Do-It-Yourself Brand Creation

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. In one experiment, Fueller and von Hippel offered ODS members a hypothetical choice among four different types of tents: one ODS branded, one from their favorite commercial brand, one unbranded—and the fourth codeveloped and cobranded by the respondent’s favorite commercial brand and ODS. All four tents, the respondents were told, were equal in quality and price and of the same design. Under those circumstances, the authors report, an overwhelming majority—78.2%—of respondents opted for the cobranded tent. The researchers conclude that commercial brands and community brands may have complementary attributes. Indeed, further research found that community members associated ODS with traits like friendship and fun, but they associated their favorite commercial brand with attributes such as quality and product design.

One limitation of the study: Fueller and von Hippel conducted their survey online at the ODS Web site. As a result, there is a risk that the survey may have disproportionately attracted more committed club members, who are likely to spend more time on the site. That could affect the results, because the researchers also found that respondents who preferred the ODS brand are, on average, more active in the ODS community than those who chose a commercial backpack.

Nonetheless, Fueller says traditional brand holders should consider the possibility that, in the future, community brands may become “fierce competition.” Even while any given community brand may attract only a small portion of the market, the effect of many user communities creating brands, he notes, could be significant. However, a second, more positive possibility for traditional brands, according to Fueller, is that “there is a lot of synergy” potential between commercial brands and community brands. Those synergies include opportunities for commercial brands to cobrand new products with user communities—or to work with the communities as endorsers or codevelopers of products.

For more information, consult the authors’ working paper, “Costless Creation of Strong Brands by User Communities: Implications for Producer-Owned Brands” or contact the authors: Johann Fueller and Eric A. Von Hippel.

—Martha E. Mangelsdorf