Through the increase in digital possibilities for networking, consumption, and marketing, the way customers and companies make purchasing decisions—and the expectations they place on brands—has changed. What does this mean for you and your organization if you want to (continue to) be among the winners in the digital age?
Digitalization leads to crowded markets and increases the need for a strong brand with real substance
With increasing complexity and dynamism, human communication and behavior patterns are changing—sometimes drastically and rapidly. Often without us noticing immediately. Consumer needs are also shifting due to the technological possibilities created by progress. To meet these individual needs as a company, a growing degree of specialization is required. This, in turn, leads to strong market fragmentation: many providers with highly specific offerings that are increasingly difficult to distinguish from one another and create enormous diversity of choice.
In the “old world,” information and negotiating power largely lay with companies, as for most problems there were only one, a few, or no alternative (brands) available to buyers. The number, reach, and thus also the importance of brandswere therefore significantly lower than today. Only with the rise of the internet did consumers increasingly gain the opportunity to search for alternative solutions and independently choose the best option. For companies, this meant the chance not only to reach people through mass media advertising but to connect with them at many different touchpoints using different messages. In addition, vast amounts of data could now be collected and processed (Big Data).
From data-driven technologies on the one hand and the strong increase in market participants on the other, the need for individualization emerged: to reach people in their lifeworlds, messages had to be more strongly adapted to their individual contexts. Without the help of massive datasets and intelligent algorithms, such large-scale individualization on global markets with diverse target groups would not have been possible. Mass markets with only a few providers per category have thus evolved into highly individualized global mass markets with countless categories and alternatives.
The possibilities for buyers to say “no”—to choose another provider or none at all—have increased significantly. The likelihood of a brand being perceived as relevant, however, has decreased sharply. This makes it clear: the necessity for companies to offer real value and remain memorable as a brand in the minds of the right people has become a central success factor in densely populated, global, and digital markets.
Over the past 20 years, however, marketing has generally focused less on substantial offerings and more on targeting people with digital advertising and, above all, collecting their personal data. The customer’s purchasing or decision-making process has often been understood (especially in B2B contexts) as a linear and rational sequence (“funnel”), supposedly driven primarily by reason rather than emotion. Technological and data-driven possibilities have led to central insights into human psychology being ignored. This outdated mental marketing model and its associated misconceptions are still widespread. Yet they hinder the fundamental prerequisite for creating real customer value (innovation) and building a strong brand: radical customer centricity.
Digitalization is changing how we communicate and interact
The internet and the abundance of information and alternatives have been changing the way we communicate—and consequently how we interact and make purchasing decisions—for years. The spread of mobile devices in particular has led to a massive increase in global connectivity and opened up new communication possibilities. The digitalization of all areas of life has accelerated significantly in the past two years, reinforcing existing behaviors and establishing new ones that had not yet fully taken hold.
A prominent example: remote work. Only through the major restrictions of recent years were digital collaboration tools—some of which had existed for years—widely adopted and used. External changes forced people and organizations to adapt to new conditions (“survival of the fittest”). Only a few companies were prepared. Some are still asleep. Others have already had to close their doors.
Regardless of one’s stance, it is important to recognize that, compared to just a few years ago, a large part of our private and professional lives now takes place in the digital space—and the trend continues to rise. While networking opportunities provide daily new chances, they also increasingly lead to overwhelm and become the greatest distraction from achieving personal goals. The key is to remain flexible while maintaining focus.
To cope with complexity as human beings, we rely on strongly reducing perceptual and interpretive filters. Only through them can we interpret the world coherently from our perspective. Our organism’s primary goal is to filter out what is unimportant in order to conserve energy while satisfying needs (pleasure/displeasure). What we perceive as important or unimportant depends on our personality, our current state, and the specific context. To capture the attention of certain people, it is therefore crucial to understand the complex nature of human beings in varying contexts and align communication and marketing accordingly.
What relevance these developments have for you and your business
- The internet—and especially social media—creates a context in which our perceptual filters are particularly active. This leads to constant overload. Due to the vast amount of information we encounter daily and the many surprises awaiting us, our perception and handling of information are changing. Our filters are becoming more refined, and the time window to break through with a message is shrinking. For companies, this means: it is more important than ever to capture the attention of the right people, awaken their demand, and remain in memory as the best option. To achieve this efficiently despite high information density and strong individualization demands, a stable brand identity is essential. Only then will you have a chance of cutting through the enormous competitive noise and reaching the right people.
- Today, people make most purchasing decisions autonomously. According to a frequently cited Google study, potential buyers want to have completed around 60% of their decision-making process before contacting a company personally. In this phase, it is crucial that customers can easily access the right information. Even without a study, you likely observe this in your own buying behavior: we use available information to minimize the risk of making a wrong decision. Many people have also developed a strong aversion to advertising. To avoid falling victim to this aversion, companies must provide exactly the information customers need to make largely independent purchasing decisions. It is especially important to recognize that the emotional processing of information outweighs its rational content. Beyond providing information, it is therefore about staging—creatively designing information in line with the brand identity.
Important questions you should ask yourself to remain memorable as a brand:
- How clearly does the brand differentiate itself visually and substantively from relevant alternatives?
- How easily—and through what means—does the brand remain memorable?
- How consistently is the brand designed across different sensory channels?
- What opportunities exist for potential customers to approach the offerings independently, without having to make personal contact?
- What information is missing for your potential customers to feel confident reaching out to you or making a decision?
