The Big-Brand Dilemma

Big brands are having some difficulty in the new economy.

Why? We think it’s because of the fundamental change in the way the media has changed.

It used to be Big Brands went well with Broadcast Media. That’s when broadcast media was the only place buyers could get information about products sold. What do we mean by broadcast media?

  • TV
  • Newspapers
  • Big Events
  • Magazines
  • Blimps
  • Radio

All of these media outlets were designed to take a limited number of messages and broadcast them to millions of viewers/listeners/readers. That’s the “broad” in broadcast.

Now things have changed. The internet allows for direct connection with people. Millions of web sites, YouTube videos and blogs “cast” to millions of users. There is no “single” place that everyone looks to for information, and this creates a problem for Big Brands.

In the past, people viewed brands as the way they could decide on quality. If you liked the brand, you were willing to buy another product from the same brand. Big brands stood for quality. Unknown brands were risky, and quality was unknown.

Now the concept has flipped. People want quality and they want to “discover” products that are superior to the Big Brands. In order to hold onto market share, the Big Brands need to flood the market through as many sales channels as possible and are now forced into discounting product to make sales targets. They seem to be in a “death spiral” because their value as a brand is now working against them in a marketplace where buyers can discover and purchase top-quality alternative products.  And the buyers today want to do this.

For wine purchases, people want to learn the backstory behind the product and share the experience with friends and family. No one wants to take a “house-brand” or Big Brand bottle of wine to a friend’s house for dinner.  They want to arrive with a wine they “discovered” that tastes like a much more expensive wine. A $12 bottle that tastes like a $25 bottle.

As the on-line discounters get into wine sales, they will first start selling the Big Brands, because they still have “pull” in the marketplace. Of course, these brands will be discounted, because that’s the value the big discounters provide. This means further decreases the perceived brand value which causes buyers to abandon the brand and seek out something better and special instead.

As has been reported, big brands like Budweiser, are facing declining sales. Gone are the days when people gathered for Monday Night Football where everyone remembers “This Bud’s for you”. People want to feel special and have special products. That’s why we created Tier3, so we can help the channel deliver special experiences through private/discovery products that include a Social-Media-Wrapper with a story told directly to the consumer at “the moment of purchase”. The world is moving in this direction. Ask a Big Brand owner.

Some suppliers are creating an alternate path for their product. See Discovery Brand Strategy.