March 4, 2018
Have you ever been in the middle of brushing your teeth when the battery of your electric toothbrush suddenly peters out? And after some grumpy minutes of searching it becomes apparent that you’d put off buying some spares.
If you’re lucky, you’ll have a trusty fixed bristle back-up, or whatever the old-school equivalent is, and can add some more branded batteries to the shopping list.
But when will you squeeze in a trip to the shops? Wouldn’t it be easier just to buy online? Browsing Amazon, you find you could buy ‘Basics’ store brand batteries at a significant discount to the well-known branded equivalents. On the same page. Customer reviews suggest these basic batteries are at least as good as the branded ones.
This gets you thinking: could social media and independent customer reviews destroy certain brands?
For example, 20 years ago, most people would shy away from buying supermarket branded cornflakes, even if they were significantly cheaper than the branded variety. But this was before independent customer reviews could give reassurances about taste and quality.
I suspect luxury brands won’t be as affected by this: people will always aspire to buy those kinds of products and services. Just being able to buy them is part of the allure, it doesn’t really matter if you can get the same quality from a spartan manufacturer elsewhere.
But we don’t seem to get excited by commoditised brands such as Andrex, Kellogg’s, Colgate, Flash, Fairy Liquid, etc, anymore. We don’t show them off to our friends and neighbours. We bought them in the past because we believed and trusted the brands to be of superior quality. We trusted that they were worth more. But what if own branded products are considered to be least as good as them and half the price? What if that trust has diminished?
Will Millennials be loyal to these if their peers are positively reviewing much cheaper alternatives? We already know their spending patterns are very different to middle-aged people.
This has already been seen with painkillers in this country. You can buy supermarket own brand paracetamol at a fraction of the price of the branded ones. Clearly many people do.
New brands are popping up very quickly, backed by big marketing budgets, for example web-based property brokerage Purple Bricks. These start-ups bargain on developing their image in the public consciousness as quickly as possible to gain the trust that is the lifeblood of brands. Often, these branded goods or services have low barriers to entry other than their marketing spending power. We need to be sure the substance and sustainability of the company matches the initial spending power.
And as for the battery drama? You could purchase online during your morning commute and they’ll be home before you are.
Rathbone Investment Management Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered office: Port of Liverpool Building, Pier Head, Liverpool L3 1NW. Registered in England No. 1448919. Rathbone Investment Management Limited is part of Rathbone Brothers Plc. Head office: 8 Finsbury Circus, London EC2M 7AZ.
Any views and opinions are those of the author, and coverage of any assets held must be taken in the constitution of the funds and in no way reflect an investment recommendation. Past performance should not be seen as an indication of future performance. The value of investments and the income from them may go down as well as up and you may not get back your original investment.