Walmart Makes Brand Names Irrelevant

A couple of weeks ago, I explained how Toyota's quality problems and Apple's product naming gaffe illustrated how "branding" had become irrelevant. My argument was that brand, while still important, was created by the customer experience, not by marketing activity.

As such, I argued that marketing money spent on branding would be more wisely spent in more measurable marketing activities like lead generation, especially in cases, like big-ticket consumer products and most B2B products and service, where a sales professional is necessary to close a deal.

That post generated a firestorm of comments, apparently from people who have built their careers in brand marketing. While none of them were able to make the case that branding was valuable for B2B products and services, they were able to construct a half-way reasonable argument that branding might be useful when it comes to consumer products.

Walmart just proved them wrong. According to the recent article "Dumped! Brand names fight to stay in stores," retail stores, led by Walmart, are busy pulling dozens of brand-named products off their shelves. In some cases, they're limiting the number of brands that they'll display and in others only offering their own "store brands."

Now, while it's true that store brands do involve some "branding" (they are often packaged in a similar way to the "name brand" products, for instance), it is clear that Walmart no longer believes that consumers simply will still shop at Walmart, even if they can't get their "favorite" brands. Walmart has, in fact, concluded that brand loyalty is irrelevant.

Apparently all that high-priced "branding" (involving umpteen billions of dollars over the years) is less important than the customer experience of shopping at Walmart. Walmart has realized that shoppers wil buy "whatever" brand because the Walmart customer experience ("everything in one place really cheap") is what is really important.

With this move, Walmart has essentially declared that branding is dead, even for consumer products. And it's questionable if it was ever alive in the first place for B2B products. And it's almost always a lousy investment compared to lead generation with products and services that require a sales force.

What does this mean for sales professionals? Directly, not much, since the only ones concerned are those who sell wholesale to retail outlets. But the growing perception that many "branding" investments aren't playing off -- an inevitable result of this kind of brouhaha -- will have an enormous impact on how companies spend money in order to generate sales.

In many firms, marketing groups have used the "branding" mantra as a way to position themselves a "strategic" and therefore too important to be measured on results. MBA-addled C-level execs drank the "branding" kool-aid, resulting in ridiculous spending on marketing activities that had no measurable impact on sales.

As companies finally realize that customer experience (NOT the marketing) creates the brand, companies will increase spending on marketing activities that help define or redefine that experience. For products that require a sales force, that will mean MORE spending on lead generation, which consequent increase in revenue -- always a good thing.

Marketeers will no longer be able to trot out exceptional examples like Coke and the success of "branding" in the "Mad Men" era in order to justify spending exorbitant amounts of money on "branding." Instead, they will have to find other ways to add value.

What amazes me is that the concept of branding has hung on for so long. Today, there are literally tens of thousands of brands, all competing for the same attention span of a consumer who is completely overloaded with information. The only brand that matters today is the brand that's connected to the customer experience.

To summarize:

• Customer experience with the product, not marketing, creates the brand.
• Brand isn't important as before because there are now too many brands.
• Spending money on "branding" is wasteful, irrelevant or counter-productive.

READERS: Do you "get it"? Or are you still determined to gnaw on the bones of a form of marketing whose day has come and gone?