By Larry Romanoff, August 08, 2022
One of the greatest frauds ever perpetrated on consumers is the branding of consumer products, a practice created almost entirely in the US, achieving significance only from an overwhelming flood of abusive psychological propaganda and advertising. In probably no other place did American corporations and ad agencies apply Bernays’ psychiatric propaganda methods of public manipulation with more bloodthirsty determination than in their creation of the fiction of branding, and in no other country are brands treated with the reverence they are in the US.
In real life, a brand is nothing. It is only a name that has no value other than for product identification. Any value is in the product itself, but the large firms have spent literally tens of billions of dollars to convince Americans and the world otherwise. Everything we have been told and taught about brands is a lie, what someone called “meticulous landscaping” of the consumer environment. To a consumer, there is no value in a brand. The relation between a product and its brand is identical to that of a steak and its sizzle, but the brand has been cleverly drilled into our minds as the definitive element containing utility and value. Just as these same firms concluded many decades earlier that if people would pay for sizzle there was no need to provide the steak, they later correctly concluded that if customers would pay for a brand there was no need to provide a product, at least not of any commensurate value. The sizzle has no value; its only function is to stimulate our emotions to desire. Similarly, a brand has no value, but branding has been abused to serve only as a kind of psychological deceit.
It is a story well-known and often told that in areas of the US all tomatoes from all farms in a large geographical area are delivered to the same factory, where they are all mixed together, washed, cooked and put into cans. On the morning shift, the cans are affixed with a low-price generic label for one customer, while in the afternoon the same tomatoes from the same farms in the same cans on the same production line will have another firm’s “premium” label pasted on them, and appear on supermarket shelves at 150% to 200% of the price of those from the morning shift. The magic of branding.
To most large multinational companies today, this is the real value of a “brand” – the power to give consumers the same or less, but charge much more. We have been trained through fear and uncertainty to believe that a lower-price product is substandard or perhaps even toxic, and our uncertainty pushes us to the “premium” brands even though there is nothing premium about them except the price. So-called “luxury” products are even worse. Marketers boast that companies like LV and Apple can charge two or three times the price of another product equal in quality in every way, so you can see why these firms spend so much money on “branding”: it gives them the ability to charge more and more while giving customers less and less.
The entire concept of brands was conceived and desperately promoted because it was a license to steal, indoctrinating a gullible public with clever propaganda contrived to defraud consumers with myths of quality and status and deceive them into paying ten times the value of a product. One obvious category is personal care products like cosmetics and shampoos. Any executive of any FMCG or cosmetics firm will tell you privately that in spite of a price differential of four or five times there is virtually no difference in content or value between their lowest and highest priced products. They will also confess in private that a wash-cloth and soap will do more for your face and your complexion than will their skin-care products. In China, excellent shampoos like Bee & Flower are available for 10 yuan per bottle, but when a P&G or a Unilever put their “brand” on it, foolish consumers will pay 50 yuan for identical or often substandard content.
Think of laptop computers. All are similar, all perform more or less identical functions, usually with variations only in small features, and all are of a similar price. But we happen to prefer the features of a Dell or a Lenovo over others, and the brand name serves only for identification – which is as it should be. But Apple, with their clever niche marketing strategy, again following Bernays’ psychiatric manipulations to the letter, can charge 50% more for an equivalent product. It is true that Apple products usually have nice features, but that isn’t the issue because those features are virtually cost-free. Apple’s excessive prices are due to brand manipulation, not to value.
Wide ranges of foodstuffs and small consumer products follow the same pattern. Consumers in China pay 50% more for Nestlé bottled water than for other brands, because manipulative advertising has led trusting consumers to believe a well-known brand must be of higher quality, but there is no evidence this is the case, and I have seen considerable evidence that often the opposite is true, a number of media reports claiming that much of Nestlé’s water comes directly from the tap. In 2013 and 2014, rumors were swirling in China that P&G had significantly degraded the quality content of most of its popular products while maintaining its high prices. It seems consumers detected the product degradation and flocked back to domestic brands; P&G have been struggling in China ever since. Capitalism, the drive for profit maximisation, greed, and a lack of business ethics will too often lead to this eventual result, with the most respected brands often being the worst sinners in this regard. American advertisers spent generations and billions of dollars to manipulate consumers into the foolish thesis that they should pay more for the name on a product than for the product itself.
