The consulting firm Accenture tells us that Apple and then Microsoft and Netflix are the digital brands Americans love the most. For the U.K. and Brazil, Netflix was in the #1 spot.
To understand why we love Apple and Netflix, Accenture tells us to think, “FRESH:”
Really though, Accenture was giving us a branding lesson.
In blind taste tests, more participants have said they prefer Pepsi. But asked to identify their favorite soda brand, many of the same people say Coke.
When economists explain the contradiction, they say “the brand.” After all, a brand establishes a firm’s individuality. It can create an emotional loyalty that is separate from any of the product’s attributes. Then, having generated that loyalty, the firm hopes for some inertia that makes the cost of switching prohibitively high.
Accenture’s Love Index is supposed to convey clues about the Netflix brand’s consumer connection. Illustrated by the green line, the Netflix graph (below) displays “SOCIAL” as weaker than the other four FRESH variables:
Our Bottom Line: Oligopoly
Expensive to create and retain in one country and far beyond, the most formidable brands come from oligopolies. As firms that enjoy economies of scale and dominate large markets, oligopolies can afford the expense of branding.
On a competitive market structure continuum, oligopolies are closest to monopoly because of their size and pricing power. Where we have oligopolies like Apple and Netflix, four or fewer firms receive as much as 90% of their industry’s revenue.
My sources and more: Having started with a Bloomberg news segment on the Accenture branding report, I discovered the original. Providing insight, still, the report was about selling Accenture’s services. So, I recommend as a complement this NBER paper on branding.