When brands cease to be in future generations

Philippine Daily Inquirer, Business Features Section, February 24, 2012

Time was when selling a product was far simpler – not much competition; fewer available product forms and benefits; limited media formats to deal with and absolutely no social networks. Also, less sophisticated research and development and technology; far less pervasive retail space and formats; pricing and margins were not too depressed; and consumers were less demanding and bought mainly due to functional needs.

Thus, a product that rose to become a successful brand decades ago would have by today’s time far more financial resources, a wider customer base, heritage, expertise and capability to invest in product technology, research and development. Moreover, by this time the brand is likely to emotionally connect more effectively with consumers.

But few brands endure into the next generation of consumers. Some cease to exist completely. Others are simply milking their old-time customers and fail to build new markets. A few recover from the big dip and re-energize so brand life continues.

Sustaining the Life of a brand remains difficult

Contrary to what most marketers believe, sustaining the life of a brand remains challenging. Ironically, even some of the world’s most valuable and popular brands like Coke, HP, IBM, Nordstrom, Xerox, Disney etc. have suffered glitches in their brand life but have since recovered. Truly, great brands can decline and yet recover.

But one wonders why super brands ever dip and cease to be. Properly managed, no brand needs to fail, die or decline. Following are symptomatic of declining or failing brands:

Over-reaching or stretching beyond the brand value. In a moment of panic triggered by “more” business objectives – more customers, more units sold, more peso or dollar value, brand owners sometimes fail to take stock of their brand’s essence. In 2009, iconic motorcycle brand Harley Davidson made an attempt to bust its macho stereotype personality by targeting women riders and making them a priority. First in its product line-up for women is the US$8,000 SuperLow, intended for women and first time riders. The model has a low seat for easy ride and is 150 pounds lighter than the original Harley. This was an attempt by Harley’s newly minted non-riding CEO Keith Wandell to source additional growth.

At the end of 2010, Harley Davidson dropped 24% in brand value and fell from 76th in ranking to 98th in ranking by 2010. The drop is precariously close to the brand falling off from the Top 100 global brands list where it has been a regular.

Arrogance synonymous to immortality. Motorola was at one point the number one cellphone maker in the world with a nearly 50% share of the market until pride and arrogance subsumed its key executives. In 1995, Motorola put all its eggs in StarTAC, the smallest analog technology cellphone, when most carriers were demanding digital. Moreover, Motorola hustled its distributors with exclusivity, low commissions and nearly impossible merchandising support for StarTAC. Motorola’s arrogant tactics became an opening for competition. With limited support from distributors, Motorola slipped rapidly from 50% to a 17% share by 1999.

Today, Motorola is attempting recovery with its line of smartphones, mobile converged devices, digital entertainment devices, etc.

Failure to understand or recall the brand’s essence. In the 50s and 60s, Coke outsold Pepsi 5 to 1 worldwide. But Pepsi’s reinvention as the drink of the new, young generation proved to be a major strategic challenge. The 70s and 80s saw Pepsi taking the offensive with two trailblazing branding campaigns i.e. Pepsi Generation with youth endorsers like Michael Jackson and Don Johnson and the Pepsi Challenge that showed that across blind comparative product tests Pepsi was better-tasting than the “real thing”. By the mid-80s, Coke’s position has become shaky and its market share has dropped to nearly 24%. On April 23, 1985, its relatively new Cuban-born chairman Roberto Goizueta introduced the New Coke and stopped the production of the original Coke. Consumer outrage was such that sale of the New Coke was an all time low and there was huge public outcry for the return of the original Coke. Three months later on July 11, 1985, Goizueta opened up a press conference with four words addressed to the consumers, “We have heard you”. Clearly, consumer attachment to the brand goes beyond blind taste tests and functional needs and more deeply into emotional connection and passion. No functional consumer research test can ever capture this insight. The original coke represented American pride and national patriotism. Not surprising, as Coke was the first brand born shortly after the World War II that quietly conquered the world.

In retailing, Nordstrom is a classic marketing success story, known globally for its unique and extraordinary customer service. But then, from 1995 up till 2000, Nordstrom suffered a major dip owing to its disregard of customer service that first built the brand and sustained it. Not until a fourth generation family, Blake Nordstrom took the reigns and brought back the brand to its core mission and architecture that the decline was reversed. Nordstrom has been quoted, “It was evident to my cousins and me that our fall was our personal fault. We lost sight of what we are. Success for our company and brand is not an entirely new business model. Instead it is taking what we already do well and continue to execute these strengths and be the best department store chain in the world in building lasting relationships between the customer and sales person”.

Complacency. The Philippines has a long list of generational brands, brands that live to serve only one or possibly, two generations. Some of the notable names of the past with declining awareness and limited usage at present include Ma Mon Luk, Acebedo Optical, Chocnut, 680 Appliance store. True, these products still exist but no longer enjoy the reputation they experienced in the past and are merely milking its long time consumers. Other generational brands are attempting to relive its glory days thus, sustaining its brand life. Some of these include Savory chicken, Happy Feet footwear. But recovery becomes an uphill battle and is nearly as costly as introducing a new brand compared to successfully managing a brand over time. Still, there are those brands that survived more than a generation on the strength of its product technology thus, gaining a stable following. These brands are ready to move into the next level to conquer new markets and become real challenger brands in their category but are managed by people afraid of competing in unfamiliar territory.

More of the same, no game changing brands. Some companies are under the impression that introducing more products results in more profits rather than maintaining a few products and building these to become brands. Ironically, many of the products introduced are mere modifications of core products and are no real game changers that create new segments and categories and serve emerging or un-served needs. Rubbermaid in the 90s introduced one new product every single day for 365 days. By 1995, Rubbermaid reported a loss, did a major restructuring and in the same period cut nearly six thousand product variations, closed manufacturing plants and eliminated thousands of jobs.

Apple, the most celebrated brand of this century has few consumer product offerings but most are winners, changing the lives of consumers and competitive playing field. Macbooks, ipods, ipads, iphone – all remain true to the Apple brand essence of functional design.

The Generics PharmacyÒ has changed the landscape of local retail pharmacy. Riding on the macro-environment trend of more and more branded medicines becoming off-patent, The Generics PharmacyÒ through its 1,300 branches nationwide makes available a complete range of off-patent generic medicines that are safe and equal to the efficacy of off-patent branded medicines. These generic medicines sourced mainly from reputable global generic manufacturers and sold at highly affordable prices help consumers complete their dosages.

Brand owners lose track of their accountability. Some brand owners zero in on the short-term, tactical moves, daily activities, cost and expense reports failing to have a long-term vision of their brand and their true accountability. For example, not uncommon are brand owners who do the media buying themselves without a real plan or a macroscopic view of where to take the brand, sweet-talked into masked deals, unaware that not all media formats that is cheap or affordable is helpful to the brand. Most forget that their true game is the brand’s strategy and direction.

Sustaining a brand is no easy task. It requires the brand owners’ discipline, competitive spirit, clear-cut focus of accountabilities and insightful intelligence.

The writer is the author of the best-selling branding book, Color Folders In The Mind: A Branding Story and is Asian Institute of Management Course Program Director of Strategic Brand Management. With email at kdeasis@skyinet.net

 

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