2023 has witnessed many changes in brand transformation, from the controversial rebranding of Twitter to X, Nokia’s futuristic wordmark, and PepsiCo’s new logo and identity. Many of these changes were driven by the need to remain relevant to existing consumers while appealing to younger segments who look for brands to reflect their self-image.
With the rise of business mergers and the growth of indie brands challenging established leaders, we should expect to witness more brand transformations ahead. Regrettably, we will also notice the disappearance of well-established icons that have failed to adapt to these rapid changes. Many transformations reflect shifts in consumer demographics, psychographics, and the dynamics of emerging trends.
In this blog, we have identified five key challenges that brands will face as they explore the need to transform their identity and customer experience (CX). Significant shifts in consumer attitudes and trends drive these changes. Organizations need to remain vigilant to ensure they are aware of the effects of these potential market disruptors. However, for leading organizations, these challenges will be viewed as opportunities.
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Challenge #1: Growth of Distrust
Merriam-Webster has picked “authentic” as the word of the year 2023, saying that it saw a “substantial increase” in online searches. It reflects the consumer expectation for brands with solid values, transparent offerings, honest messages, and integrity in how they treat their employees. The rise in interest in the word authentic reflects the increasing distrust in the media, governments, and brands, which will continue in 2024.
Our past studies on strategies for retailers, CPG brands, and banks in the age of misinformation highlight consumers’ lack of confidence in online reviews and company claims. As bad actors use it to disseminate misinformation, the growth of AI will continue to fuel mistrust. With the rise of layoffs and WFH conflicts, our study highlights that employees have also become distrustful of employers.
Brands considering a transformation program in 2024 should ensure the rationale is anchored in solid values. The rebranding program should help bridge the gap between the emotional needs of consumers and employees and provide a solid understanding of the needs and directions of the company.
The most successful rebranding programs start from the inside out, answering the question, “What’s in it for me, and how do I live the new brand promise?” This approach becomes critical in merger-driven rebranding programs where different cultures are forged into one organization.
Challenge #2: Polarization of Ideals
In the past decade, we have witnessed the polarization of beliefs, ideals, and views. The support for LGBTQ+ communities by Target and Bud Light has received backlash. According to our study on inclusivity, irrespective of the negative hype in the media, brands embracing diversity are positively perceived by consumers. At the same time, only 5% of the population has a negative attitude towards companies supporting DEI.
Unfortunately, a few customers have the loudest voice, supported by some politicians and well-established institutions. Customers demand brands take sides in the debates, opening them up to controversy and alienating a segment of their customers. Polarization is not limited to DEI but also includes political party divides, attitudes toward immigration, climate change, etc.
Brands must review how the polarization dynamics might relate to their vision and mission. For example, many institutions have demonstrated sustainability efforts on social media. How they defend and support their social programs will be critical as part of the rebranding initiative.
In addition, rebranding needs to consider valuable insights from various stakeholders. Due to a lack of coherence in brand values and the new visual identity, many rebranding programs have led to negative consumer reactions, which further disconnect and polarize their customer base.
Challenge #3: Clashes of Classes
The recent economic recession, rising food costs, and the erosion of the middle class negatively impacted the brand perception of grocery retailers in many countries. Value-based offerings became more attractive as consumers grappled with the increased cost of living. Many brands have maintained their competitive price points by reducing the quantity or size of their offerings, hoping the changes go unnoticed. However, governments and consumers are starting to take matters into their own hands.
For every action, there is always an equal and opposite reaction. Unions strive to protect jobs as organizations achieve significant profits. Brands must remain relevant to the growing lower-income segments and consumers looking for greater value. On the opposite side of the equation, the growth of more affluent consumers is offering brands the opportunity to sell higher-margin items or premium experiences. On the way to rebranding, brands must recognize these market dynamics to maintain trust and relevance.
To make the transformation program successful, brands should start with a strong understanding of the critical customer’s needs and how the brand will deliver value. They should also review the product or service offerings to determine what can bridge the growing gap. By redefining a brand’s value proposition to better align with the overall portfolio, brands can remain relevant across the entire income spectrum without diluting brand equity.
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Challenge #4: Impatience for Change
Consumers’ demand for change and willingness to adopt new habits quickly can best be summarized by the explosive growth of ChatGPT compared to previous platforms. Customers no longer tolerate apps and websites that don’t work, customer service that is slow to respond, or products that aren’t convenient to use.
Apple and other technology platforms are training consumers to desire change at an unprecedented rate. This ever-growing expectation for change forces brands to strike the right balance between innovation and maintaining brand equity. Brands today need the courage to take bolder steps while staying relevant across decades. The new value proposition will need to consider the importance of delivering a coherent strategy that must be agile and long-lasting.
Challenge #5: Avoidance of Complexity
The final challenge is one that marketers have been grappling with for the past decade: simplification. It has become more important with the growth of new distribution channels, business models, and emerging brands, which add to the complexity of consumer choices. Consumers seek shortcuts to help make their purchase decisions easier, giving marketers a unique opportunity to simplify. A growing trend in reducing complexity is the move from omnichannel to seamless experience, where consumers gain an aggregated view of their preferences and needs.
A rebranding program must explore the entire customer journey, from research to purchase and usage. Value proposition, brand identity, and critical moments help ease the purchase-making process. With the growth of online sales, a brand identity must encompass a robust, coherent strategy consistently delivered in both the physical and digital worlds.
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Thinking Beyond 2024
Driven by social, economic, and demographic factors, new challenges are constantly arising. Brands should take the long view and resist the incremental mindset. These factors, many of which will evolve and take on a life of their own, can be viewed as challenges or capitalized on as opportunities. The future is not yet written, providing marketers with opportunities in 2024 to set a new course.
