Re-engineering brands

By leveraging the capabilities of electronic networks, infomediaries will help undermine the value of brands in conventional markets. They’ll do so by removing the two constraints that make brands viable today, both of which have to do with scarce resources:1. Limited information about vendors.2. Limited “shelf space” for access to products or services.

In the process, they will undermine the two basic planks of a conventional marketer’s power base-control over information and presence – and force marketers to find new sources of economic power. Marketers can either evolve into infomediaries and regain privileged access t information, or they can focus on product innovation and commercialization by developing the skills needed to deliver tangible value back to customers more quickly than anyone else.

For example, when customers lack detailed information about the full range of vendors or the functionality and pricing of their products, a brand becomes a proxy for imperfect information. Rather than overinvesting in collecting difficult-to-find information, customers rely on brands to assure them of a predictable product experience. McDonald’s may not offer the best meal experience, but it does offer a predictable meal experience relative to a no-name restaurant where the consumer may experience either a gourmet treat or food poisoning.

Brands play a similar role with regard to limited shelf space. From a vendor’s viewpoint, brands help “pull” customers into retail stores. In the process, they help the vendor persuade the retailer to dedicate some of its scarce shelf space to the vendor’s products. Similarly, retail brands help customers decide which retail stores to frequent. Given the limited selection that scarce shelf space affords, customers look to brands for assurance that the limited selection will be consistent with their buying preferences.

Infomediaries will help remove shelf space constraints by providing access to an essentially unlimited range of products and services in an online environment. On-line vendors like Amazon.com exploit the economics of networks to offer customers access to any book published (including out-of-print books that have traditionally been the most difficult to find). Infomediaries carry this process one step further-they will enable the customer to search across multiple book vendors, maximizing selection based on such factors as price and shipping lead times.

At the same time, infomediaries will help clients access detailed information about individual products or services through their profiling and agency services. Not only will customers be able to access information from vendors, they will also be able to examine detailed product reviews and evaluations by third-party firms.

Infomediaries will also be able to generate information of their own. For example, a client might want to find out how many other clients of the infomediary have bought a particular brand of┬ácomputer, how many of these computers were returned as defective, and how many of the clients repurchased the same brand of computer. The infomediary’s profiling database could readily provide this information.

As reverse markets erode shelf space and information constraints, does this trend mean that brands will disappear? Not at all. It does mean that the role of brand is likely to change and that, in the process, ownership of the most meaningful brands may change.

In an environment of unlimited selection and access to information, the scarce resource becomes customer attention. Customers still face one unyielding constraint: they still have only 24 hours a day. Where and how they choose to use this time will have enormous economic consequences. With limited time and unlimited choice, customers will likely focus their attention on providers that best understand their needs and can, as a result, maximize their return on attention by delivering highly tailored bundles of products and services.

Author: Kasia Bialek