A recent article on psychological research sheds interesting light on people’s behaviour in relation to price. At its most basic, people expect more expensive things to work better, taste better and look better. Think about it yourself. How often have you spent more on something on the basis that the price is indicative of quality? A bottle of wine, perhaps? Organic food? What this…hang on! This is what brands have always been about. A brand at its most basic was a marker of quality. A guarantee of certain contents; certain processes followed; a contract with the purchaser that this was the real McCoy – it built an expectation. And, as such, it cost a little more.
So why is this research interesting? The researchers were perpetrating a fraud. The wine used for the test was the same cheaper variety. The drugs tested were in fact placebos with no medicinal value whatsoever.
Interestingly, when the price was not shown the wine drinkers preferred the lowest priced. When they trusted their own judgement, they went for what they liked, not a promise. And that, to my mind, is why brands fight for their lives everyday. If a brand fails to deliver on its promise, be it in big a way or small way, its reputation takes a knock, eroding trust and its value falls. That’s bad for business.
Consumer brands can focus on a dominant audience and a clearly defined set of characteristics – taste, colour, aroma – to revive their reputation. Corporate brands (who might own a consumer brand or two) have a much wider range of people whose expectations need fulfilling such as investment performance, job security, responsible citizenship and so on.
Businesses need to manage their reputations actively on all fronts if they are to prosper and grow. Effort here will help build up their immune system for bad times and keep them fit and healthy in good. To be fair most businesses try to do this and devote resources to ensuring their vision, image and culture are all clearly defined though they are managed independently by different elements in the company.
However, these three building blocks of reputation are dependent on each other and mutually reinforcing, which means we have opportunities to work across the management spectrum to make sure these connections work. And when the connections do work, a company can live up to expectations.