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Branding – value addition or value assurance

by Ashok Sethi , 10.07.2015

Research has often indicated that consumers in markets like China and other emerging Asian countries, place a lot of importance on brands. Brands are surrogates of quality and imply trust. That is why more Chinese and Indian consumers than anywhere else in the world agree to statements such as “ it is better to buy well-known brands as you can rely on quality”. In fact, many of these consumers aver that they only buy products from a trusted brand. This means that, in the developed world, branding is a value addition – but in the developing world, it is a value assurance.

Consumers in developing markets need this value assurance as they have burnt their fingers with myriad products of dubious quality. Scandals on contamination or suspicious ingredients in food products are rife in markets like China and India, driving consumers to indulge in tougher scrutiny of brands. Consumers in developed markets, on the other hand, normally enjoy safe and reliable products, and hence the brand now serves as a tool of value addition. In the world of fiercely increasing competition, this value addition is often in the intangible area of brand image and personality, rather than the basic product attributes.

Our studies also show that, while brands are considered important in China, consumers there have been less loyal historically, when compared to the rest of the world.  To a great extent, this has to do with the fact that the history of branding and marketing in China is relatively short. Thirty years ago there were hardly any brands in this market. Brands have not enjoyed the same kind of long lasting affinity with consumers as they have in other societies, where consumers have grown up with brands. That is the reason marketers have often placed more importance on tactical measures, such as price and promotions, rather than brand building.

However, this is rapidly changing. Today brand loyalty is declining in the developed world, but it is actually increasing in China. Consumers are realizing that all that comes with attractive packaging and seductive advertising is not necessarily good or even safe. Hence they are now more selective in their embrace of brands and more loyal once they find one that brings satisfaction. It is time for marketers to increase their investments in brand building in these markets and try to forge a strong and long lasting bond with the consumers.

For more information contact Ashok Sethi at ashok.sethi@gfk.com.