How Customer Values Are Transforming Brands Today

By Jay Gronlund

Brands are under attack today from many sources, most often triggered by activists on social media. They are demanding brands take a stand on controversial socioeconomic and political issues that are getting more attention with our divisive politics today. Most brands can no longer ignore these trends and remain apolitical. There are always risks of offending some customers and employees so the challenge is to determine what issues to address, and how. The answer should depend on the core values that define the brand equity and image, and related to this the most important values of their primary customers and employees.

Fully understanding the concept of “brand value” is crucial for addressing this dilemma these days. In the 1980s David Aaker described brand equity, which is all about value, as “a set of brand assets and liabilities linked to a brand name and symbol,” and had four dimensions: brand loyalty, awareness, associations, and perceived quality. A more general interpretation is Webster’s definition of value which refers to the “worth, usefulness or importance in comparison with something else.” But value is also relative, and marketers usually determine the level of value (e.g. degrees of good or bad) using a basic formula: the benefit divide by the price.

Today, top-selling consumer brands are becoming more vulnerable from customers who question the true value of their brand offerings, especially among the distrustful millennials. They view many big brands as overpriced and/or overpromising, hence not “good value,” and instead are switching to store brands and less expensive products offered online (e.g. on Amazon). The results are alarming for big consumer goods companies like Procter & Gamble and Pepsi:

  • Overall consumer packaged goods in the U.S. declined 2.5% in the first quarter (source: Nielsen)
  • The sales growth of big brands were flat in 2016, versus smaller brands which grew 2.4%
  • This discouraging performance is more pronounced as most consumers reported an improvement in household financial conditions over the past six months.

Underlying this lackluster sales performance of household staples are key emerging trends associated mainly with millennials–getting married later, shopping more online, not having as many children, eating fresher and healthier foods/beverages, aggressively seeking deals, and cutting back on purchases as they draw down supplies at home.

Concurrent with these disturbing trends facing big brands is an intensifying insistence by customers to learn and judge what such brands stand for today, i.e. their mission and values. The controversies evolving from Trumpism on such issues like immigration, the environment and sustainability, health, partisanship, etc. have further galvanized consumer demands for brands to take a position on such issues, aggravated by an existing, ubiquitous lack of trust in corporate and government institutions.

Here are some examples of how major brands are now taking serious action to demonstrate their support for their core values, in response to what their customers expect from them: