Have Consumers Changed the Way They Make Brand Decisions?

In the old days when I was still a cub copywriter in the advertising industry in India – which is around 35-40 years ago – the prevailing marketing wisdom was that the consumer or customer is the one who makes the biggest decisions on brands. “Customer is King” was always heard at meetings, in conference rooms and in reviews. Why the customer is not Queen often crossed my mind, but in this regard, I would have to say that nothing much has changed in India. Even though most decisions on household purchases are made by women, including housewives and homemakers, and most such communication also addresses women, the customer is not yet Queen. However, this is a discussion for another piece, on another day.

At the same time, the prevailing wisdom in the advertising industry was that our task was to create consumer demand for the product or service being advertised, or what was called consumer-pull in advertising and marketing jargon. Consumer-pull vs manufacturer-push. If the brand was in a fight for market share, the task was to not just create consumer demand but to create brand preference for your brand versus competition. In fact, in my first stint at Ogilvy Delhi when we would follow the OMI Blueprint for creating strategy – on which Mr. SR Ayer himself conducted many a workshop – the first task was to get a brand into the consumer’s consideration set of brands. Because the understanding was that every consumer or customer has a set of at least three or four brands in their minds, from which they make their choice. The idea was to make sure your brand featured in that consideration set and then moved up the pecking order, to be the most preferred one.

The world was much simpler, 30 or 40 years ago. There were fewer brands to start with and fewer competitors, as a consequence. Target audience segments too were fewer, I would imagine, given the disposable income levels then and spending patterns in India. Product differentiation mattered and most people were influenced in their brand decisions by advertising as well as family and friends’ recommendations. Purchases were made only at brick-and-mortar stores, and purchases on credit were rare.

Of course, we always knew that there were subtle and important differences in the way packaged consumer goods and consumer durables were sold, and business-to business advertising and marketing was also a different kettle of fish. While a packaged consumer good was advertised on the basis of a compelling consumer benefit – preferably with product differentiation – enabling the consumer to arrive at their own price-value equation to rationalize the purchase, advertising consumer durables also required the use of strong imagery, especially that of the corporate brand, since after-sales service depended on this. Business-to-business advertising and communication hinged even more on the corporate brand image, in addition to strong consumer benefit and product differentiation. If you have been reading my blog posts regularly, you would have noticed how much I stress on the importance of the corporate brand. This is not only because of consumer durables and business-to-business products and services; I think that with the proliferation of products and brands from CPG companies, the time has come for them to focus on their corporate brands as well. And, as I have also been writing, product brands and corporate brands have a symbiotic relationship with each other.

Fast forward to the present day, or at least to the present decade. Have the internet, digital marketing and e-commerce changed anything at all in the way consumers shop? There is plenty of hype around all these technology-related facets of marketing and communications, especially their vast stores of data on consumers that they can mine to deliver better and more targeted results for marketers. But, in actuality has the way customers decide on brands fundamentally changed?

From my own reading and observations over the past couple of decades, I shall put down a few new features I notice in the shopping and consumption landscape and we can go over these to see how important, fundamental and enduring these changes are. First and foremost is the arrival of e-commerce in the form of Amazon and Flipkart (now owned by Walmart) in India. These were initially used to shop for books and music and electronics goods, but now almost anything and everything, including daily groceries are available on these sites. In fact, I think the Amazon logo itself captures this aspect really well: the arrow running from a to z beneath Amazon in the form of a smile. What’s more, they promise lower prices thanks to the economies of scale, although in India they still take a few days to deliver the goods at home. At least in Goa, they do!

I am not a very regular shopper online, though my aged father and I do prefer to buy books on Amazon, since there aren’t any good bookshops in Goa, unlike Delhi. It appears that those who shop online regularly are people who are either trying to save on time and/or money, or else live in places not very well-served by shopping centres, malls and by brands of their choice. Of all these advantages of online shopping I suppose lower prices are the biggest draw, and with additional deals and discounts being offered almost on a daily basis, they lure people into scouting for the best deals all the time. During the pandemic, online shopping became the norm for a while, thanks to Covid-related lockdowns, social distancing rules, etc. McKinsey’s study of consumers just after the pandemic was something I read and also shared on my blog with subscribers to my free monthly newsletter, The Whistle.

The other new development is that thanks to the internet and e-commerce sites, consumers these days are much better informed and better cued in on product features as well as prices. They don’t merely depend on advertising to know about the product or brand; they can visit various websites and do their comparisons on features and prices. This is called researching brands online before deciding on a purchase. I think this would be more prevalent and relevant for consumer electronics goods and other consumer durables, including cars. However, a Nielsen Global Digital Impact Report that I happened to see online studied online grocery shopping in 2012, where it appears that consumers do compare and research prices of even grocery items online before making a purchase.

In the car industry, I read that most bookings are done online these days, with very few actually visiting car dealerships. I wonder how they manage test drives, or do they make do without it? Premium and luxury cars send the car along with a salesperson to your home or office for a test drive, but what about the others?

