Posts Tagged 'economy'

Metaphors and the American consumer

There is a very fascinating study that gives us a window in the minds of consumers during the current economic latke.  It was done by the extremely smart people at Olson Zaltman Associates.  The name of the study is “The US Economy and Its Impact on Americans”.  You can download it from their website.

This study is also a very good introduction to the ways metaphor shape thought.  It is through metaphors that we can shed light on new ideas.  It is through metaphors that we can make sense of the bits and pieces of information in our lives.  Olson Zaltman use a proprietary and patented methodology, ZMET.  It stands for Zaltman Metaphor Elicitation Technique…I think.  

For my fellow writers and English majors, I acknowledge that I have taken some freedoms with the word metaphor.  I am including analogies and similes under the same umbrella.

What does branding have to do with John Maynard Keynes?

In this post I will attempt to show how branding can make a small but important contribution to getting the economy back on the right track.  The essence of my argument is that branding, done right, can stimulate the desires of people to buy goods and services.  

Why is it so important to stimulate the desires to buy, buy, buy?  Allow me a small digression and I promise to answer that question.

The disastrous state of our economy has made the name John Maynard Keynes safe to say in public again.  He was the brilliant English economist who developed the ideas that helped to pull the US and UK out of the Great Depression of the 1930s.  His best known but now little read work is The General Theory of Employment, Interest and Money.

By coincidence I am very familiar with that book, having spent two years studying it under Sidney Weintraub, who had himself been one of Keynes’ students in the 1930s.  

Keynes was very concerned with “Aggregate Demand” — the sum of all our desires to purchase things now.  He recognized that it was possible for a country to fall into a situation in which the demand for goods and services fell substantially below the supply of those goods and services.  The decline in demand meant a decline in supply as companies cut their output and fired people.  This led to more declines in demand.  The downward cycle, once begun, went on for years.  The way to solve it was to stimulate demand.  If the demand didn’t come from consumers and companies, then it would come from the government.  Thus we get stimulus spending!

Keynes fell out of favor and out of the popular mind during the Supply-Side revolution of the 1980s.  Build it and they will come became our new national mantra.  

Today we are back to Keynes’ insight because demand for goods and services is falling.  People are sitting on their wallets.  Demand is dropping for cars, for flat screen tvs, for vacations.  As a result factories are closing down, companies are laying off workers.  

Which brings me back to the point of this post.  

Companies need better ways to create demand.   That is where Narrative Branding can play a role.  Dollar for dollar, Narrative Branding is the most effective way to stimulate the desire for goods and services.  

The reality is that media budgets are being slashed.  Spending more money is not an option.  

Narrative Branding is concerned with the role of a brand in the life of the customer.  By understanding that role, it is possible to create desire and demand in that customer.  

This is not the same as “differentiating” one brand from another.  It is not about the relationship between one brand and another, the position of one brand vs. another.

Only the government has the resources to stimulate the entire economy.

Narrative Branding makes it possible for individual companies to stimulate desire and demand for their offerings.

Is Brand USA another Banana Republic?

While at lunch today, my companion began to explain how the current economic meltdown has more or less bypassed Central and South America.  The countries there had been through so much economic turmoil of their own over the years that local companies had acquired a certain immunization against the shock.  So the local companies continued to spend on marketing including branding and advertising.

My companion when on to bemoan the situation here in the US.  He observed that US companies are in a state of shock.  They don’t know how to maneuver through economic disaster.  Marketing has been particularly hard hit.   He said that the US has a lot to learn from Latin America.

That got me to thinking.  The stereotype of Latin American countries is a banana republic.  By contrast the USA was the large rich country to the north.   To shed their banana republic image a number of countries, such as Mexico, have undertaken branding efforts to change their image.  They engaged in nation branding.

For many years travel destinations, such as Bermuda or the Virgin Islands, have spun their own brand stories.   The idea of creating branding for travel destinations has gradually spread to other geographies from cities to states to entire countries. This is often known as “place branding” or “destination branding.”

Instead of giving my own definition, I defer to the collective wisdom of Wikipedia for one:

Place branding (also known as destination brandingplace marketing or place promotion) is a relatively new umbrella term encompassing nation branding, region branding and city branding. The term was first developed by Philip Kotler,  and was further researched by Gold and Ward, Simon Anholt, Avraham and Ketter,  Seppo Rainisto, and others. The term “place branding” could refer to a city, country or a tourist destination, and to their competition for tourists, visitors, investors, residents and other resources.

When it comes to nation branding, a good example are the recent campaigns to shape opinion of Hugo Chavez’s Venezuel 

Larger, richer countries have generally not indulged in actively shaping their reputation through the tools of branding.  We can hypothesize several reasons including the already strong reputations of the richer countries and public antipathy to wasteful spending of taxpayer dollars.  

Certainly both of those reasons applied to the USA for many years.  

Then a curious thing happened.  Following the events of 9/11, the Bush administration hired the advertising phenom Charlotte Beers, the retiring chairman of advertising agency J. Walter Thompson.  Her job was to elevate Brand USA.  

How successful was she and the others who followed in her footsteps?  

Not very.  Judging by Simon Anholt’s annual survey, the efforts were duds.  Brand USA has slipped into 7th place while Brand Germany has captured the coveted number one spot.  

You might even say that Brand USA is taking on characteristics of a banana republic.  Our reputation is dropping fast.  We are running huge deficits (actually the deficits are huge numbers but a relatively small percent of annual GDP).  We are seeing the nationalization of major industries such as banks and automotive companies.  High unemployment.  True, the analogy isn’t perfect, but it is useful for understanding our situation today.  

Which brings me back to my lunch and my friend’s observation that US companies could learn a thing or two from companies in Latin America.  Yes, he is right.

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?

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