AdvertisingBusiness models

The impact of price comparison on brand

By September 8, 2008 8 Comments

I’m on a plane going through some old email and have just read an interview Roberto Munoz of UK car insurance company More Th>n did an interview for e-consultancy in early August on topic of price comparison sites. This particularly caught my eye:

Previously an insurer’s reach was more or less proportional to their marketing budget. Now, we can all reach the same amount of people just by taking part in the aggregator market.

Making sure people know about a product – i.e. reach – has historically been an important driver of marketing spend. This is another example of the internet uncoupling distribution from spend/control of the medium.

I think the impact of this will be to reduce the economies of scale and the impact of brand in the delivery of commodity products.

In the information age there is less requirement to rely on a brand to tell us about the quality of a product – we can just look it up, or check out reviews. Price comparison could therefore spread and we could start to buy all commodity products via price comparison sites or via price comparison mechanisms imported into standard ecommerce sites. For example Tesco’s could offer price comparison on products like washing powder and basic foodstuffs such that people shift brands more frequently then they do today – forcing companies like Unilever and Proctor and Gamble to focus more on price and raw product quality.

Remember I am only talking about commodity products here. For more complex and for newer products, and especially for products that carry social stigma brand will continue to be an important driver of value.