The economy, consumer demand and branding

There is something curious happening in the economy today.  Something that we have not seen in 70 years.  Demand is falling.  Consumer desire to purchase things is falling.  Business desire to purchase things is falling.  Everywhere you look people would rather put their money away than spend it.

If nobody is buying, then the economy will continue to contract.

The economist and New York Times columnist Paul Krugman recently wrote, “Once again, the question of how to create enough demand to make use of the economy’s capacity has become crucial.”

So what does this have to do with branding?  Usually we think of branding as driving preference for one brand vs. another.  Underlying this are some assumptions, unspoken, that consumer desires are limited only by their income.  That is why brand positioning is fundamentally about comparing one brand to another.  This concept is labeled “differentiation” in the language of brand positioning.

In other words, we have taken it for granted that consumers want to buy things.    Even in the last couple of recessions consumer demand has held up — people wanted to buy things.  

Today consumers are sitting on their wallets.  Businesses are sitting on their wallets.  Demand is dropping.

In this economy, branding needs to work harder, to serve a different purpose than simply “differentiation”.  Branding needs to create demand.  

Narrative Branding is a method that is concerned with the role of the brand in the life of the consumer.  A compelling narrative does more than change minds, it changes behavior.  It is more effective at generating demand than the standard brand positioning method.  

This is particularly important for companies in today’s economy.  Marketing dollars that create demand for your offerings are better spent than marketing dollars that “differentiate” you from competitors.  In other words, a company will be better served by using branding to create demand rather than to simply shift preference from one brand to another.

Of course no single company can solve the falling demand problems of the economy.  But if more companies adopt Narrative Branding or other narrative methods for creating and managing brands, there can be a substantial impact on consumer demand.  At a minimum it will create demand for each company’s offerings.  

What are your thoughts on how branding can create consumer demand?