The consumer actively comparing and researching brands and products online is a good development, provided the information online is authentic and genuine which one cannot be sure of at all these days. This trend of checking and comparing products on features and price online has also led to what is called omni-channel shopping by consumers nowadays. Where companies and brands have to make sure they are selling both offline and online. This, to my mind, would enable companies to set up a database of their regular customers who they can build relationships with over the longer term. However, the task of managing the database efficiently and seamlessly over both channels can be quite arduous.

Another new feature along with e-commerce, is that almost anything can be bought on credit or on equated monthly installments (EMIs) these days. Earlier, this used to be true of only high-value purchases such as consumer durables, especially automobiles. I wonder if this has actually increased the purchasing power of Indian customers and how much it might have contributed to private consumption in recent years, if there is any data available at all on this.

Then, there is the new direct-to-consumer channel being touted by many companies, through the internet. Besides e-commerce, most companies across all types of consumer goods have an online presence these days and many customers shop at these individual sites directly. But that is not what is meant by direct-to-consumer, it seems. From what I read on Shopify, direct to consumer appears to be for smaller, niche brands that want to sell directly to customers, but without compromising on customer engagement.

Instagram was promoting its new shopping feature quite some time back, of being able to sell the product directly off an advert on its platform, without the user having to leave the app. I am not sure how it works since I am not on Instagram, but I believe the advert directs the customer to a direct message section on the brand’s business account page, where the customer can chat with the company and conduct the purchase. This could be seen as another form of direct selling to the consumer, where the company also manages the entire fulfillment process.

All these new and revolutionary developments in online and digital shopping, have one thing in common as I have been writing on my blog for a long time: to reduce the decision time and effort for the consumer and to clinch the sale as quickly as possible. In that sense, as I have been saying all along, tech-enabled features of shopping accentuate the sales funnel aspect of shopping, but leave customer-engagement which is what brands require, unaddressed. Besides, the nature of the technology intervention is such that it has made the sale process completely transactional, and I would go so far as to say that it has rendered the process brand-agnostic.

Therefore, it doesn’t surprise me when people in the industry say that consumers don’t care about brands anymore. And that there is no such thing as brand loyalty. If this is really true, then we in the industry have only ourselves to blame for the terrible state in which companies and brands find themselves.

Now, let us return to the process by which consumers make brand decisions which I started this piece with. How does the consumer today decide between brands, even after he or she has visited several sites and made comparisons. Unless the person is so completely lured only by discounts, I think that the brand image and perception that the consumer carries in his or her mind would still be the most relevant. And that image and identification with a brand can only be created by advertising and brand communications, as it always has.

In the OMI Blueprint, we looked at three dimensions of a brand that consumers consider: what does my choice mean for the brand performing satisfactorily to my expectations of it, for my social image and for my own self-image? Each of these dimensions’ importance would vary by product category. For example, in cars and Scotch Whisky, all three would be high, while in personal care, social image would be lower than the other two dimensions.

If you are familiar with Maslow’s Law of the Hierarchy of Needs, you would notice how the three dimensions correspond with the functional, the social and the self-actualising needs of human beings. However, this is where the similarity, if any, ends; in the OMI dimensions, there is no predetermined hierarchy. All three dimensions operate at the same level; the hierarchy in term of its importance to the customer is determined by the category and how the consumer relates to it.

I doubt these aspects of how consumers evaluate brands have changed at all over the years, despite all the new-fangled technology-related developments. These are based on universal human truths and are therefore unlikely to change very much over time. The only fourth dimension that could tip the scales in favour of a brand over the other three I mentioned earlier is the deal/discount. Indeed, in today’s world of consumption and marketing, it seems to be a weapon wielded with abandon and it’s relentless. But that is precisely what makes the deal/discount the enemy of brands, especially when indiscriminately applied.

In my view, brands and companies ought to not merely acquire market leadership and a large customer base, but must help those customers aspire and reach for higher-order ideals and values. Only then will customers gravitate towards brands and stay with them; else, they will be flitting in and out without providing companies with a solid, stable customer base.

If anything ought to change in the way consumers make brand decisions, we ought to stop leading them down the zero-sum game path.

Post script: In the context of online shopping, I must mention that Perfect Relations unprofessional idiots have been meddling with my shopping on Amazon during the past few years. The last time I browsed Amazon for footwear and clothes which was a few months ago, I found that nothing in the size I wear was available. Worse, Amazon was reminding me of the size of footwear I have ordered from them in the past, as if I don’t know my own foot size!

As I have shared in a post on LinkedIn recently, they have also started interfering with the stores in Vasco, Goa and their merchandise. Suddenly, the same stores from where I have bought clothes before, be it Benetton or Unlimited are stocking clothes in much larger sizes, and not the kind I would wear. And strangely, Unlimited which was retailing casual apparel at very reasonable prices earlier is now even cheaper, if that is possible! But the quality of merchandise is just not the same.

I am quite sure that these are all attempts to make me someone else, including my younger sister, Bhavani.

This blog post first appeared on my blog on October 5, 2023