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Twilight of the Brands - A MUST READ

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  • Faust
    kitsch killer
    • Sep 2006
    • 37852

    Twilight of the Brands - A MUST READ

    This is a must read for every designer out there. It is true that fashion, as the author points out (when he refers to luxury) is more affected by brand loyalty, but designers should beware that if you put out low quality products at high prices relying on brand loyalty, you might be in for a rude awakening one day.

    Original article on the New Yorker site

    TWILIGHT OF THE BRANDS
    by James Surowiecki
    FEBRUARY 17, 2014

    Twelve months ago, Lululemon Athletica was one of the hottest brands in the world. Sales of its high-priced yoga gear were exploding; the company was expanding into new markets; experts were in awe of its “cultlike following.” As one observer put it, “They’re more than apparel. They’re a life style.” But then customers started complaining about pilling fabrics, bleeding dyes, and, most memorably, yoga pants so thin that they effectively became transparent when you bent over. Lululemon’s founder made things worse by suggesting that some women were too fat to wear the company’s clothes. And that was the end of Lululemon’s charmed existence: the founder stepped down from his management role, and, a few weeks ago, the company said that it had seen sales “decelerate meaningfully.”

    It’s a truism of business-book thinking that a company’s brand is its “most important asset,” more valuable than technology or patents or manufacturing prowess. But brands have never been more fragile. The reason is simple: consumers are supremely well informed and far more likely to investigate the real value of products than to rely on logos. “Absolute Value,” a new book by Itamar Simonson, a marketing professor at Stanford, and Emanuel Rosen, a former software executive, shows that, historically, the rise of brands was a response to an information-poor environment. When consumers had to rely on advertisements and their past experience with a company, brands served as proxies for quality; if a car was made by G.M., or a ketchup by Heinz, you assumed that it was pretty good. It was hard to figure out if a new product from an unfamiliar company was reliable or not, so brand loyalty was a way of reducing risk. As recently as the nineteen-eighties, nearly four-fifths of American car buyers stayed loyal to a brand.

    Today, consumers can read reams of research about whatever they want to buy. This started back with Consumer Reports, which did objective studies of products, and with J. D. Power’s quality rankings, which revealed what ordinary customers thought of the cars they’d bought. But what’s really weakened the power of brands is the Internet, which has given ordinary consumers easy access to expert reviews, user reviews, and detailed product data, in an array of categories. A recent PricewaterhouseCoopers study found that eighty per cent of consumers look at online reviews before making major purchases, and a host of studies have logged the strong influence those reviews have on the decisions people make. The rise of social media has accelerated the trend to an astonishing degree: a dud product can become a laughingstock in a matter of hours. In the old days, you might buy a Sony television set because you’d owned one before, or because you trusted the brand. Today, such considerations matter much less than reviews on Amazon and Engadget and CNET. As Simonson told me, “each product now has to prove itself on its own.”

    It’s been argued that the welter of information will actually make brands more valuable. As the influential consultancy Interbrand puts it, “In a world where consumers are oftentimes overwhelmed with information, the role a brand plays in people’s lives has become all the more important.” But information overload is largely a myth. “Most consumers learn very quickly how to get a great deal of information efficiently and effectively,” Simonson says. “Most of us figure out how to find what we’re looking for without spending huge amounts of time online.” And this has made customer loyalty pretty much a thing of the past. Only twenty-five per cent of American respondents in a recent Ernst & Young study said that brand loyalty affected how they shopped.

    For established brands, this is a nightmare. You can never coast on past performance—the percentage of brand-loyal car buyers has plummeted in the past twenty years—and the price premium that a recognized brand can charge has shrunk. If you’re making a better product, you can still charge more, but, if your product is much like that of your competitors, your price needs to be similar, too. That’s the clearest indication that the economic value of brands—traditionally assessed by the premium a company could charge—is waning. This isn’t true across the board: brands retain value where the brand association is integral to the experience of a product (Coca-Cola, say), or where they confer status, as with luxury goods. But even here the information deluge is transformative; luxury travel, for instance, has been profoundly affected by sites like TripAdvisor.

    For consumers this is ideal: they’re making better choices, and heightened competition has raised quality and held down prices. And they’re not the only beneficiaries; upstarts now find it easier to compete with the big boys. If you build a better mousetrap, people will soon know about it. A decade ago, personal-computer companies like Asus and Acer had almost no brand identity outside Taiwan. Now they are major players. Roku, a maker of streaming entertainment devices, has thrived even though its products have to compete with similar ones made by Apple (which is usually cited as the world’s most valuable brand). And Hyundai has gone from being a joke to selling four million cars a year. For much of the twentieth century, consumer markets were stable. Today, they are tumultuous, and you’re only as good as your last product. For brands like Lululemon, there’s only one consolation: make something really great and your past sins will be forgotten. ♦
    Fashion is a form of ugliness so intolerable that we have to alter it every six months - Oscar Wilde

    StyleZeitgeist Magazine
  • michael_kard
    Senior Member
    • Oct 2010
    • 2152

    #2
    To be honest, I'm not convinced this is at all relevant to fashion. While comparing and reviewing may work when you want to buy a TV or a car, but there are simply too many parameters to consider when it comes to clothes. For example, several brands have been expressly criticised for their construction in the forums yet people still buy their products.

