Market ChangesBy Tom Dougherty
9 July 2014
Market Changes. Manufacturing Changes
Market Changes. Branding In the U.S.
All you have to do is look around at the manufacturing jobs that have been running like a river from our own shores to see the problem in very real human terms.
Brands are developed so that the manufacturer is able to increase margins and preference over competing brands.
The difference between the price point of a branded product and a generic rip-off is the only real measurement of brand equity. The same changes can be seen in the U.S. consumer market.
Market Changes. The U.S. Consumer Market
The average brand manager and brand expert would not argue with this measurement. But, they would argue with the conclusions. They can plainly see that their margins are dissolving right in front of their eyes. In the US consumer market, it is no longer the name brands that set the price point. It is the generic fighting brands.
The reason is that they believe the only way they can compete with cheap imports is to make manufacturing cheaper. This is like taking an aspirin to relieve the headache caused by a brain tumor. It hardly deals with market changes. It might give a short-term pain relief but the suffering will return soon and often with a greater vengeance.
Look at Textiles as an example of market changes
For example, textile manufacturers have shut their doors right and moved offshore to tap into cheaper labor. The reason? They are unable to compete with the price point set by the cheaper imports.
Instead of looking at their marketing departments and pointing the finger of blame squarely where it belongs — on the marketing departments total failure to create and maintain a brand — they blame it on the American factory worker.
And the wages they must pay to employ him.
But Fieldcrest Cannon did not go out of business because we preferred cheaper versions. Instead of developing real brand equity, it followed the old stupidity of advertising’s unique selling proposition. And told us of all the generic product benefits that its textiles had like color, size, softness, cotton content and absorbency. it never reacted to market changes.
These are simply table stakes, attributes that are required for the simple entry into the textile marketplace. Where was the customer in all this? Where was the brand?
The Auto Industry
The auto industry became the next manufacturing sector to feel the results of brand delinquency. Market changes are always reactionary for them.
There was a time when an owner of a Ford or Chevy thought the brand said something about themselves (notice we did not say “said something about the car”).
Today, consumers see no real difference in the automobile brands (there are a few minor exceptions — HUMMER for the extravagant nouveau riche, Volvo for the safety conscious family, and BMW for the successful for example).
They choose a model type first and the parent brand offerings are then compared by attribute and price (sounds very familiar doesn’t it?).
Their first question on the automotive decision tree is —not what brand of car do I want to purchase – “do I want an SUV, Mini-van, compact, truck etc.?”
The actual brand is the second or third consideration on the list as the buyer test-drives all or most of the category offerings.
One automobile manufacturer declared that it was going to pursue this new order and set its offerings as separate brands.
This foolhardy approach relegates brand equity to the back shelf and forces the automobile manufacturers to compete on an amenity and price platform only or forces the manufacturer to support a myriad of brands when it was unable to support even a single brand.
This is not a result of an emerging marketing trend it is the result of no brand planning and an almost total lack of understanding as to what these brands mean about me — the customer.
Airlines are in the same mess in terms of market changes. Aside from Virgin Atlantic (fun and sophisticated), British Airways (the seasoned international business traveler) and Southwest (the individual that knows what is really important). No airline has any brand at all today. (A more detailed study about the Airline industry can be read here)
Choices are made solely on price and route availability nothing more. Instead of addressing the fundamental problem of a lack of brand, the airlines decided to treat the symptom rather than the cause. And, they developed frequent flyer programs in order to snare the loyalty of the traveling public.
They too are not table stakes and the savvy traveler belongs to all of the mileage clubs. All it has managed to do is marginalize the airline brands even more and make the would-be traveler more retail conscious than ever.
This has become even truer with all the consolidation. There is less choice after the mergers of Delta and Northwest, United and Continential and now American and US Air.
Advertising Is A Problem coping with market changes
If American businesses plan on competing in the new world order and to do so by employing American workers then they had better address the basic problem with their brands (an over reliance on creative advertising vehicles) and develop a sound brand strategy.
They need to infuse the customer back in the brands, giving the customer an image of himself or herself that they will covet and pay more to own or use.
Unless this happens, cheap imports and overseas manufacturing will set the price platform. And, while our market shelves will be flooded with cheaper products, we will all be unemployed and therefore unable to buy a thing.
If American-made brands are to survive and adapt to market changes, we must sell more than category attributes so that we might be able to command the prices that enable us to employ American labor.