Digital has brought about upheaval in many branches, industries and functions. I focus in my Digital Brand Discussions, on topics and questions around Brands and Digital. What are Digital Brands, Why Should your Brand be a Digital Brand, What is a Digital Brand Expression are just some of the topics I discuss.
Digital has made quite some impact on Brands and Brand structures, the way people connect with Brands, research and communicate with Brands. It hasn't been easy, as people at Brand HQs are not able to keep up with fast changes around them. One of the many developments that I find interesting and which has been brought about with the rise of digital services and devices is "Servicization".
Servicizing of Brands
"Servicizing" is a transaction through which value is provided by a combination of products and services in which the satisfaction of customer needs is achieved either by selling the function of the product rather than the product itself, or by increasing the service component of a product offer.
One industry that learned this lesson the hard way is IT industry, especially software companies who were caught sleeping while cloud development was happening around them. Those that were caught off guard are now in painful challenge of deciding how to cope with two opposite ways. Investing in future (cloud) while surviving today - bringing product updates to existing client base that already has software installed on premise and expects updates of functionalities, service, etc. You will ask how this relates to Brands (traditionally products). Your Brand Products can't be turned into services. Perhaps you are right, but let me point this out to you.
A big transport company's impact has been just that - "Servicizing" of a concept of owning a car. In this reconfigured context, utility has been increased so high, and value proposition reconfigured, that we don't really know and/care which Car Brand comes to pick us up. Interestingly enough, Brands are not even a part of the decision-making and have been permanently deleted from a customer journey and future decision making process. After knowing all those investments gone into building brand equity, that should sound really scary.
Let's look at another example.
Brands as Subscriptions
Outcome of 'Servicizing', besides the different consumption pattern, and as we saw from Uber case, is also a change in the economics of payments. Namely, rise of service enabled by digital, also meant change of payment from one lump sum payment to subscription models. Good example of that is 'One-Dollar Shave Club' which has recently been acquired by Unilever. Change from payment per piece to per month. Unilever hasn't bought this company for no reason. I believe that this acquisition will have strategic impact as it will enable corporate learning into brand subscription models. One can make an educated guess that soon we will see other Unilever brands experiment with this model. Retainment, loyalty programs, data, higher consumer switching costs between brands are all in this interesting interplay.
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