Thursday, August 16, 2018

Brand Unawareness

A fellow shopping for auto insurance asked an unusual question: what repair shop would we use in his location for body work.   Some years ago, he had an accident and was sent to a shop that did rather a poor job, leaving him so displeased that he changed insurance companies.   And then, when he had another claim, the new insurance company sent his car to the very same body shop for repairs, and he was again disappointed.  He wanted to change insurers again, but wanted to make sure that the new company would not send him back to the same shop.

In the years I spent in the insurance business, I had listened in on many phone calls – a few hundred or so – and this is the only one I can recall in which a shopper took this level of interest in our suppliers.   Everyone cared about the price, and to a lesser degree about the kinds of coverage that price included, but nobody seemed particularly curious about exactly how the benefit of the product would be delivered: what company is really going to do the work that they are paying for in advance?

There are many buying situations in which consumers are unaware of the brands they are purchasing when the company with which they are directly transacting is merely passing on the product of another firm.   No insurance company, to my knowledge, has a nationwide network of repair centers that it owns and controls, but sends claimants to a local provider.   And where the product is a good rather than a service, the invisibility of its providers is clear: you have no idea what brands you are consuming when you order a meal in a restaurant, nor what company refined the copper in your computer.  You are only aware of the brand of the seller, not the maker.

And in the present day, where most firms are vertically dis-integrated and business operations are outsourced, chances are that when you consume any product, you are consuming dozens or hundreds of brands that you are not aware of.   The more complex the product, the more hidden brands you are consuming without being aware.  I would venture a guess that no-one, ever, has investigated the full supply chain of every product they use – there simply isn’t enough time in the day.

That’s not to say that the brand of a supplier is of no value – it is of great value to their direct customer, the reseller, though invisible to the ultimate consumer.  And in this space, the values of the reseller are significantly different: is the supplier reliable, will delivery be timely, is the quality of goods consistent, and so on.   These are entirely different to the values that customers espouse, or pretend to espouse, in evaluating the brand of the reseller.   They are generally concerned only with the last link in the supply chain.

Thursday, August 2, 2018

Targeting the Gullible Market

A brand is trusted by its existing customers because of its past behavior: if the brand kept the promises it made, then it is trusted to repeat the same behavior in the future, and this trust extends to any new promises that the brand makes to the customer that has already experienced its reliability.  But when approaching a prospect, who has not interacted with the brand, earning trust is difficult – the brand has not had the opportunity to keep its promises to the prospect, and the promise itself is not trustworthy because it comes from an unknown brand.

Granted, some level of trust depends upon the trustor – whether or not the prospect has a trusting nature.   In general, a brand that approaches any market can depend upon the trust of the most gullible members of that segment – but a more measured approach would consider the qualities of an individual who will trust without experience and seek to define a target market in which gullibility is baked in.

The inherent problem is that gullible people are not respected people – their peers and acquaintances know them to be exceptionally gullible and do not put much credit in their endorsements.    In that way, a brand that targets the gullible may have some success in gaining the initial trust of people whose recommendation carries little weight with the rest of the market.   Hence the short-term and unsustainable success of many new products.

And even the gullible market segment is not sustainable: the most gullible individuals can be fooled once into putting trust in a brand – but if the brand fails to keep its promise to them, then it will be difficult to make a second sale even to the same individual.   They are likely to extend credit to brands once, but not a second time once their trust has been violated.

One notable exception are individuals in whom there is an unfortunate coincidence of gullibility and narcissism: the person who has been tricked, but whose ego will not allow them to admit that they have been tricked.  These individuals will give rave reviews of horrible products, pretending to be satisfied so as to avoid admitting having made a mistake.  Going by the number of five-start product reviews on websites, there are quite a few of them, who feel compelled to repurchase and advocated for a bad product to maintain their self-esteem.

But, again, this leads to the problem of second-hand trustworthiness: it is not only the brand, but its users and advocates, that must be regarded as trustworthy in order for the brand  to gain acceptance in the broader market.  The testimony of dupes and fools is no more convincing that first-hand promises made by a brand, and it may in fact be more damaging to have the wrong kind of brand advocates.