Bonfire of the Brands

SAN FRANCISCO (03/07/2000) - A few weeks ago I was in the mood to get lost in a good page-turner. I knew that crime-writer Scott Turow had a new novel out, so I went to Amazon.com Inc. to get a copy. I was about to click on the Order button when I noticed that the book, Personal Injuries, had received a rating of just two and a half stars.

I scrolled down and read some of the reviews readers had posted. A woman from Oregon summed up a lot of the opinions: "The narrative is confusing, the characters are unidimensional and the plot is boring!" Needless to say, I bagged the purchase. My experience should make a lot of companies nervous. It shows, in microcosm, how the Internet can rapidly dissolve the value of brands.

What attracted me to Turow's novel, after all, was the author's name - the Turow brand.

I didn't know anything about the book itself; I just knew Turow had a reputation for writing good thrillers. That's the essence of a brand: It serves as a quick substitute for information that is unavailable or hard to collect.

Whether it's Scott Turow or Steven King, Tide or Nike, Dell or McKinsey, a brand provides buyers with a shortcut through the shopping process. Such shortcuts were valuable when information was sparse and expensive.

But now that the Web provides easy access to rich information on just about every imaginable product and service, buyers have less need for shortcuts. If you're looking for a DVD player, you don't need to take the lazy way out and just buy a Sony. You can go to Epinions.com to compare features and read reviews by actual owners.

And if you're looking for help in installing an enterprise system for your business, a few quick searches can uncover a wealth of information on the experience and track records of IT consultants. In "Cost Transparency: The Web's Real Threat to Prices and Brands" in the March-April issue of the Harvard Business Review, business professor Jay Sinha draws an insightful distinction between physical shopping and Internet shopping.

Physical shopping is highly sensual: Manufacturers and retailers use displays, music, scents, salespeople and other sensory cues to appeal to buyers' emotions. Web shopping is much more rational: Buyers methodically click their way through specifications, ratings and other hard information. Intangibles like brands carry much less influence. The role traditionally played by brands will diminish even further as buyers turn to software agents to do more of their personal and business purchasing. Bots are relentlessly rational shoppers, processing vast quantities of information on prices, features, quality and reliability to find the best deal at any given second - regardless of the name of the product or the retailer. Already, one bot-based company, Priceline.com, is rendering brands invisible to buyers. Does that mean that companies should stop thinking about their brands?

Of course not. In addition to being signifiers of quality and value, brands are also signifiers of image. People wear Polo shirts, drive Mercedes sedans and brandish Nokia phones not only for their intrinsic merit as products, but also to announce something about themselves. As long as people are people, that function of brands isn't going to go away. In fact, with the Web acting as a global conduit for fads and hype, the importance of brands as image signifiers may grow.

But for all the companies that have positioned their brands as shortcuts for shoppers, the Internet will tend to erode their market advantages. And for companies with empty brands - those that provide cover for mediocre products - the erosion will be fast, catastrophic and richly deserved.

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