting existing associations that make the brand easy to notice and buy.
5. Create and use distinctive brand assets (use sensory cues to get noticed and stay top of mind).
6. Be consistent, avoid unnecessary changes to brand assets, whilst keeping your brand fresh and interesting.
7. Stay competitive, keep the brand easy to buy and avoid giving excuses not to buy e.g. overtly excluding audiences.

Brands and Beans

Terms like "mental availability" and "distinctive brand assets" may sound abstract but put simply, distinctive brand assets comprise things that are memorable and attractive, providing sensory and semantic cues when used regularly and consistently over time. Examples could be logos, icons, taglines, packaging artwork, colours, brand ambassadors, music or jingles. Sharp's research shows that creating consistent and constantly used, easy-to-remember brand assets creates distinctive memory structures over time, which then bring a brand front-of-mind when a consumer is shopping in that category. For example, a consumer may see four brands of baked beans in a supermarket, but if they aren't sure which to purchase, the familiar and distinctive Heinz can design, along with a voice in their head saying "Beanz Meanz Heinz", is likely to win the purchase for Heinz baked beans more often than for competing alternatives.

Heinz baked beans are easy to buy- most places stock them- and they benefit from being the category leader, which amplifies their awareness and drives further competitive advantages. As Mark Earls outlines in his book Herd , humans seek reassurance from the wisdom of the crowd ("I'll have what she's having") and are reassured that they're less likely to be mocked for making the same choices as a significant group of others.  There is also an empirical law of marketing at play, with my fibre-filled example: the law of double jeopardy . With few exceptions, lower-market-share brands, in any given market, have both far fewer buyers in a time period and also lower brand loyalty than category leaders like Heinz. 

Large brands have higher awareness and market share, so more retailers stock them and give them greater shelf space. Online, search engines prioritise visibility for large brands too, since their algorithms tell them they are more likely to be what the purchaser is looking for. For a variety of reasons, established brands are likely to be able to spend more on advertising and pay a lower cost per contact when they advertise too. Plus, unless you hate baked beans in general, you are unlikely to hate the taste of Heinz beans, even if they aren't your favourite, since they've become the flavour benchmark for beans in Britain. As the behavioural economist Gerd Gigerenzer puts it, people generally look to make “fast and frugal” choices – decisions that are quick and easy. Brands you recognise quickly and which make themselves available in the places you shop are at a distinct advantage.

So there is a flywheel effect: Purchasers are more likely to see brands that have more promotion and wider distribution. Research shows the average consumer is more likely to consider brands they've heard of, used before or seen friends and family use. Even light buyers in a category will be less likely to have heard of smaller brands and less likely to see them because of their lower distribution. So larger brands will not only attract more buyers, sustaining their existing share advantage, but will find it easier to grow and maintain penetration, with loyalty following as a consequence of physical and mental availability and acceptance driven by familiarity.

There is also another element at play here, which I would contend still remains at the heart of good brands: a perception of quality which in turn engenders trust. Heinz beans are a mass market product and few would consider them to be haute cuisine.  Yet undeniably they are a consistently produced, quality product- produced using a proprietary sauce recipe, in a factory with high standards of hygiene, food safety and quality control.

Brand Trust

According to the  Brand Finance Global 500 study, published in 2022, the value of the 10 most valuable global brands alone stood at nearly $1.7 trillion (USD). What makes brands so valuable? Well as my old professor at Kellogg School of Management, Prof. Philip Kotler said,  intrinsic to a brand's value is “the consistent delivery of the seller’s promise to deliver a specific set of features, benefits and services to its buyers. If consumers trust the brand to deliver on these promises, this eases their decision making, reduces costs of information gathering and processing, reduces their purchase risk, and increases expected utility." Vivek Nanda found that when it comes to convincing consumers to pay more, brand trust trumps other brand factors and Gerd Gigerenzer found that the primary driver of trust is a pragmatic assessment of quality, i.e. "this product is consistently good enough to meet my needs and my perceptions are that the  positives of buying it outweigh the negatives."

So, given the importance of consumer trust in brands, it is worrying that evidence exists which suggests consumers’ trust in brands is eroding, perhaps in a sign of shifting expectations or indeed that some companies are compromising on the enduring values of quality- that brands have historically been built upon- in pursuit of short term growth.

The Edelman Trust Barometer found that, in nearly half of the countries surveyed, the percentage of people that mistrust brands’ owners exceeds the percentage of people that trust them. Young and Rubicam found similar results too. They run a regular brand trust tracker using a "basket" of well known global brands. In 2001 respondents trusted 44% of the brands surveyed, but in their recent round of research this fell to just 17%.

The reasons for a demise in trust are likely to be multifarious. One can find evidence for a general decline in self reported trust over time- in other people, institutions and corporations- within western societies. However it's my suspicion that, at least some of the fall in brand trust, can be attributed to forces that have increased the prevalence of business practices prioritising fast, continual revenue growth, within markets where the reality of climate and population change mean that's becoming increasingly hard to achieve, without turning to unsustainable behaviours with negative climatory and societal consequences.