The advertising tricks are exceedingly simple – and intended only for the simple-minded. Face creams and cosmetics are sold by a simple attachment of the face of a movie star to the product. Sport shoes and other apparel are sold by linking the items to a sports hero. In neither case do the stars actually use the products, these ‘celebrity endorsements’ being fundamentally dishonest. All TV ads should begin with a disclaimer informing viewers that this film or sports hero has never used the product being advertised, but has agreed to link his or her name to the product for a payment of $10 million. Any advertiser will confirm that intelligent people are more or less immune to these celebrity ads, but that they have a powerful effect on the portion of the population that is below average in intelligence.
Once again, a brand is nothing but a name that has no value other than for product identification. Any value is in the product itself. The entire concept of brands and branding is a huge lie. Every product and service has an inherent value, which factor should be almost the entire determination of their selling prices.
Think of a man’s shirt. A simple polyester shirt cut to a simple pattern, with no tailoring, might sell for only 40 yuan in China ($8.00). The same shirt made of low-grade cotton has a higher value and utility and might sell for 100 yuan. Progressing to a high grade of cotton might increase it to 150 yuan. Cutting the shirt to more complicated and fitted patterns, with accurate size variations for collar size and sleeve length might place the price at 200 or 250 yuan. Adding fine details like extensive pre-shrinking, double-stitching, extra cutting and care with collar and cuffs, tapering and so on, could double the price again. Extra fine quality cotton and the highest quality of workmanship and an absence of even the smallest defects, might push the price to perhaps 1,000 yuan for those who care about these details – and I do admit these finest fabrics, workmanship and details deserve appreciation and add to the pleasure of wearing fine clothing. But there is nothing you can do to a man’s shirt to justify pushing the price beyond about 1,000 yuan ($200), because there simply is no possible added value beyond this level. When you pay 5,000 yuan ($1,000) for a man’s shirt that carries a famous brand, you are receiving 1,000 yuan of product value and paying 4,000 yuan for the ‘name’. The magic of branding.
The brand marketers have so successfully promoted their twisted psychological agenda that we are made to feel proud and successful and superior when we wear their brand, but how foolish do you have to be, to believe this? Wearing a ‘Brand A’ shirt that costs $200 leaves us feeling ‘ordinary’, but an identical shirt containing no more added value from ‘Brand B’ for which we pay five times the price, leaves us feeling superior and proud. Why does that make sense to you? Overpaying by 500% for a shirt is not an occasion for pride, certainly not in our intelligence and, like it or not, we are still just as ‘ordinary’ as before. And poorer. We need to understand that pasting somebody’s brand name on our forehead does not make us either a better person or an object of envy.
I once had a long discussion over a coffee with a clerk from an LV store in Shanghai, and her assessment was this: “When I see a man paying 5,000 yuan for one of our shirts, I don’t think “Gee, he’s rich.” I think, “God, he’s stupid.” You might care to think about this.
Similarly, an LV handbag is just a bag and, even when well-made with good materials, it probably isn’t worth more than about 500 yuan ($100). The same is true for a piece of LV luggage that sells for 20,000 or 30,000 yuan ($5,000), surely 20 times the actual value of the product. And what benefit do we receive from this outrageous expense? A foolish and unjustified self-pride and the assumed envy of the 3,000 people at the airport who couldn’t care less about either us or our luggage. We might just as well stand on a podium in a public square, holding up our little treasure to the view of thousands of complete strangers, and yell out, “Look at me! Do you know how much I paid for this?”
