Why Brand Value Can Matter Most When it Doesn’t Seem to Matter at All.
Shakespeare’s Juliet famously argues that names don’t matter: “What’s in a name? A rose by any other name would smell as sweet.” In other words, calling a rose by any other name–whether a “dandelion” or “doughnut”–won’t change the way the flower effects our sense of smell. Juliet’s line presents a classic take on the arbitrary character of names. Names are nothing more than human inventions that refer to real things. As such, names obviously don’t change the reality of things themselves. It’s common sense.
Then again, what we call a “dollar bill” is more than a piece of paper. The Mona Lisa is much more than a bunch oil paint smeared on an old canvas. While names are aribitrary, they are not trivial. Things are things, but names and labels shape how we experience the meaning of these things. I don’t know about roses, but a car by another name can be in fact feel much sweeter.
So what’s in a Brand? A lot.
Why Brand Value Can Matter Most When it Doesn’t Seem to Matter at All
Let’s start with a tale of brands: It’s from a book entitled, The Reality Test by Robert Rowland Smith. In it, Rowland relates the story behind his recent purchase a new car. Before arriving at his final decision, Rowland had boiled his choice down to two very different options: A BMW and a Skoda. Now, for Rowland, the decision holds deeper meaning. More than a choice between two different cars, Rowland sees his options as representative of two distinct forms of value:
1. The BMW offers the emotional value of a brand;
2. The Skoda offers the rational use-value of function.
However, as I will explore, Rowland’s understanding rests on a false opposition. Rowland believes there’s an absolute distinction between the two forms of value: He believes you can choose between either brand value or functional value. I disagree. I believe intangible needs that drive brand value always play a role in a purchase. In fact, brand value may matter most when it doesn’t seem to matter at all. But I’ll get to that part soon enough.
First, let’s get back to Rowland’s options: The BMW and the Skoda. Certainly, the distinction in names telegraphs two very different value propositions: The BMW, an instantly recognizable, high-prestige, global luxury brand; and the Skoda, a relatively obscure economy auto-manufacturer based in Eastern Europe.
BMW meets Skoda
Manufactured in Germany, BMW assumes the locational value of a national brand built on a long, well-known heritage of German engineering. Then there’s Skoda, a comparatively little-known automaker from Czechoslovakia, a country not generally associated with a standout automotive heritage. Just saying. And while Skoda has in fact been in operation since 1895, making it among the oldest auto manufacturers in existence, the brand does not carry the same recognition. Or maybe it’s just the name: “Skoda.”
The power of brand recognition alone seems to make the choice a no brainer. But things get complicated. Rowland’s options inspire some necessary reflection on the role, meaning, and value of brands:
During the buying process it was that brand issue that vexed me most. On paper, the Skoda was as good as the BMW in almost every department, and better in some. Because what counts as an extra on the German vehicle comes as standard on the Czech, it was also about 30 per cent cheaper. Yet I was worried what the brand would say about me. More precisely, what my friends would say, what the other parents in the school car park would say, what my clients would say. And now I’m worried what my readers will say.
At second glance, “on paper”–that is, based on purely rational cosniderations–the Skoda becomes the better choice. Compared to the BMW, the Skoda offers the same funationality at a lower cost. Even technically, the cars are at least comparable. Remove the labels, and you’re effectively left a choice between two commodities.
All else being equal…
All else being equal, the differences between the options lie in their respective brand value: Brand value speaks to the intangible emotional benefits associated with a certain product, as opposed to the more rational benefits of its functional use value. With respect to the BMW and the Skoda, the differences are obvious: Skoda offers functional value—a prudent blend of price and practicality. The BMW, on the other hand, promises big-time personal and social capital. The Skoda answers a basic need for transportation. The BMW answers high-order, emotional needs related to personal identification, self expression, and social standing. On their own, products offer functional benefits; brands, on the other hand, speak to our deeper sense of self, our values, and our relation to others. Without brand differentiation, products become interchangeable commodities.
The Non-Brand Brand
But here’s where Rowland’s distinction falls short: The Skoda is not simply functional. It too has brand value. Like the BMW, the Skoda also speaks, on some level, to deeper emotional needs. That said, for some, the Skoda arguably answers these needs in all the wrong ways. If the BMW provides owners a path to prestige, the Skoda threatens to take buyers in the opposite direction by potentially lowering it’s owner’s perceived status. (Or at least the owner’s perceptions of perceived status. Or whatever.)
