EURACTIV: When consumers make decisions in the marketplace, they are voting with their wallets, writes Yaël Ossowski.
In a system of voluntary exchange, only consumers can decide if a company fails or thrives. Companies are reliant on consumers to buy their goods and “vote” to determine the best product and best company.
The freedom for companies and organisations to market themselves and create a brand is therefore essential to our markets and economic relationships.
Brands matter because they help inform consumers, help companies differentiate themselves, and ultimately “signal” quality and effectiveness.
They convey much more than what you can see or read: it’s about feeling and emotion, as well. That’s why the Red Cross is seen as a “go-to” after natural disasters, and why Amazon is now one of the largest companies in the world. People trust those brands and are willing to enter into financial relationships with them.
But what if those brands weren’t able to be formed in the first place?
Unfortunately, there is a global movement that seeks to restrict certain brands: alcohol, tobacco, cannabis (where it is legal), sugar, sodas, and many other consumer products.
Many of these products aren’t healthy. Especially in excess. That’s certainly the case with tobacco, alcohol, and sugar. There is a plethora of information available to consumers on the harmful effects of all of them, either from national health agencies or general health education in public schools.
But that doesn’t mean that consumers can’t choose from particular brands to better inform themselves on what they want to consume or use.
Consumers need brands in order to make the right decisions. What if one company uses a completely GMO-free process, or another is a process of fair trade? Don’t consumers deserve to know this information, and shouldn’t companies be free to let their customers know?
Without this information, the biggest and most well-known brand is best situated to gain dominant market power. Limiting branding is tantamount to limiting consumer choice.
If we want to ensure a robust competitive environment for products and ideas, then we must support brand freedom. Otherwise, large companies have a natural advantage and small entrepreneurs are left out in the dust.
Throughout the European Union, the most well-known bans on branding are in the sphere of tobacco and alcohol, in places such as France, the United Kingdom, and Ireland. In the UK, the current marketing restrictions ban cartoon characters in TV food adverts addressed to children.
Many politicians want to go further, banning cartoon characters from all ads and boxes. The logic of not allowing companies to have logos or branding is that consumers will be dissuaded from buying them.
But is this the right approach?
No doubt, safeguarding children and educating consumers on health options is a noble goal. But what consequences would come from restricting a company’s freedom to market and brand themselves?
A recent survey by the analytics company Sprout Social entitled “Championing Change in the Age of Social Media” reveals that nearly two-thirds of consumers say it’s important for brands to take public stands on social and political issues. That shows that brands are as important to societal life as economic life.
What contribution, therefore, would companies be able to make without the freedom create their own brand? When Coca-Cola cut ties with South Africa during the regime of Apartheid in 1986, they were championed as a steward of corporate responsibility.
Would the soda maker be where it is today without that bold political move affecting its brand? The same can be said today for a myriad of companies who are awakening to the necessity of responsible actions.
If companies and entrepreneurs are not free to create brands and market themselves, then consumers are the ones who pay the price. Not only are they not able to learn about which products are the best for their needs, but they also have their choices limited. That’s bad for freedom of choice and bad for market economies.
If there is one thing that’s worth fighting for even more in the current age, it’s the freedom of brands.