    Besides that, there have been numerous brands that have been diffusing their image to the point of disbelief with no signs of sales decreases. Givenchy's sweaters and tees are depressingly low quality, while Rick x Adidas may demonstrate that a designer's authority can convince people to buy anything.
    ENDYMA / Archival fashion & Consignment
    Helmut Lang 1986-2005 | Ann Demeulemeester | Raf Simons | Burberry Prorsum | and more...

    Comment

    • Dorje
      Senior Member
      • Oct 2013
      • 284

      #3
      Good article and I agree... I also hope fashion houses read it too because quality is not assured when paying high prices. I recently ordered a pair of Ann D black coated jeans and when I got them I could not have been more disappointed. They were horrible quality in all aspects, it was just sad. I also have a black coated Nudie jacket and it is far better quality than those Ann D jeans. I was happy I could easily return them.

      As the article says, it also gives an advantage to startups which I think is great. There are many cottage industries being built up by the internet in many different areas, most are direct marketed to the consumer which reduces the cost of the item considerably.

      edit... to be fair to Ann D I also have a top that is very nice and I would buy again... but the pants will make me think twice about future purchases from her house.

      Comment

      • Shucks
        Senior Member
        • Aug 2010
        • 3104

        #4
        this is a good article. good points about the erosion of market-total brand equity as a result of increasing transparency. however, not convinced that information overload does not exist, nor that all consumers are actually interested in fully debunking the myths they have built their identities around. of course they would never admit to this:

        Only twenty-five per cent of American respondents in a recent Ernst & Young study said that brand loyalty affected how they shopped.
        but as a near-future scenario (one of several possible), it is a well-described one - the tendencies are there for sure.

        Comment

        • arby2001
          Senior Member
          • Jan 2011
          • 102

          #5
          I used to purchase my everyday sneakers from this japanese brand called visvim, which some folks here should be familiar with. Back in the day I found it to be the pinnacle of well made, very comfortable and unfussy footwear. Prices too were reasonable, something like 300 to 350 usd for full leather on rubber sole. It lasted 5 years with constant wear.

          My converse on the other hand look like they're ready to be discarded even before a year of wear. You do the math.

          Nowadays, visvim is a japanese flagship brand. But while prices have doubled I find the quality of their stuff has gradually eroded. Sometimes it is not in the best interests of the consumer for a brand to be recognised as a major player in the market.
          too skinny for rick

          Comment

          • Faust
            kitsch killer
            • Sep 2006
            • 37852

            #6
            This unfortunately has become a common trend. There was an article in the Economist years ago that I used to teach at Parsons about how brands serve as markers of quality for consumers, which was either very naive or purposeful misleading (given the nature of the Economist editorial direction, I figure it's the latter). It was an answer to Naomi Klein's No Logo. Klein preceded to excoriate it in the best possible manner. I'll see if I can dig up the links.

            What I see often happening is the reverse, as arby describes above. A brand builds itself with quality product, builds a buzz around its esthetic/ethos/other intangibles, then proceeds to inflate the prices while reducing quality, thus vastly increasing its profit margins. Consumers get baited for a couple of years, but they will eventually move on. Consumers may be stupid, but they are not that stupid.
            Fashion is a form of ugliness so intolerable that we have to alter it every six months - Oscar Wilde

            StyleZeitgeist Magazine

            Comment

            • Shucks
              Senior Member
              • Aug 2010
              • 3104

              #7
              sometimes drops in quality when volumes increase are also due to lack of availability of skilled craftsmen (hence bottega veneta's own artisan training programs) or materials. it can also be because of higher pressure on production facilities, leading to shortcuts in manufacturing / quality control.

              not saying this is USUALLY the case, but it happens...

              Comment

              • cjbreed
                Senior Member
                • Feb 2009
                • 2712

                #8
                Originally posted by michael_kard View Post
                To be honest, I'm not convinced this is at all relevant to fashion. While comparing and reviewing may work when you want to buy a TV or a car, but there are simply too many parameters to consider when it comes to clothes. For example, several brands have been expressly criticised for their construction in the forums yet people still buy their products.

                ....
                yes but it won't last forever. and many of the early adopters and buyers have found their enthusiasm waning.

                it happens just like this:
                Originally posted by Faust View Post
                .....

