One of the main purposes of branding, co-branding, licensing, marketing, and advertising is to foster a relationship between the consumer and the product or service being promoted. In fact, brand equity is created by consumers themselves as they are the ones who attach value to brands.
This explains why licensing itself is a $20 billion dollar industry globally. Licensing is essentially the act of renting the emotion engendered by a logo, picture, or design of a well-known brand in order to allow a lesser-known or less popular brand to hopefully sell more of a product or service. A licensing agreement is established for several reasons: to generate more revenue, to extend brand and product lines, to expand brand distributions, to boost core brand value, to enhance brand merchandising, and to regulate the use of brand images.
2017 has been an interesting year for brands and the retail industry as a whole. Sales have plummeted at once-popular brick-and-mortar stores like KOHL’s, JCPenney, Macy’s and J.Crew, just to name a few. This can be attributed to shifting consumer preferences and the ease and convenience of online shopping and the increasingly popular direct-to-consumer business model.
Last week, I attended a summer program for high school entrepreneurs. While in an advertising lecture, the instructor asked what words or images come to mind when someone says “Coca-Cola”; to which students replied by saying: “refreshing”, “cool” (literally and figuratively), “beach”, “relaxation” and “sunglasses”. Coca-Cola’s goal is to be ubiquitous and make consumers think of their brand as a lifestyle of fun, relaxation, and enjoyment.
There’s a new company out there that will likely influence the way consumers think and feel about brands.
Meet Brandless, the San Francisco-based startup that is disrupting not only the grocery and personal care product industry, but also the branding industry as a whole. Brandless sells everyday items from peanut butter to mac-and-cheese just like major brands like JIFF and Kraft do-except there’s no explicit brand label. And everything is $3. Oh, and all of its transactions are made online.
When interviewed, co-founder of Brandless, Tina Sharkey said “We’re not anti-brand, we’re re-imagining what it means to be a brand.”
This begs the question: What exactly does it mean to “be a brand”? and Is it really possible to be a brandless brand?
In their purest form, brands go beyond mere pieces of intellectual property; the behavior and actions of companies and firms are influenced by their brand. The spending choices of consumers are also influenced by brands. This is because brands, like names, create identity; this is what it means to be a brand.
If you think of brands as assets, this will help you understand the immense value that brands have. In the world of finance and economics, assets are investments that put money into your pocket; while liabilities are the opposite. Brands are a special kind of asset because they are lasting. Buildings, employees, and executives come and go. Brands outlive them all. In fact, these physical aspects of a company or firm (the buildings, employees, and executives) can sometimes be liabilities. Negative PR and media, poor executive leadership and management, irresponsible employees, and decrepit facilities can affect a company or firm, and even cause sales to plummet.
Businesses exist due to the basic concept of supply and demand. Brands are integral to businesses because they create and secure consumer demand.
In essence: Create a strong brand, and you will have strong consumer loyalty (and sales). This is essentially why mergers and acquisitions, licensing and co-branding exist.
The hurdle that I anticipate Brandless will have to jump over is how it will convey to consumers how their brandless brand is one they can trust for now and for years to come.