We’re going to have to close our doors. We heard it declared twice last week that branding is dead because of Amazon. It is going to own everything. Differences won’t matter. And everything will be ordered through Alexa.
We. Give. Up.
No less a voice than Scott Galloway’s is among those who forecast we will soon close the coffin on branding.
In a recent presentation, Galloway, CEO of business intelligence firm L2, made a convincing case that brands won’t matter and Alexa will present a “frictionless, brand-less means of ordering all the stuff you need in your household.”
In Galloway’s presentation, he does a test to prove this with a slide titled “brand-agnostic favoritism.” He continues into another test, trying to order batteries and Alexa only serves up the AmazonBasics brand.
Galloway’s examples are convincing. If you don’t do anything else today, watch the video (link provided below) because the information leading up to this point in the video is mind-boggling. Amazon truly is re-shaping the retail space. Amazon is indeed changing what and how we buy.
Galloway continues, “I think Alexa and Amazon have conspired and figured out that Voice is a way to pull brand and some of the traditional mechanisms and accouterments of brand-building out of the ecosystem and then slowly but surely take control of your preferences. And your preferences are about to become the product that Amazon makes the most margin on or that Amazon private-labels. And we’re going to see a further death of brand-building.”
Well, that’s somber news. Branding is dead.
Galloway feels the only hot brands will be those that Amazon will offer beyond the advent of voice ordering. He may be right.
Do brand-building and positioning have a future?
You know the answer from us is yes, but can we convince you in the same way that Galloway suggests otherwise?
Let’s use Galloway’s words against his own argument.
He continues after declaring “death to branding” to share a story about his own brand, L2. He noted: “The venture capitalists came in and said … Scott, you are going about this all wrong.” Then, “They put a bunch of money into the company and said … become more special … establish a leadership position that no one can argue with!”
He continues later, “36 months after we took that money, the valuation of our company went up about 10-fold.”
We contend, Mr. Galloway, that this is brand-building. Your brand now has more value because you established the strongest competitive position: leadership.
As an aside, viewers of Galloway’s presentation will notice the “branding” throughout: “L2” is in four spots (stage right, the light on stage left, the YouTube video, and the slide show. He also mentions it a few dozen times during his presentation.).
We admit Galloway is not offering his services on Amazon and he was generally universalizing his comments to the consumer packaged goods space. Yet branding is indeed NOT dead. And positioning is now more important than ever.
His last few words on this topic: “So this is the new gestalt in our economy ... to establish leadership, to grow at all costs and to lose a lot of money.”
In other words, competition is fierce. Clutter is increasing daily. Price pressures are a reality.
That’s why positioning matters. Differentiating your product is the only way to resist price pressures, stand out from the clutter and beat your competition. Admittedly, Amazon is both your friend and foe. They will keep pressure on your brand no matter your business.
Branding is dead... or not?
Let’s take one of the most basic consumer packaged goods: toothpaste. Isn’t all toothpaste the same? Before you say yes, notice your options in the search results for this most “commodity” of packaged goods:
Natural Toothpaste, Fluoride and SLS Free | Tom's of Maine
Tom's of Maine is proud of the ingredients that go into our toothpaste.
Sensitive Teeth Toothpaste | Sensodyne
Learn how Sensodyne®, the #1 dentist recommended sensitivity toothpaste, can provide relief and long-lasting protection for sensitive teeth and acid erosion.
Baking Soda Toothpaste | Arm & Hammer
It may surprise some to learn that baking soda is actually the least abrasive material for polishing and cleaning teeth.
Fresh Breath Toothpaste | Close-Up
Unlike the typical opaque, mint-flavored toothpaste of the time, Close-up debuted in 1967 as a clear red gel with a spicy cinnamon taste and mouthwash right in the toothpaste.
Fight Cavities Toothpaste | Crest
Fight cavities with Crest Cavity Protection Toothpaste, accepted by the American Dental Association.
Advanced Whitening Toothpaste | Colgate
A visibly whiter smile can be yours with Optic White® High Impact White toothpaste. Contains 2x the whitening ingredient and fluoride to fight cavities.
Inexpensive, Low Price Toothpaste | Pepsodent
Cheap toothpaste from Church & Dwight.
Double Action – Clean and Fresh Toothpaste | Aquafresh
Voted Product of the Year in 2013, Aquafresh® Extreme Clean® Pure Breath Action can help get rid of bad breath, leaving you with pure fresh breath every time.
Great Tasting, Kid-Loving Gel Toothpaste | AIM
AIM® Cavity Protection toothpaste cleans, freshens and whitens. Children love its mint taste!
The examples above make it apparent that even toothpastes have figured out how to differentiate themselves! While many products fail to differentiate at the risk of their own demise, those brands which differentiate themselves from the competition (positioning) will continue to win.
Positionists, do not fear. We are not closing our doors. Nor is branding dead.
One last proof point: Amazon just bought Whole Foods for almost $14 billion. Why Whole Foods? Why not Kroger, Safeway or some other national grocery chain? Because Jeff Bezos cares about their difference. He wanted to invest in a chain whose customers aligned nicely with its customers.
If you decide to work harder and differentiate your brand daily, you will win … maybe even win bigger in Amazon’s economy.
(Editor’s Note: Check out Scott Galloway’s presentation in this video. Mark’s reference to Galloway’s test ordering batteries to illustrate “brand-agnostic favoritism” starts at the 16:50 mark. Galloway’s discussion about his own company’s brand adventure begins at 21:00.)