The Role of Brands in Consumer Markets

Brand names offer consumers information and consistency in a complex market.

William G. Stuart is a sales executive living in Cummaquid, Massachusetts.

One criticism of the modern consumer democracy is the plethora of brands and products. Self-appointed consumer advocates compare brand-name products to generic products and determine that the difference in performance does not justify the price. Their conclusion: The brands represent a colossal waste of resources in packaging identity, promotion, and advertising.

These critics fail entirely in understanding the vital roles that brands serve in the modern, consumer-driven economy. Consumers continue to purchase branded products not out of misguided or manipulated habits, but rather because the brand name provides them with two attributes critical to their mission as consumers: product information and consumer protection.

Brands as Sources of Information

Imagine a consumer who wants to purchase an automobile in a market in which automobiles do not have brand names. There is no Taurus, no Cutlass Ciera, no Acura. Instead, her options are among a lot full of automobiles that have no manufacturer identity or brand names. She seeks information to aid her in making her purchase. Some of the information she can gather quickly; she can, for example, look at the various cars on the lot and determine which vehicles meet her preferences for size, style, and color.

Most of the other information, though, she cannot gather by sight alone. How reliable will the vehicle be over time? To answer this question, she must hire a mechanic to inspect the vehicle to determine how mechanically sound it is. The mechanic’s summary will tell her how sound the car is today, but he can only guess as he projects how it will perform over time—after all, he has no industry reports about the long-run performance of specific automobile brands.

Our consumer cannot gauge other aspects of vehicle performance, such as quality of the ride over varying road surfaces and fuel consumption, without experiencing the car firsthand. Thus, she must take an extended road test (perhaps three or four hundred miles) to estimate fuel economy and experience vehicular performance in different driving conditions.

The decision that she ultimately makes will be more of an art than a science. She simply will have inadequate qualitative and little quantitative information on which to base her choice. She may make a good choice, but that outcome will be more a matter of luck than of a solid conclusion based on sufficient evidence.

By contrast, let us shift to the current world, one in which vehicles are branded and positioned to appeal to a certain market segment. As our consumer ponders the decision to replace her car, she begins to notice print and television advertising of automobile brands. As she assesses her needs, she is able to exclude many brands and models from consideration and focus on a few alternatives. Advertising, far from being the manipulative tool that its critics claim, actually transmits important information to her. Advertising places the vehicle in a context (an economy car, a passenger van, and a four-wheel drive vehicle are positioned very differently in advertising) and exposes the consumer to important information about the car (fuel economy, handling, special features).

Her next step may be to review literature in the popular press, including consumer magazines, to determine how the vehicle performs, how it holds up over time and how economical it is to operate. She can find qualitative information (such as the impressions of professional test drivers) and quantitative information (statistical surveys of repair histories and fuel economy) of that brand. This information is statistically accurate but impersonal. She may then choose to speak with a mechanic who services the brand and survey several friends who drive this vehicle brand to obtain their more personal testimonials.

All of these information avenues are available to her because the vehicles are branded. If there were no brands, nobody could compile information accurately. Consumer surveys would be impossible, since there would be no way to distinguish one automobile from another. A mechanic would have no way of distinguishing his impressions of one vehicle from another. And it would be difficult to determine whether a friend or neighbor has the same vehicle as a potential buyer, since it would be difficult to distinguish among cars.

The larger the dollar amount and the more complicated the product, the more important the role that information plays. A consumer purchasing rolled oats, for example, is far less interested in information than is a car buyer. Beyond the basic question of whether the oats are free from contaminants, the purchase is not complicated; a mistake results in a small monetary loss or less enjoyment than anticipated. In contrast, a poor decision about a computer, automobile, house, or business results in greater degrees of consumer discomfort or pain.

Brands as Consumer Protection

A century ago, branding was in its infancy. At that time, people still made most of the products that they consumed (such as food, soap, and clothes) or purchased them directly from producers who were their friends and neighbors. People had faith in the quality and safety of the products because they knew the people who made them.

