There is no doubt that brands play a significant role in the success of companies. Brands, for instance, create identity in internal and external communication. A strong brand is a crucial factor for differentiating companies and their offers and services from competitors. They are the fundament for an enduring competitive advantage and high recognition in a rapidly changing business environment.
In this expert interview, Seval Dogan (right), Senior Marketing & Special Project Specialist at Business Wire for Germany, Austria and Switzerland, discusses with Christine Riedmann-Streitz the challenges and implications of digitalization on brands, especially in the context of urban and metropolitan areas. Christine highlights how to take advantage of digitalization as well as how to avoid some pitfalls of digitalization such as "digital burn-out".
In addition to being the founder and managing director of MarkenFactory GmbH, a Frankfurt-based marketing and consulting firm, Christine (left) is an expert in brand, innovation and change as well as a university lecturer, trainer, and speaker at marketing and media events. She is also the author of "Will there be still be brands in the future? Hybrid Brands - a future vision for strong brands ", which was published earlier this year by Springer Gabler.
Seval Dogan: In your book, you state that brands are not an invention of the modern age. What role do brands play in the digital age?
C. Riedmann-Streitz: Humans have invented the brand, centuries before modern times, because it was important to mark those things that were of value to them and to give them a distinctive recognition. This involves products (e.g., bricks, tools), economic alliances (such as the Hanseatic League), or social status (e.g., aristocratic families). The core functions of brands are essential – even in the digital age: they represent defined values, provide orientation and long-term quality promises, create rational and emotional benefits.
Seval Dogan: According to your book, it seems that the digital environment has a disruptive effect on brands. What influence does the digital transformation have on brands?
C. Riedmann-Streitz: We live in a time when almost everything is in flux, it is volatile, uncertain, complex, and ambiguous - also known as VUCA. The disruptions caused by digitalization make life and decision-making much more complex. The effects on brands are serious. With the consequence that corporate, employer, product, service or personal brands must be rebuilt to stay viable. Let me explain this: Brand success is based on the perception of the customer, on its "perceived value" and "perceived quality". The degree of identification with the brand determines the "brand fit" ("the brand suits me"). This applies to both B2B as also B2C. Digitalization, however, changes communication and perception. Decision mechanisms are turned upside down by bots, recommendation algorithms and automated processes. It is becoming increasingly difficult for the brand to attract attention. Think of an online shop (such as Amazon®): the branded product is de-contextualized in its product category (e. g. men's watches), left without its original brand environment and in competition with tens of thousands of other available products in that online shop. Filters are either price (ascending or descending), novelty or awarded "stars". Hence, the brand runs the risk of irrelevance.
In the digital age, well positioned brands provide a robust economic factor, bringing significant value to companies. Having a strong brand makes also an employer more attractive in finding and hiring ambitious and highly-skilled candidates. In other words, an attractive employer brand and corporate brand makes you a winner in the ‘War for Talents’ and in the tough global competition – in the real and online world. On the other hand, digitalization can affect the function of brands negatively if there is a lack of sustainable values, benefits, and promises – and if brand management ignores the rules of real and digital worlds. But, in one way or another, digitalization can increase the significance of brands if every single brand is prepared for the digital future.
Seval Dogan: Why is the ability to change and innovate vital to brands in the digital age?
C. Riedmann-Streitz: Because otherwise the brand ages with its customers until they look around for some younger and more attractive brands. The fashion industry is a good example. Some brands must be reinvented to escape the ‘indifference trap’ and not become irrelevant. A strong brand stands for continuity and reliability with a clear brand promise that will also hold true in the future. At the same time, it reflects the ‘Zeitgeist’, the spirit of the time, is close to its customers and meets their needs. Desires are changing, so the brand must change and be able to surprise over and over again its customers if it wants to remain relevant. The challenge is clear: On the one hand, brands must adapt to digital transformation; on the other hand, they must protect themselves from ‘digital burn-out’.
Seval Dogan: In your book, you provide evidence showing that more than 70% of brands worldwide and over 90% of brands in Europe have become irrelevant in the eyes of the consumers and if such brands disappear tomorrow, they wouldn’t be missed. This sounds like brands will be irrelevant in the future. Will there still be brands in the future?
C. Riedmann-Streitz: My vision is, that brands will still exist, if fundamental prerequisites are met. Brands must endorse digitalization, but stick to certain fundamental principles. For example: A brand can only win customers if all employees are convinced of it and if they behave as brand ambassadors. Unfortunately, many brand managers no longer believe in their own brand. Most mid-sized companies have barely discussed how they need to build and position their brand for the future. But: New technologies and big data compete with brands for the same customers. This situation is getting worse by numerous companies that focus on technology only and neglect content. Technology is always only a means to an end; it does not itself offer any content or values – nor does it provide a brand experience that can inspire, retain customers and stoke customer loyalty and recommendation. Digitalization provides a plethora of data that only creates customer value when drawing the right conclusions.
Seval Dogan: You underline in your book that brands will evolve into 'Hybrid Brands'. What do you mean by that?
C. Riedmann-Streitz: Brands need to be transformed to Hybrid Brands if they want to survive. In addition to the real world, both the enriched (augmented reality) and the virtual world exist. These worlds are merging to hybrid worlds - not only in technical terms, but in people's perception and behavior. As outlined in my book, customers want mobile information, real shopping (advised by customer service representatives who have additional knowledge and deliver brand experiences that are not available online), mobile payment options and that the purchase is delivered on demand. Hybrid Brands combine the best of both (real and virtual) worlds and create seamless transitions as their stakeholders no longer accept interruptions and discontinuities. The future is "seamless".
Seval Dogan: You also describe the future of 'Hybrid Brands’ in ‘Hybrid Cities'. What is the role of urbanization?
C. Riedmann-Streitz: It is estimated that by 2050, 70% of the world's population will live in large cities. This is where the challenges of future economic activity, work and life come together. Big cities and megacities are evolving into hybrid cities. Amongst other technologies they use "location-based services" for the benefit of their citizens in public and commercial urban spaces. Even today, providers in the public and commercial space already collect data about passers-by and consumers via face recognition (also in Germany). However, this takes place without asking people for their permission, it happens unsolicited, unprotected and non-transparent. As I explained before, the brand must develop into a Hybrid Brand. But this hybridity must be well reflected and thoughtful to shape a future worth living in.
Seval Dogan: What vision is your book based on and what do you want to convey to companies and customers?
C. Riedmann-Streitz: The future starts now. The question is not: “What is possible?”, but: “How do we want to work and live in the future?”. “What are the values guiding our thinking and actions?” Relevant values, enduring promises and trust are the foundations of successful business and functioning societies. Brands play a significant role here. But they must be transformed into Hybrid Brands to have enough impact and not suffer from ‘digital burn-out’. Against this background, I have created a vision of what would be desirable and what needs to be done. It is based on an understanding of the economy and society that is not subject to the primacy of technological opportunities, but of benefits to us humans, who invented the technologies. Digitalization can bring plenty of progress, economic efficiency, comfort and quality of life when used purposefully and always being under control by humans. My vision is that companies and consumers will continue to stick to the brand in the future. If: Brands become Hybrid Brands and further evolve to Human Hybrid Brands that consistently fullfil the principles of respect for privacy and the criteria of what I call ‘Humane Customer Centricity’ with the stakeholder being at the real core of thinking and acting.
Seval Dogan: Thank you Christine!