In fact, Rowland’s reflections on the two options significantly speak less to the appeal of the BMW’s prestige, and much more to the author’s “worry” that the Skoda will make him look bad. Rowland does not so much want the BMW brand as sign of prestige as much as he wants to avoid the embarrassment he associates with the Skoda. As means of self-expression, brands have the potential to elevate our social status. However, and perhaps more powerfully, in providing a means of self-expression, brands also have the capacity to either cause or save us from social embarrassment. If brands have the value of making us feel better about ourselves, their greater value may lies in their capacity to keep us from feeling bad. Either way, anxiety regarding issues of social standing and identity can provide the critlcal emotional space in which brands find competitive leverage. Of course, in the case of the BMW, that self-esteem comes at a 30% increase in price.
What’s the Difference?
Either way, the emotional dilemmas of buyer choice speak to the critical role of brand value. Brand value becomes particularly important in an era in which technological developments progressively reduce the technical differences between competing manufacturers. For automakers, technological differences no longer provide the value add they once did. As we have seen in Rowland’s account, a BMW is not really technologically superior to the Skoda, or any other non-prestige brand.
Rowland’s account confirms broader trends. According to McKinsey’s Quarterly
In recent years, the number of car makes and models has grown in every product segment. At the same time, the once vast gaps in quality, performance, safety, fuel efficiency, and amenities have all closed significantly. Although variations in quality and performance persist, the remaining possibilities for differentiating products, and thus achieving competitive advantage, revolve around styling and other intangibles and the emotional benefits they confer on the customer. But instead of attempting to convey these benefits, carmakers spend 55 percent of their marketing budgets – $ 24 billion a year – on rebates and incentives.
As technical differences decline, value increasingly hinges on a manufacturer’s ability to deliver products that offer an effectively cultivated (i.e. marketed) brand experience. It’s not the thing itself that matters, but how consumers experience that thing. (Or maybe, it’s more about how consumers experience their experience of a thing? Just saying.)
The BMW “Civic”
Speaking of brand value, I have this friend–Kyle–who is really into BMW’s. Well, he is really into high-end brands. At least he was. He’s older now. Most of my stories are stuck in like 1995. Back then, Kyle had a ’94 or ’95 Honda Civic Coupe. Or maybe it was a ’93. I don’t know. I’m getting old. Anyway, Kyle was convinced that he could make me people believe his Honda was a BMW. He was pretty proud of the idea. All he needed to do was switch out the logos. I thought he was insane. I was wrong. He pulled it off–I saw him, first hand. People believed Kyle’s Honda was a BMW. (To test his theory, Kyle would actually talk to strangers in the parking lot. That’s the kind of guy Kyle was.) People saw the logo, the brand name, not the car.
Of course, Branding is much more complex than switching logos. After all, people are complicated. And the way they construct the value of a brand experience is also, well, complicated. Rowland, for instance, struggles at first to decide on the meaning and value behind his brand options. The BMW and Skoda each offers a very different brand experience. He simply does not at first know how to characterize these differences. Nor does he know what they mean for his own sense of self.
I’m paraphrasing, but his reasoning proceeds something like this:
Sure, I might pay $20k extra for a car that keeps me from feeling embarrassed at the drop-off line at my kid’s school.”
Then again, do I really want to pay $20k just to keep from feeling anxious about how I look?
In fact, paying $20k for my self-esteem may actually end up making me feel worse about myself…
Wouldn’t I feel better about myself if I could say I’m the kind of guy who doesn’t need a brand to prop up my self-esteem?”
Maybe. But then again, I don’t want to look ‘cheap’—that would be embarrassing…
Who am I, anyway???
OK, I exaggerated that last bit. My point here, however, is that even when rational considerations of functional-value play a role in consumer choices, consumers continue to view purchases as emotional expressions of their own identity and values. Even buying the cheaper, more efficient option involves the kind of intangible emotional dimensions of value often considered the exclusive terrain of brands. While often seen as a purely rational consideration, price carries extensive emotional meaning. Depending on one’s own values, as well as details like cultural context, there is a very real emotional appeal to products that identify buyers with economic practicality.
The Professor’s Busted Old Honda:
I know an old English professor who owns a 20-year-old Honda Civic. He’s very proud of his car. I can tell. He’s also famous, by English professor standards, anyway. He certainly has the means to afford a new Civic. One could are that the value of the old car lies in purely rational considerations: The car works; it’s paid for, thus there is no rational reason to buy something new.
However, for the English Professor, that busted old Civic also has an emotional appeal. No, the car does not plug into his nostalgic for 1997. Rather, it expresses the professor’s belief in a kind of non-materialistic, monastic commitment to a life of the mind–a life that disregards the social capital of prestige. If that old Civic could speak, it would say something like, “This is the car of a guy who doesn’t care about fancy brands and social status… And by the way, that’s Dr. Professor, to you, mister!”
