Introductory note: What follows is a guest post from a close confidante of your main correspondent. I have recently been encouraged by this confidante to both (1) develop my own personal ‘brand’ as an economics blogger, and (2) to occasionally move away from long-winded theoretical expositions, and toward practical, real-world stuff involving actual firms and news items. In the interest of advancing both of those ends, she has submitted this guest post.
A company’s brand is its image in the public eye. Tied to and built through names, symbols, phrases, and campaigns, a brand influences consumer behavior and allows a firm to command a premium price or a higher market share. In fact, Tide has such an excellent brand and higher perceived value that it has become an alternative street currency in New York.
But, seriously: On its most basic level, a brand’s value can be thought of as the price premium a consumer is willing to pay for it. Other metrics such as brand awareness, customer retention, market share and customer satisfaction can also be used to estimate a brand’s value. But a brand’s value is inherently slippery to quantify as it can fluctuate greatly from botched ad campaigns or other PR disasters, such as product recalls and corporate scandals. Essentially, we know that brands are worth something, we just don’t know how to accurately quantify this worth. However, that doesn’t mean that there aren’t interesting ways we can view branding and the value of brands, especially when brands are put in extreme situations, such as on the auction block during liquidation, or when popular brands represent unpopular (or nonexistent) products.
It was a difficult year for the legendarily imperishable confection, Twinkie, as its parent company, Hostess, filed for bankruptcy in early 2012. After negotiations with workers’ unions failed, Hostess was forced into liquidation in November. Consumers panicked, clearing shelves and listing boxes of Twinkies on Ebay for (I kid you not) over $200,000.
But this isn’t the story of a failed company. Rather, the most fascinating part of this process has been the forthcoming sale of the Hostess brand names. Brands from the legendary Twinkie to Hostess Cupcakes and Ding-Dongs will be auctioned off to the highest bidder, with potential suitors ranging from Walmart to McKee Foods. Creditors anticipate the sale tipping over a billion dollars, twice the company’s projected worth before liquidation.
The nuts and bolts of Hostess, its trained labor force, management, factories, and specialty machinery, are worth far less than its brands. In other words, the design stamped on a Twinkie’s box is more valuable than the Twinkie itself, the idea of the product surpassing and rising above the product itself. Anyone can make an elongated tube of cake and stuff it with frosting, but only the Twinkie can capture the American heart (arteries included) and with it, the American wallet.
Let’s push the power of branding forward another step by looking backwards, at the licensing schemes of French fashion houses. As the demand for couture slowed in the mid-20th century, houses began to license their name to third parties to take advantage of lucrative royalty fees. Pierre Cardin infamously allowed his name to be placed on bidets.
Ironically, as licensing schemes proliferated, couture sales continued to fall. French fashion production drifted away from the largest clothing market, America, by continuing to craft inaccessible, exorbitantly priced pieces that arrived too slowly for the modern fashion season. In the very moment when their brand was in highest demand, their couture was universally ignored. French fashion became intertwined in a vicious cycle where their historic couture reputation gave them a valuable brand name, profits came from stamping this name of a variety of third-party products, and unpopular seasons of couture were supported by these royalties. No one wanted French fashion, but everyone wanted French labels.
And now, dear readers, let’s move from the gilded past to the vulgar present. Twinkie is a case where the brand makes a perfectly simple snack valuable and French couture is an instance where a brand proliferates regardless of the disdain for the product it purports to represent. But I would argue that the pinnacle of branding, the crème de la crème, is the luscious Kim Kardashian. She is the American mega-queen of three-hit reality television shows, a chain of fashion boutiques, numerous lines of clothing, and one fabulously profitable wedding (and divorce) to Kris Humphries. But whereas Lance Armstrong, beneath his tarnished brand, represents athleticism and resilience, and while Justin Bieber offers his earnest, teenage croon, Kardashian is ostentatiously talentless. In an interview with the Guardian, she noted, “When I hear people say [what are you famous for?], I want to say, what are you talking about? I have a hit TV show.”
Her logic is circuitous; her fame justifying her fame. Transforming her life into a brand, she represents nothing except desire, price premium, and superiority. When you consume Kardashian, there is no utility beneath the brand and therefore no substitute—no generic alternative is possible. She is pure brand, pure fame, a slick white line of our powered need.
This is why this and every blog like it needs a brand. Without one, your Econ Blogger is merely a mind to readers. Similar to his minimalist WordPress theme, his words and paragraphs stand naked and open for judgment. Without the direction, the cushioning, the gentle shaping that a brand lends, he is yellow-sponge cake that must, on every read, be evaluated by its own, spongy merits.
There are intellectual benefits to this, of course. You may feel more open to criticize his work because of your lack prior investment. You may be more receptive to his writing, not having seen an unflattering picture of him that may have biased your engagement. But the harms of this type of semi-anonymous work are far greater. Loyalty is built through branding, market share is gained by positing yourself not just as the best, but as fundamentally different, intriguing, intimately compelling. Engaged readers lock in and comment when they feel personally involved. If he wants to be remembered, he (along with all other WordPress blogs) needs more pieces that involve a Self, and some selfie shots, too—selfies are key.
One last word of caution. The main correspondent on this blog has legendary, dazzling, world-renowned blond hair, which he, in his public appearances, combs and folds into a cavalier and winsome side-part. Some critics have complained that it is too handsome to be endured and threatens the morals of the youth. There is, therefore, the danger of brand eclipsing the product, which may be why mdsy10 is nervous about taking this direction.