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Sunday, May 29, 2016

The Uncertain Future of New Brands

For the last few decades, brands have been a very important facet of our U.S. economy.  There was a time when it appeared that generics and store brands would dominate things but brands bounced back in many categories and grew even stronger.

At first the message was that brands must be warm and friendly and then it morphed in to an era that posited that one must have a relationship with their favorite brands. All that appears to be going away according to the futurists out there. It is difficult to argue with them as we appear to be going in to a “personal data economy.”

In previous postings in MR, I have discussed how the Internet of Things, Big Data and on line shopping lead by Amazon.com are turning the media, advertising and marketing worlds upside down. Truly, we are in a transformational era that may well speed up a new economic system and perhaps even social system.

The advent of accelerating technology has changed the way we shop and how we are persuaded what to buy. Many cling to the concept of emotional storytelling remaining the key to consumer communication but I am growing increasingly skeptical of that idea. As online shopping grows, smart data, if you will, should take center stage in many purchasing decisions. Some are forecasting a huge decline in the importance of grocery stores especially in high income, densely populated areas (i.e., Manhattan) in the years to come as many will order their food and other sundries on line or with the help of their “Smart Fridge” that signals when certain items are running low in the household.

Generally, I have found that seismic change takes longer than futurists forecast as consumers, or many of them, tend to lag technology. Millennials, however, are so tech savvy that they are likely to embrace technological advances far more quickly than any previous generation has to date.

So, what does this mean? I return to a theme that I have tried to articulate in several MR posts over the last few years. Established and firmly entrenched brands have to have a tremendous advantage over new products. In an era where commercial avoidance will continue to grow especially among the well educated and affluent, many automatic orders of groceries and personal care products will likely take place with the overwhelming preference going to established brands. Other than in fashion, where trends often seem bubble up quickly without much traditional marketing support, established players will have a huge advantage over newcomers who may not be as well funded as the deep pocketed giants.

Yes, there will be new players who will break through and somehow upset all precedent and succeed. Not to sound cynical but I would bet that they will be bought out by major players in their category if they grow fast and build market share quickly. A billion dollars remains a sizable amount of money and few entrepreneurs will be able to resist a generous buyout.

So, as the retail world unravels or shifts look for the big producers to get larger and even more powerful. Social media is great but it likely cannot level the playing field enough for newcomers to break through and grab big shares from the global giants.

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com

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