User communities have considerable potential to build their own brands.
Strong brands are often seen as an important corporate asset. But what happens when user communities—connected by the Internet—start to create their own brands? That question is explored in an intriguing August 2008 working paper, “Costless Creation of Strong Brands by User Communities: Implications for Producer-Owned Brands,” by Johann Fueller, an assistant professor at the University of Innsbruck School of Management, and Eric von Hippel, the T. Wilson Professor of Management at the MIT Sloan School of Management. The authors’ findings suggest that companies with traditional brands would be wise to pay attention to this emerging arena.
The researchers surveyed 216 members of Outdoorseiten.net (ODS), a community of 8,300 German, Austrian and Swiss hikers, about their brand preferences—and found that ODS members showed significant interest in buying hiking products displaying the club’s ODS logo. For example, when members of the ODS community were asked whether they would prefer to buy a backpack from their favorite commercial manufacturer or one that was of equal quality and price but instead had the ODS logo, 34% preferred the ODS product and an additional 17.7% viewed the two brands as equally attractive. (The rest preferred their favorite commercial brand.)
Fueller admits that he was “a little bit surprised” by the results—and, in particular, by the degree of interest community members showed in the ODS brand. Moreover, Fueller and von Hippel point out in their paper, because many backpack manufacturers outsource manufacturing, it would be quite feasible for hiking communities to develop their own branded products and have them manufactured. Without much need to incur marketing costs, such products could pose substantial competition to traditional for-profit brands.
The authors conclude that user communities have the potential to create strong brands at low cost. And, in fact, in some arenas, communities have already created their own brands: Apache open source software, Fueller points out, is an example of a strong brand created by a community (the Apache Software Foundation) rather than by a traditional commercial entity. In hiking, ODS has already codeveloped and cobranded a tent with a commercial manufacturer.
What should companies with traditional brands make of this trend? The news isn’t all bad for corporate brands; the research also suggests that the emergence of user-generated brands offers the possibility that commercial brand owners can collaborate with user communities to create cobranded products.