I just picked-up a thread on ignorance premium by Hugh Macleod where he wrote:
"With the Ignorance Premium, you're paying extra for not knowing. Instead of MICRO knowledge, your basing your choice on the cooler, hipper MACRO Brand Metaphor. Branding is all about about being cool and hip, because branding is all about propping up the Ignorance Premium."
It is an interesting point-of-view that is evocative, real and makes a lot of sense to me because there are a lot of brands in the marketplace today that are unable to hold market share, charge a premium and grow year-on-year. Consumers are ditching these brands because they don't see value anymore, as their IPQ( Ignorance Premium Quotient) about these brands and their benefits have increasingly come down to zero over years.
Take for example, the processor market. AMD is threatening Intel off-late because consumers are increasingly seeing "very little" value for the premium that they have to pay for Intel chips. AMD seems to be giving better performance vis-a-vis price. It is in Intel's interest that they add "powerful features or differentiators" to their chips to maintain and grow marketshare.
The rise of Wal-Mart with the promise of "everyday low prices" is another striking example of how leading brands are unable to justify their "price premiums" , as consumers' "ignorance premium" is reducing everyday, thro active collaboration, word-of-mouth, chatter etc.
Rapid reduction in ignorance premium amongst consumers, could also be the real reason for shorter product lifecycles, as information about products and brand comparison shopping is extremely easy and convenient today, than in the past.
Do a reality check on your customer IPQ and that may be the real reason for erosion of market share and value. Always focus on customer, product and innovation.
thro' Christopher Carfi