The last few decades saw the rise to power of companies that excelled at branding, but now an article at Chief Executive is asking… are brands dead?
As private label share grows, the competitive landscape requires a new approach by manufacturer brands. Growth in the developed markets will be hard and depends primarily on the ability to launch successful new innovative products and concepts. Given the resources needed to support ambitious new product programs, only brands with adequate size and share can be supported. The rationale to keep weak brands, those without top market share positions, is hard to see in most categories.
Continually finding new products is a challenge for the best of companies. Traditional models of innovation have limitations in producing the required number of new products, and in any case, large companies have never been great at innovation. In 1970, 5 percent of global patents were issued to small entrepreneurs, while today the number is around one-third and rising.
Yes, there has been a power shift but I think an obituary for brands is premature. I think the brands of yesteryear, those focused on basic goods, may well continue to struggle, but in a world where marketing is of increasing importance, I think brands matter more than ever. If we are really moving towards a long-tail economy, a consistent message and a brand that stands for something is important, even if the differences with competing brands are subtle. Branding itself is no longer the competitive advantage it once was, and thus no longer returns above average profit levels, but it has transitioned into a basic business skill than any and every company needs to do well just to stay competitive.