This is precisely the mentality contained in that piece of luggage and in its advertising – emotionally immature and mentally defective. And that’s brand marketing. If we were to create a list of personal characteristics for which we would like to be noticed or admired, or appreciated, by friends and colleagues, that list would begin with items of our character, personal integrity, our personality. The brand name of our luggage or shirt labels wouldn’t even be on that list. Or at least, they shouldn’t be. And few of us would care about the opinions of our luggage by complete strangers at the airport. If you are one of those people who draws his confidence or sense of personal importance and self-worth from displaying a brand name on clothing or other personal effects, you might want to re-examine your sense of values.
On the same note, apparel items like Levi’s or Calvin Klein blue jeans are neither premium nor luxury, but the same plain denim blue jeans we wear when we feed the pigs on the farm. They should sell for less than 250 RMB in China, about $40 in the US, because that’s all they’re worth.
As well, there is no such thing as “super-premium” ice cream, no matter what Häagen-Dazs tries to tell you. They use the plain, ordinary ingredients that should go into every ice cream (but often don’t), then charge ten times what it’s worth. In any case, Italian gelato is infinitely superior to this Danish-sounding Jewish-American concoction. And much cheaper.
Never knowing when to quit, Americans have applied branding psychiatry to everything including their universities, to the point where your tuition fees at Harvard are 15% educational product and 85% brand sizzle. The same applies to most every American product area, selling sizzle with very little underlying product, all following the principles laid down by Bernays many decades before.
Americans are also very clever at re-branding their goods to take advantage of an inexperienced, gullible and trusting public. US-based luggage manufacturer Samsonite read somewhere that Chinese people like luxury goods, so they decided to pretend their McDonald’s luggage was a luxury brand, mostly by just increasing their prices by five times. It hasn’t yet occurred to Samsonite that a luxury product must actually be luxurious. Pizza Hut in the US is junk food like KFC, but has been re-branded in China as high-end dining. It isn’t. It’s a McDonald’s that sells bad pizza.
Rolls-Royce have done something similar in China, charging about five times their prices in the West, then dealing with the violent consumer backlash by attributing the excessive cost to (non-existent) “Chinese taxes”. Their biggest lie was claiming they make “no more profit” on a car sale in China than in the UK or US.
In the meantime, General Motors is profiting hugely from another re-branding scam, the fabricated tale of how Buicks were “popular with China’s leaders” when they were no such thing, Buick’s entire presence in China being nothing more than an historical fluke. A car was gifted to Pu Yi, China’s last Emperor, and eventually ended in the hands of Zhou Enlai who, according to the fabricated myth, loved the car as “the pride of his collection”. The hell he did. The car may have held sentimental value for its prior owner but evidence is thin to non-existent that either the Emperor or Zhou held that car in any esteem, and certainly not for its unreliability and countless other bad habits. Today, General Motors brought their crappy Buick automobiles to China, linked them with a gift of another crappy car given to someone 100 years ago, and re-branded it as venerated political history. And far too many Chinese are falling for this scam.
Swarovski “crystal” is another hugely successful lipstick-on-a-pig branding exercise. Swarovski is a Jewish-European firm that began life as a small company making cheap costume jewelry and who then used their accumulated knowledge of glass to make excellent optics for binoculars and telescopes. The imagining and marketing of their “crystal” costume jewelry is a relatively recent development.
In the real world of gemstones, “crystal” refers to natural quartz, a common crystalline mineral that produces some truly beautiful colors. In natural crystal, the atoms are arranged in a highly-ordered structure, forming a lattice that we see in diamonds, snowflakes and table salt. Most other elements have no structure at all, items like melted wax or plastic – or glass. Swarovski “crystals”, on the other hand, are not “crystal”, they are not natural, and they are certainly not “gemstones”. Swarovski’s so-called crystals are glass. Plain, ordinary, cheap, glass. The irritating fad surrounding Swarovski and their mythical crystals is nothing more than clever marketing, with people paying ridiculous sums of money for grossly overpriced and fragile costume jewelry made of cheap glass. For the prices paid for many of Swarovski’s products, one can easily purchase genuine semi-precious stones. Swarovski company advertising tells us, “The company’s name has become synonymous with genuine crystal.” Yes, and that’s the problem, because Swarovski have so heavily advertised their glass costume jewelry as ‘crystal’, leading most people to believe they are purchasing some kind of natural, genuine gemstone. But all they are getting, is glass. The designs may be pretty, but it’s still just cheap, ordinary glass.
