Throughout the second half of the last century, Branding was used as the product differentiator. Most of the products were manufactured in house, with very limited outsourcing. This ensured that the Firms could tweak the product features to match the Brand perception. Thus Merc was known for its style and engineering perfection, Nikon for its unmatched quality of the Camera, and Sony for its vivid picture quality.
But with increase in competition leading to thinner margins, Organizations took the easier route of outsourcing to keep the price tag competitive. This resulted in many leading brands becoming marketing organizations rather than manufacturing organizations. The products were manufactured in remote China or Vietnam or Korea to leverage the cost advantage. The joke is that a IBM Laptop is made 100% in China and the only thing American about IBM is its brand name on the Laptop. Well! even that embedded logo is made in China!! This is true of all the other Computer manufacturers and products manufactured by organizations in other sectors.
The brands started losing control over their product features and process advantage, leading to them being forced to market the product based on Product features than on Brand equity, built over a period of time. Thus we have a scenario where consumers buy a laptop based on the product features like RAM, HDD capacity, Processor, Screen Resolution etc than on whether it is manufactured by HP, IBM, Compaq or Dell. Their refrain was "Well, it doesnt make any difference what the brand is, as all of them are manufactured by the Chinese".
The same is true of the Automobile industry. Toyota lost its competitive advantage of producing cars of quality, when they failed to control the quality at their outsourcing units forcing them to recall millions of vehicles and plunging the company into deep trouble. Many of the leading car manufacturers have a history of vehicle recall to replace defective parts, all of them outsourced.
The move to outsource non critical component manufacturing has started to bite the leading brands, as consumers are quite unwilling to pay a premium for a differentiation that actually do not exist.
So we are back to the pre branding era, where all products were commodities.
