Brands to use, brands not to use
Inspired by GGx's question Will traditional publishers force you to remove brands?
I would probably not want to mention a brand name of a small brand in my work: a small brand might not want to be associated with a fictional work because of suspected endorsement, and might get replaced next year by a better brand, turning my work into a period piece. Readers might also be unfamiliar with a small brand. So it's all-around advantageous to make up my own.
But what about a big known brand, like Google? In a story set in our time, it would be rather weird for the characters to use a search engine that isn't google - we even use 'google' as a verb, as in "why don't you google it?".
Similarly, I haven't yet heard of characters driving InventedCarBrand rather than Porches and Rolls-Royces if they're rich, or Volkswagen Beetles if they're poor. Depending on the setting, characters drink coke or Dom Pérignon, not BlackSugarWater and FancySparklingWine.
So where does one draw the line? Is there a rule of thumb regarding when to use the existing brand, and when to make up one's own?
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Not using real brands can give you more creative freedom
Funnily enough, I have an example of this from just the other day. I was writing a scene where my protagonist meets his soon-to-be love interest (who's also secretly a supervillain bank robber) in a nightclub. To demonstrate her wealth, I had her remark, "My entire outfit is Gucci". Then shortly afterwards, I came to a bit where I had to describe her outfit, so I looked up the Gucci women's catalogue.
Let's just say the clothes in their catalogue didn't match the image I had in my head of what that character would actually wear. Especially in a nightclub. Rather than flick through every high-end fashion brand I could think of in search of one that did match, I just changed the line to "My entire outfit is designer" and then made the description up.
Not using real brands lets the reader fill in the gap
Let's say you have a running gag in which your character's smartphone is slow and keeps crashing, and they constantly complain about it. If you don't mention the brand, readers will imagine it to be whichever smartphone company they like the least, and the joke will become even funnier to them. If you mention it's an iPhone, suddenly readers who like iPhones - and Apple's lawyers - aren't laughing anymore.
Using a real brand can help reinforce a character's personality
Certain brands are associated with certain subcultures or personality types. To use the soft drinks example: Mountain Dew is associated with gamers; Faygo is associated with Juggalos; Dr. Pepper is associated with the anime Steins;Gate. You can use these associations to your advantage, either to subtly reinforce a character's personality, or to subvert them ("The hell is a Juggalo? I drink Faygo 'coz it tastes nice.") At the same time, you should avoid a character using a brand that doesn't fit their image (unless, again, it's for subversive purposes).
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This is not legal advice and I am not a lawyer.
Great question! I think the answer lies in this:
But what about a big known brand, like Google? In a story set in our time, it would be rather weird for the characters to use a search engine that isn't google - we even use 'google' as a verb, as in "why don't you google it?".
When you get to the point that it would sound odd to not use the brand name, that's where it makes sense to use it (if you can).
"Good question, let's Floogle that" sounds weird. If you were in a situation where you can't use the brand name legally (I'll leave whether that's the case for other questions to answer) you can write around it. "Good question, let's check the web" is definitely less awkward that using another search engine.
It's also worth looking into the concept of generic trademarks:
A trademark is said to become genericized when it begins as a distinctive product identifier but changes in meaning to become generic. This typically happens when the products or services with which the trademark is associated have acquired substantial market dominance or mind share, such that the primary meaning of the genericized trademark becomes the product or service itself rather than an indication of source for the product or service.
Thermos, Kleenex, ChapStick, Aspirin, Dumpster, Band-Aid, Velcro, Hoover, and Speedo are examples of trademarks that have become genericized in the US and elsewhere.
Whether this means you can use these without fear of getting a cease and desist letter... I'd check with a lawyer about that.
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+1 to Neil, my thought was the same: When a replacement name risks breaking the reader's suspension of disbelief (SoD), you need to either circumvent the mention or use the real name.
In the GGX case of "famous designer" (or famous lawyer, engineer, programmer, billionaire, CEO, sports star, actress, politician...), we always have more to choose from than names we can remember, so it will not risk breaking SoD to make one up. Every year we can plausibly see a new crop of all of those professions.
Another option is to invent anyway: For "Google" give yourself an expert computer scientist or super hacker.
"Wait, what are you searching with? That doesn't look normal."
"Oh. BFG. Little trick we've got, bypasses the filters on ... Here we go, found it."
"That fast? I searched all day!"
"Yeah dude. Get you some BFG."
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