And last, but not least, people everywhere, but especially Chinese, need to know that Nescafé is not coffee. It is nothing. Less than nothing. Nescafé is ‘instant coffee’, which is a chemically freeze-dried concoction that an authoritative source claimed was made mostly from a mixture of dried peas, chicory and rat shit, and designed for Americans and others who have no taste. Not only that, this product is almost always made from the lowest-grade and cheapest coffee available and, in a Western supermarket, costs maybe 10% of the price in China. It’s a tragedy to me that anyone in China might have developed a taste for this awful stuff. At Chinese New Year, I see people on the streets carrying gift boxes of Nescafé. I can hardly think of a greater insult. In the West, instant coffee has about the same social status as a box of tissues or a can of bug spray, nothing that even the mentally defective would offer as a gift. The Nescafé brand is owned by Nestlé, the same people who bring you grossly-overpriced Häagen-Dazs ice cream and dead babies in Africa.
One of the dirtiest branding tricks I’ve ever seen was in Canada with the creation of the “No-Name” brand. It originated a few decades back when a consumer backlash occurred about branding, the light finally coming on, with consumers despising the “premium” brands for their dishonest and predatory practices and flocking to ‘ordinary’ products. Clearly, something needed to be done to protect the cash stream of our criminal industrial elite. Following Bernays’ principles, a group of Jews invented the “No-Name” brand, convincing consumers of their wisdom in refusing to “pay for the name”, with very cleverly-worded ads suggesting these ‘no-brand-name’ products represented real value where a customer was paying for only the product and nothing for the ‘name’. Nothing was farther from the truth. As one example, I can still recall seeing bins of “No-Name” loose pasta in supermarkets priced at 40% above that of much superior packaged products on the shelves. And I can still recall seeing the poor, the uneducated, those either unable or unwilling to do the arithmetic to determine their real cost, trusting in the false claims of the supermarkets . That brand still exists in Canada today, owned by Loblaws, and is a valuable brand for its psychological value.
A clarifying note to my American friends: there actually are products that are “premium” in the real sense of being of superior quality, costing more to manufacture and selling at higher prices. In no way do I suggest avoiding these, and would in fact encourage their purchase. My objections are entirely with those “brands” that offer no more than standard value but use manipulative hype to charge much higher consumer prices. It is worth your while to consider this, and to try to evaluate brands based on value. As one simple example, Hero jam is almost infinitely superior to all other brands on the market, expensive but worth the money. The same can be said for tools, automobiles, and many other products, but we need to differentiate between real value and no value. The issue today is that most famous “brands” offer only fictional value.
Finally, for my Chinese friends, when you are done with your test-shopping of foreign products, turn your back on them and revert to your own domestic brands. In most cases, Chinese products are equal or superior to many of the Western brands, and offer far better value for your money.
Mr. Romanoff’s writing has been translated into 32 languages and his articles posted on more than 150 foreign-language news and politics websites in more than 30 countries, as well as more than 100 English language platforms. Larry Romanoff is a retired management consultant and businessman. He has held senior executive positions in international consulting firms, and owned an international import-export business. He has been a visiting professor at Shanghai’s Fudan University, presenting case studies in international affairs to senior EMBA classes. Mr. Romanoff lives in Shanghai and is currently writing a series of ten books generally related to China and the West. He is one of the contributing authors to Cynthia McKinney’s new anthology ‘When China Sneezes’. (Chapt. 2 — Dealing with Demons).