                What I see often happening is the reverse, as arby describes above. A brand builds itself with quality product, builds a buzz around its esthetic/ethos/other intangibles, then proceeds to inflate the prices while reducing quality, thus vastly increasing its profit margins. Consumers get baited for a couple of years, but they will eventually move on. Consumers may be stupid, but they are not that stupid.
                the 2 labels that i have a good deal of personal experience with that i've seen maintain pretty consistently high quality garments with respect to fabrics + construction (leaving ccp out of course) are m.a+ and label under construction. this only makes sense though, i mean its kind of their thing, but i am thankful they have stuck to their original guns...
                dying and coming back gives you considerable perspective

                Comment

                • stagename
                  Senior Member
                  • Oct 2011
                  • 497

                  #9
                  The gap between a fall in perceived (or actual) quality and changes in consumer behaviour is about 2 years in the auto industry. I can dig up the article if there's a demand.

                  That being said, and as Shucks mentioned I believe, the car market is a very well-documented one, and also one where consumers might be assumed to be more rational (although we might disagree on this). Still, consumers can go and buy the Consumer Report car edition, or go to Edmunds, or read reviews online, whatever.

                  Fashion is slightly different on this end. You can't really go on epinions and google Rick Owens FW2013 and get reviews of the quality of the collection. Where do you get your information from?

                  More, and as I think Fuuma might have mentioned at some point on this forum, the assumption that consumers pay a premium for fashion brands for their quality is probably erroneous. There are other variables leading to brand equity (brand image for example), so brands could indeed keep their equity no matter how crappy their products are ...

                  Comment

                  • Dorje
                    Senior Member
                    • Oct 2013
                    • 284

                    #10
                    Originally posted by stagename View Post
                    so brands could indeed keep their equity no matter how crappy their products are ...
                    No, I think people will stop buying the label eventually.

                    Comment

                    • unwashed
                      Senior Member
                      • Dec 2008
                      • 694

                      #11
                      I do really care for the quality, but in the end I could place design over quality when I know quality will be low and have to prioritize, this only with clothing.

                      With electronics/household appliances/construction materials etc. I always check for quality reviews.

                      But I think the larger the scale items are manufactured the less quality control is applied. Where in small/made-by-hand factories there is a lot of control over the end-product and the complete production process, in businesses where part/all is outsourced the quality will degrade. I also think that the workers in large factories do not care/care less about the brands philosophies and quality as they're just waiting to clock out the end of the day.
                      Grailed link

                      Comment

                      • stagename
                        Senior Member
                        • Oct 2011
                        • 497

                        #12
                        Originally posted by Dorje View Post
                        No, I think people will stop buying the label eventually.
                        Yes that's a pretty strong argument you have here Dorje. ;)

                        Comment

                        • michael_kard
                          Senior Member
                          • Oct 2010
                          • 2152

                          #13
                          I don't see how so many people care so much about quality as you guys say. On an everyday basis, I see people buying expensive things purely based on the way those look. Without having any evidence to back this up other than my personal experiences, I would say that 80-90% of luxury consumers are essentially high street consumers with a larger budget. The short-term influence of seasonal trends is still a major force in their purchasing decisions, however they buy Rick Owens and Givenchy instead of Zara. In this sense, quality is simply not a relevant priority.
                          ENDYMA / Archival fashion & Consignment
                          Helmut Lang 1986-2005 | Ann Demeulemeester | Raf Simons | Burberry Prorsum | and more...

                          Comment

                          • michael_kard
                            Senior Member
                            • Oct 2010
                            • 2152

                            #14
                            Originally posted by Dorje View Post
                            No, I think people will stop buying the label eventually.
                            How do you explain Givenchy then? Tisci's first few collections were undoubtedly better made and aesthetically superior to the current stuff. In fact, Givenchy's recent offerings demonstrate a certain progression backwards, where their own ideas are watered down to end up looking like OAK or something. At Luisaviaroma, the most 'intricate' piece from SS14 is a nylon parka with a retail of just under 5k. Do you think this is simply 'cos people haven't yet realised the brand's claims of quality etc are not really there?
                            ENDYMA / Archival fashion & Consignment
                            Helmut Lang 1986-2005 | Ann Demeulemeester | Raf Simons | Burberry Prorsum | and more...

                            Comment

                            • cjbreed
                              Senior Member
                              • Feb 2009
                              • 2712

                              #15
                              i think michael has a good point here. people buy crap quality "fashion" all the time because it is "on trend" or "hot this season". and they always will. but the crap itself changes, and the labels change. and even the most moronic consumer will hesitate to buy from a label again if they have had consistently bad experiences. BUT, on the other hand, for some people everything is fast fashion and literally the only consideration is if it is the newest latest priciest trendiest thing
                              dying and coming back gives you considerable perspective

                              Comment

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