Brand: From Identification Symbols to Anchors of Trust

While traveling on a business trip and observing civil aviation operations through floor-to-ceiling windows at an airport terminal the other day, I arrived at a fresh deduction about the fundamental value of brands. If all markings and brand symbols were completely erased from civil aircraft and ground support vehicles, airport operations would immediately collapse. Crews could not identify the aircraft assigned for their flights, and ground staff could not accurately match baggage to corresponding flights. Even if plain numerical codes replaced brand symbols, visual recognition would become far less efficient and cognitive costs would rise sharply, causing overall operational performance to drop by an order of magnitude. For this reason, aircraft inevitably carry airline names, which later evolved into distinctive proprietary brand logos with unique visual recognition capabilities. To achieve differentiated competition in the marketplace, airlines embed core brand values and tone into logo design. This evolutionary path reveals the original purpose of brands: as identification symbols that cut transaction costs and sustain efficient division of labor.

This line of reasoning applies broadly across the entire consumer market. When shoppers pick bottled water in fast-moving consumer goods channels, if every product came without branding and only listed physicochemical parameters, consumers would spend immense time comparing specifications. Worse still, they would have no way to verify whether those parameters were true from public information. Decision-making costs and transaction risks would surge. Fundamentally, consumers need recognizable symbols to tell products apart, while manufacturers need differentiated markers to stand out from competitors. Early identifiers were merely brand names. To ease consumer memory, visual logos emerged, followed by further differentiation in bottle shapes and packaging systems. Validated over long periods in the market, these distinguishing features solidify into widely accepted public consensus, delivering the core value of brands: certainty in consumption decisions. This is an institutional outcome jointly chosen by buyers and sellers to minimize transaction costs.

A core conclusion emerges from this scenario-based reasoning: as standardized trust intermediaries, brands constitute critical infrastructure for modern society’s collaborative networks among strangers. Without this infrastructure, efficient social division of labor across regions and non-acquaintance groups cannot function. Claims that “the brand is dead” circulating in some quarters amount to a misreading of the underlying logic of commerce.

The conclusions drawn above are well supported by established theories in institutional economics. The “lemons market” theory proposed by Nobel laureate George Akerlof clearly states: in markets with severe information asymmetry between buyers and sellers, low-quality goods gradually drive out high-quality ones, eventually shrinking market volume or wiping out the market entirely. Take a market entirely stripped of branding as an example. Suppose high-quality goods cost ¥100 per unit and low-quality alternatives cost ¥10 per unit, with identical outward appearance. Unable to judge quality at a glance, consumers are only willing to pay ¥30 based on average market expectations. At this price point, high-quality goods cannot cover costs and exit the market, leaving only low-quality products. As consumers perceive falling average quality, their willingness to pay drops further. Eventually, low-quality goods also become unprofitable and withdraw, and the whole trading system breaks down. Brands are the core mechanism to break this vicious cycle. Brand goodwill accumulated by enterprises through long-term operation is essentially a credible commitment to consumers. As a carrier of corporate reputation, brands implicitly guarantee product quality and reduce consumers’ costs of information screening.

Extending this to the cost of verification: if consumers had to personally test moisture content, pesticide residues and aging levels when buying agricultural products such as rice, the cost of individual inspection would exceed the value of the transaction itself under the finely divided social labor system of the modern economy. Brands act as a simplifying mechanism for trust, offering consumers a trust shortcut that removes the need for pre-purchase inspection. Consumers skip complex quality screening, make decisions rapidly, and society-wide transaction costs fall substantially.

From the supply-side perspective of enterprises, brand value is equally clear. Long-term-oriented high-quality operators need unique identifiers to separate themselves from low-quality rivals and communicate differentiated value. Opportunistic merchants chasing short-term gains usually lack incentives to build brand equity, since they can abandon one brand and re-enter the market under another after defrauding customers. In essence, the brand system is an incentive-compatible mechanism for long-term operators. It allows high-quality goods and services to be recognized, remembered and actively selected by consumers, fostering a positive market cycle where good money drives out bad.

The public may not need premium brands to signal social status, yet brands are indispensable as responsibility anchors that identify accountable parties for products. If all branding were forcibly removed, the market would not revert to some imagined low-premium idyllic state. Instead, it would sink into self-doubt and constant verification, a regression in the efficiency of social collaboration. Ancient swordsmiths carving their names onto blades, armies flying distinctive banners, clans using marked tallies all follow the same underlying logic as modern brands. Fixed, recognizable symbols anchor trust, accountability and value, laying institutional groundwork for cooperation between strangers.