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Buying “the name” is smart


“You‘re just buying the name”


In the 1950s the Soviet Union didn’t allow brands. Brands stood in direct opposition to the idea of communism, and so all sorts of products were manufactured without any brand names associated with them. The resulting products from this brandless style of production can be described in one word; shit.


This is because in a brandless world where widgets are simply piled together and distributed to people, there is no incentive to make something exceptional (no one will know you did it), and there is no consequence to making something terrible (no one will know you did it).


A brand is a shorthand that people use to make purchasing decisions. As Rory Sutherland explains in his book Alchemy, we don’t buy brands because we think they are better, we buy brands because we know they aren’t shit. This means that our choice to pay a premium for a brand name is simply a hedge against getting ripped off or buying a piece of shit.


If I told you that you could buy tickets to see Drake through Ticket Master for $1000 or you could get similar seats from my good buddy John for $500, you’d be more likely to pay Ticket Master, since you don’t know John and he might screw you out of $500.


The same thing happens when we make everyday decisions, are you going to buy an HP laptop for $1500 or are you going to buy a Huiwoo for $999? The computer statistics are the same, the guy at the store says he has a Huiwoo … but are you going to risk buying a house fire machine to save $501?


Our subconscious knows that HP has been in business for a long time and it’s safe to assume that they would like to continue to be in business, so HP cares about it’s reputation, it won’t sell you a shit computer and if it does it will refund you or get you a new one. Huiwoo could be a dishwasher maker just testing out computers (how hard could it be?). So Huiwoo does not have a reputation yet, give them some time and they might, but right now they could (theoretically) flood the market with cheap shitty computers and flee the scene.


Now there is another group of products that are purchased simply because they signal I’m fucking expensive.

In the luxury goods market the value of the product comes almost entirely from the brand and the associated status with the brand. You don’t buy a $5000 Chanel hand bag for the functionality, you buy it so that your wife loves you.


In this case we buy brands to signal to others and to ourselves. From an evolutionary biology perspective this signaling is usually to show an abundance of resources. A peacock shows off with it’s massive tail to attract mates, middle aged men show off with expensive watches and topless sports cars. Both are economically idiotic. Both show abundance in an attempt to attract mates.


Brand matters. Build it in your business or die a commodity.


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