Brand Marketing = Bad Investment: More Evidence

This week's New Yorker magazine featured an article explaining that the most successful vendors in many product categories are the ones that sell high-end products to a relatively small number of people. The example cited was the iPhone, which generates as much profit for Apple as Nokia's entire cell phone business, even though Nokia sells 20 times as many units.

Sandwiched in this article was this highly interesting observation:

Today, consumers don't need to rely on shorthand: they have Consumer Reports and J. D. Power, CNET and Amazon's user ratings, and so on, which have made it easier to gauge differences in quality accurately. The result is that brands matter less: a recent Nielsen survey found that more than sixty per cent of consumers think that stores' generic products are equal in quality to brand-name ones.

However, if even grocery store shoppers -- arguably the most likely to be swayed by brand marketing -- aren't buying it, then what's the point of spending your marketing dollars trying to create a brand preference?

The answer is simple. If your products (i.e. the entire customer experience you're creating) are virtually identical to the no-name competition, the money that your spending on brand marketing is just being flushed down the toilet.

The only way to create brand preference (and command a higher margin per unit sale) is to offer a better customer experience.

That's the main lesson that we can learn from Apple. When Apple creates a great customer experience, its products fly off the shelves. (Think iPod.) When Apple creates a mediocre customer experience, its products die on the vine. (Think Apple TV.)

In other words, the Apple brand reflects the customer experience, not the brand marketing. While Apple's marketing efforts can help bring some attention to the company's products (good or bad), the buying preference (i.e. brand) proceeds directly from the customer experience.

In the B2B world, that better customer experience can be much more than just features and functions. It can include your sales process, your personality, your ability to provide additional insight, your ability to create a customized solution, etc., etc.

Unfortunately, the business world is full of parasitical marketers pretending that they, by themselves, can create a buying preference through marketing deliverables like advertising, logos, packaging, press releases, etc.

Maybe brand marketing worked back in the day, but in today's information-rich world, it's all about the customer experience.

UPDATE 4/2: I respond to most of the comments to this post in "Brand Marketing = Dead End Career".