In any event, my point is that pratical, functional benefits–often perceived as contrary to the emotional appeal that fuels brand value–can actually provide another kind of powerful, and very valuable brand story. For some, a practical car signifies “boring and cheap”; for others, that same car presents a heoric brand narrative that situates the owner as an independently minded iconoclast who rejects conventional symbols of social status. The key is not to sell simply on “price” or “function” but to offer a brand story that presents these benefits as values consumers can feel good about.
After all, people don’t like to feel “cheap”—the term suggests a kind of scrooge-like frugality that actually places too much value on money. However, people do value being smart. Meanwhile, over-selling to the appeal of prestige can backfire if customers don’t buy into the concept as a meaningful source of value. Indeed, while impressed by the prestige attached to the BMW brand, Rowland also wonders whether that appeal belies a deeper insult to his intelligence:
Apart from contributing to the cost of the glitzy showroom on Park Lane where I went for my test drive, that 30 per cent differential was the price of my emotions. The implicit calculation BMW were making was that I would spend about that much extra, not to have a better car, but to feel better about myself. So why didn’t I buy it? The BMW brand, I felt, existed to mask the fact that the car didn’t justify the premium. Beneath the thrill at the prospect of owning a new BMW ran the disquieting sensation that I was being ripped off.
As the basis for BMW’s brand value, prestige, for Rowland, only goes so far. In Rowland’s eyes, the BMW brand essentially places a 30% premium on his “emotions.” While tempted by the “thrill” associated with “owning a BMW,” Rowland ultimately opts for the Skoda, a decision that, in his eyes, proudly confirms the wisdom of his practicality: His shrewd capacity to avoid getting “ripped off.”
Is a Brand a Window or a Mask?
Certainly, Rowland’s conclusions regarding practicality make sense. Even those who may question his choice in cars can still see his reasoning. However, Rowland’s thinking also belies some contradictions. By focusing on function, Rolwand sees his purchase of the Skoda as a rejection of brand value itself. In his words, Rowland describes his decision to buy the Skoda as evidence of his ability to see beyond the “mask” of the BMW brand. The implication here is that, because they speak to emotional, not practical needs, brands dupe and mystify. Instead of providing a window into value, brands, according to Rowland, play with emotions in ways that mask real, functional value.
In other words, Rowland see his decision to purchase the Skoda as a rational choice uninfluenced by the apparently unreal, even deceptive, emotional appeal of brand value itself. Yet, Rowland’s views rely on a deceptively reductive view of brand value. After all, Rowland justifies his “practical” purchase in the kinds of emotional terms most often associated with the intangible appeal of brand value. While he avoids the tempting “thrill” of the BMW brand, his purchase of the Skoda answers an equally emotional need to avoid the “disquieting sensation that [he] was being ripped off.” In fact, for Rowland, the so-called “rational” benefits of the Skoda actually speak to a deeper need for self-expression: The purchase is less about simply saving money than it is about confirming a sense of himself as practical, intelligent, and unconcerned by the presumably “shallow” brand appeal of social status. Yet Rowland’s purchase of the Skoda merely exchanges one image for another. Like any brand-driven purchase, Rowland’s decision to buy a Skoda provide a means of confirming a sense of himself in terms of certain values: Rationality, practicality, and more importantly, the intelligence and self-control required to resist the emotional “thrill” of prestige.
Simply put, while framed as a rejection of brand value, Rowland’s decision only confirms the intangible benefits brand provide. Rowland’s decision to reject the BMW brand ultimately confirms a kind non-brand branding: The value of brand narratives that position products as minimal, “no frills” commodities, but which does so in a way that ultimately appeal to emotional, not practical benefits. It’s like the guy who does out of his way to dress sloppy in order to maintain the image of someone who doesn’t care about his image–the move is wholly concerned with image! In the same way, the appeal of the non-brand brand speaks to the need to appear to disregard brand value. It can work. Whether you prefer a BMW, a Skoda, a Honda BMW or a 20-year-old Civic, each presents a unique kind of brand value. Fully harnessing that value simply requires some carefully crafted marketing.
The Swag Test:
One final thought: Here’s an interesting test to evaluate the impact of your brand. Offer your potential or existing clients a hat or some other bit of visible swag that bears your brand. Do members of your target audience want to wear and show off your brand? Do they actively seek to identify themselves with your values and voice? Does your brand provide customers a means of self-expression? Do they want to be part of what you stand for? Do they know what that is? Do they want to hop on your “brand”-wagon?. Certainly, a brand can still be effective without necessarily inspiring that kind of allegiance. But it’s certainly a good sign if they can.