As our economy became more specialized—a trend that, as Adam Smith predicted, created an unprecedented degree of wealth—consumers were more removed by both distance and time from producers. The introduction of labor-saving machinery, which increased productivity markedly, also dictated the concentration of producers in a manufacturing area. Thus, the village silversmith or baker or cobbler was replaced by a factory that produced a high quality product at a more competitive price. Consumers valued the potential quality consistency and savings, but they no longer knew the people who made their products. Similarly, as individual consumers became more specialized in their roles as producers, they themselves made even fewer of the products they consumed and relied increasingly on other specialists to meet their material needs.

In a large market, consumers do not care who makes their products. In this sense, the market is the great equalizer, as producers of all races, ethnic origins, religions, and genders unleash their creative energies to meet the needs of consumers. While consumers do not care who makes the products, they care very much how the products perform. They want to know that the product they purchase will meet their expectations.

In this consumer environment, brands play a critical role. When consumers first started purchasing more food and raising less themselves, they purchased items from a bulk bin. They had no information about what ingredients the products contained, how safe they were, and how they would perform. Branding created the protection that consumers demanded. The brand name signified a level of quality and consistency consumers could trust. Thus, Quaker Oats, Ivory Soap, and Levi’s instilled in consumers a degree of confidence that their unbranded competition did not.

Defining Brand Expectations

Brands are effective only when the product delivers a consistent level of quality from product to product. McDonald’s delivers the same level of quality regardless of location or time of visit. A consumer may choose not to dine there for a particular meal, but that decision is not a rejection of branding. Rather, it is an informed decision not to consume that expected level of quality on a particular occasion.

Consumer confidence in brands varies with the type of product. Typically, confidence in branded goods such as automobiles, detergents, movies, and clothing runs extremely high. After all, standards can be defined and controlled strictly when the product is produced entirely in one central location and can be inspected before being presented to consumers. These brand names deliver the highest level of consumer confidence. The consumer may accept or reject the product; in either case, the decision is made with a clear expectation about the performance or level of quality of the goods.

Confidence in a product that is composed of a combination of both good and service is somewhat reduced because part of the output cannot be controlled in advance. A McDonald’s hamburger, bun, lettuce, and tomato can be inspected before they arrive at a particular franchise, but other inputs—the actual cooking and preparation, the attitude of workers, the cleanliness of the facility—are presented live to consumers. The challenge the McDonald’s manager faces in making his product the same from day to day and consistent with every other restaurant in the chain is the same challenge that the theater director faces making his live production uniform from show to show and consistent with other presentations of the play elsewhere. The managers who master this challenge reap the spectacular reward of a valuable brand identity, while those who do not perform so well find the brand image tarnished. For every example like McDonald’s, which has mastered this challenge, there are many restaurant or lodging chains whose quality is not consis tent over time and location and thus whose brand name in consumers’ eyes represents a range rather than a fixed point.

Products whose consistency varies from unit to unit have brand names of more limited value to consumers seeking confidence. “Republican,” for example, is a brand name about which consumers (voters, contributors, activists) can make some generalizations, but candidates running under the Republican label may have very different perspectives on problems and very different approaches to solving them.

The trend toward branding is expanding. Buoyed by the success of poultry marketers, beef companies and egg producers now are branding their products. More and more produce is wrapped and branded. Similarly, grocery stores that once sold “generic,” no-brand products (packed in white packaging with black lettering) are now applying their store name as a brand on more and more “house brands.”

These moves, far from being the wasteful, price-raising schemes that critics contend, are a response to needs that consumers in a more complex environment demand: information and consistency. The trend toward branding products, identifying certain characteristics with the brand, and striving toward uniform brand quality will continue as long as consumers continue to seek confidence in the purchase decisions that they make. Brands continue to offer self-regulating, informed consumers both the information and level of quality that they demand in the free market.