Take away the branding and companies may be unable to explain products
Take away the branding, and you may end up taking away a company's ability to explain its products to customers
You might already have seen Dollar Shave Club's tongue-in-cheek video ads, which are making the rounds on social media.
In one video, which has racked up more than 25 million views on YouTube (and counting), founder and CEO Michael Dubin says: "Do you like spending US$20 (S$27) a month on brand-name razors? US$19 goes to Roger Federer."
Mr Dubin's message is clear and simple: You don't need Gillette. You just need a shaver that does the job; and we are going to send it to you every month for a fair price.
For a subscription as low as US$1 a month, the club sends disposable razors to your door. Its video ads show no slow-motion, dramatic close-up shave - and no technology.
Instead, Dollar Shave Club focuses on convenience and value - and a strong dose of humour poking fun at the positioning of industry leaders.
The appeal to customers is compelling: within two years, Dollar Shave Club scored US$65 million in sales, and was acquired by Unilever for US$1 billion in the second half of 2016.
Dollar Shave Club and other disrupters provide a lesson on the importance of brands, especially in an age where branding has never been more prevalent and markets rarely so crowded.
With Uber, you just need a vehicle to take you from one location to another. It doesn't matter what car it is. With Airbnb, you just need an apartment to stay in. It doesn't matter if it's not a suite in Marina Bay Sands.
But Dollar Shave Club, Uber and Airbnb are, in fact, the very incarnation of a brand.
What they do is to cut through the noise in a crowded environment of incumbent brands with an engaging story about what makes their offerings unique to connect with their audiences and get their messages across.
In an age with more and more brands in any given market, and when brands now also communicate through social media platforms, branding becomes even more important. Companies that rise above are the ones that have the strongest brands, which gives them the ability to convincingly explain their products to their consumers with a good brand story.
COMPARATIVE ADVANTAGE
A brand is a product's "personal" story - it explains what the product should mean to its users, what it can do, where it has come from and, sometimes, where it is going.
The purpose of brands is to create for consumers meaningful differences among competing products. A brand helps consumers pick the right product for their requirements, especially in a crowded market and when products become similar due to technology or business model convergence.
However, there is a growing movement to remove brands on goods deemed dangerous to public health, such as soft drinks, some breakfast cereals and tobacco products.
Plain packaging removes all company branding, including colours and logos, from a package.
Effectively, the brand is no longer present as the graphical design of a package is harmonised across competitors, with all competitors' packages made to look exactly the same, apart from the product's name in a standardised font.
But with only a name and no brand, consumers' ability to distinguish one product's story from another in a crowded and converging market is severely inhibited, undermining consumers' ability to fully understand their product alternatives and pick the right product for their needs and wants.
Is a plain-packaged product a premium or economical product? For whom is it for? Heavy or light users? Professionals or amateurs? How might a consumer identify with the product? And what will the product communicate about its owner?
Often, no-brand products are seen by consumers as being "cheap", meeting only basic or minimum product performance standards. They can also be associated with counterfeits.
Making brands invisible in a product category could lead firms to stop investing in the further improvement of products in that category.
Because companies largely lose the utility of their products' stories with plain packaging, they can lose the financial incentive to innovate and exceed minimum product standards for the benefit of customers.
If the use of brands in a given product category is not protected, then consumers' product choices are likely to be less informed, continuous improvement as well as innovation in that category is at risk and brand-owners' often very substantial investments in their brands are devalued.
The writer is a professor of marketing at the University of Manchester This article appeared in The Business Times on Thursday.
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