An obsession with fast growth has partly been fuelled by relatively easy access to venture capital over the last 10 years and a start-up founder culture that, until recently, has considered fast growth to achieve a valuation a higher priority than profit. The logic of this has been that a rapid accumulation of customers is a sign that a company has a higher future value if it can use scale effects to eventually turn a profit.  But logic also dictates that profitless private enterprise can't endure for long and sadly that logic has come to bear, with  VC startup funding dropping by 50% YoY in the third quarter of 2022 , mass layoffs at tech firms and  several high profile startups stopping - all within the immediate context of a worsening economic outlook.

Nonetheless this is an issue far bigger than the woes of start-up culture or indeed the marketing industry. There is stronger evidence to suggest the pursuit of ever increasing profit growth, by large established companies, has had a cumulative impact on brand trust erosion. Continual, compounded, corporate profit growth inevitably becomes harder to achieve over time. Which progressively increases the likelihood for conflict between the profit maximisation behaviour of firms and the social and environmental impact of such behaviours on the consumers, who paradoxically companies rely on to sustain the growth of their businesses.

The Economic Context

In his book "Prosperity", Professor Colin Mayer of Saïd Business School at Oxford University, argues that the practice of prioritising short-term returns, over the longer run implications for doing so, has become endemic over the last 30 years. fuelled by an institutional shareholder led imperative to drive constant growth, frequently within mature markets, on a planet with diminishing resources to support such ambitions. Mayer points out that the current market orthodoxy, in the US and UK, demands that companies continually deliver more profits, to a point that directors of companies would have to devote more hours every day to producing them than there are hours in the day to do so.

In many markets, the easiest ways to keep fuelling financial growth are finding potentially nefarious ways to lower costs, actively avoiding societal dues such as taxes or finding more elaborate ways to extract more cash from customers. Mayer suggests this is how we ended up with historically responsible companies outsourcing manufacturing to locations with unsafe overseas working conditions but lower labour costs. It's why we ended up with PPI scandals involving banks that were once among the world's most trusted institutions. It's why features that were once standard on cars now often require a monthly subscription for them to work. It's also why a raft of recent "innovations" weren't designed with the customer-needs focus, beloved of marketing driven product development, but simply to gouge incremental, short term, recurring revenue from punters.

OECD forecasts suggest that, in the next few years, economic growth will inevitably and structurally flatten in developing countries. This is logical, since the earth has finite resources, populations are ageing and historical growth rates cannot be sustained in perpetuity. This in itself raises questions about the future of the "higher growth, higher profits, higher shareholder returns" doctrines of economist Milton Friedman, which have become the prevalent economic ideology underpinning British and American capitalism. Professor Mayer's view is unambiguous. He believes the current system, "Does not work, has never worked and will never work . And everyone- business leaders, institutional investors, regulators, governments and law enforcers- knows it,  but...many (in senior positions) are highly conflicted in benefiting immensely from maintenance of it and the pretence that everything is just fine."

Back to Brands

Clearly everything is not fine with either our economy or environment. But what does this have to do with brands?  Well, successful brands evolve to survive and the best brand marketers think long term. Colin Mayer's research into corporations over the last 2000 years reveals that companies have a self preservation instinct and are frequently faster to act, adapt and shape agendas than governments and regulators. If one considers that 68% of the world's capital assets are human and environmental, their decline would in turn diminish potential returns for corporations. Put simply, companies will increasingly need to find profitable solutions to problems of people and planet, in the interest of their long term survival.

Marketers typically facilitate the transfer of understanding between buyers and sellers to identify profitable propositions that encompass benefits for consumers.  So it would seem logical that they will be at the vanguard of this change, once understanding of the issues at hand becomes more commonplace, overcoming the knee-jerk tendencies towards short-term greenwashing we see prevailing in many corporations today.

Good marketers are trained to have a customer orientation, to constantly evolve their understanding of consumers and the context for their consumption. Whilst some marketers may argue that the current economic status quo and climate crisis are issues that cannot be resolved within the timeframe they get paid to focus on, or are outside their scope of responsibility, the consequences of poor economic stewardship, pollution and global warming are clearly issues that are directly affecting consumers right now. The rising cost of living, widening wage disparity, lower job security, a lack of skills based manufacturing jobs (due to the offshoring of production), diminishing customer service standards, plastic pollution and extreme weather events are just a few examples that have already been identified in research studies as significant contributory factors, to both the long term erosion of trust in brands and contemporary changes in consumption patterns. Which could explain why some marketers have moved these issues up the agenda, though it would seem there is a way to go before others make evidence based connections between selling more and the imperative to do more, in a changing environmental context.

In Part 2 we look further into how macroeconomic factors have affected changes in brand trust issues relating to product experience, customer experience and changing expectations relating to environmental and societal change. We then examine the case that brands should look to their pasts to inform a better future for us all, moving to a new paradigm of brands that stand for quality, through profitably creating great products and services, with a positive impact for both people and the planet.

> Read on in Part 2

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