The Phaeton is a great point! It just shows how even a brand like VW with a lot of ‘emotional benefits’ as you put it, can easily alienate its market with a move like that. On the other hand, Saturn has made a similar shift and fared better. It might be interesting to compare the marketing initiatives around the time of the Phaeton with those of Saturn as they shifted into the higher sports/luxury bracket.

I agree that one’s brand is of paramount importance in marketing. Al Ries has frequently demonstrated the supremacy of a strong brand over a strong product, such as with the Volkswagen Phaeton example. While the car was superior to its counterparts at the product level, it betrayed its own brand (or vice-versa, depending on your perspective) and thus failed. At any rate, it’s becoming increasingly difficult to differentiate at the product level and the most sustainable differentiation seems to occur with emotional benefits rather than functional. When does product superiority equate to category ownership? Not very often. It’s those strong, favorable, and unique elements of a brand — to put it into a Keller context — that are difficult to replicate, and even more difficult to identify. Since a brand is defined by the collective perceptions of every contact point imaginable with a product, service, or company, I guess we just try to do things as well as possible as often as possible, cross our fingers, and hope to be defined positively by consumers.