Case Analysis

A BRAND IS FOREVER!

A FRAMEWORK FOR REVITALISING

DECLINING AND DEAD BRANDS

What this case study is about?

Position of a Brand in market is not constant!

Over the time, even a high valued brand may tend to decline and death

subsequently, if proper attention is not given.

Situation analysis

But they say..

Decline is Reversible!

Situation

analysis

Even dead brands may have significant brand equity!

Also, revitalization of brand is less costly and risky than introducing a new brand.

Brand declination: Gradual process

Situation analysis

Brand evolution theory is used to determine causes of brand decline.

Situation analysis

Why this case study?

To evaluate the Causes of brand decline, Preventive steps to avoid impending decline, Cures to revive a declining or dead brand.

Objective

What is at stake if a brand dies?

Investment made in brand building.

Key concept: Brand Equity

Differential effect that customers’ knowledge about a brand has on customers’ response to its marketing activity.

Consumer brand knowledge can be characterized in terms of brand awareness and brand image.

May decline with passage of time.

Examples of Brand decline and revival

Ford’s Taurus

Launched in 1985, Ford’s Taurus quickly became one of the company’s top selling modelsHowever, intense competition from two Japanese brands the Honda Accord and the Toyota Camry weakened the brand.Ford decided to pull the plug on the Taurus in 2006Soon after, Ford did an about-face and reintroduced the Taurus brand.

Harley-Davidson Early days of the post-World War II period, the brand gained popularity as its motorcyclesbecame known for their unique designs and engineering.

The brand started bleeding in the early 1970s upon the advent of smaller Japanese motorbikes.

Created its own line of smaller vehicles; unfortunately, these were perceived by loyal Harley customers to be of poor quality, failed.

Harley decided to make a significant investment in its quality and distinctive styling.

Revived again.

Causes of Brand Decline

Three main causes of Brand decline

1. Managerial actions (Generative force)2. Environment action (Selective force)3. Competitors’ action (Mediative force)

1. Managerial Actions

Product quality

Compromises in quality for

cutting cost

Successful in short run due to customer loyalty

Bad customer experience Decline

Price increase

Increase in price without offering corresponding

benefits

Brand abandoned by customers

Example : Volkswagan’s Rabbit model was replaced by Golf model

Price cuts

Cutting price Perceived as lowering of quality

And eventually Brands have to compromise in

quality to keep price low in long run

Example: Lacoste, when sales began to decline, it loweredprices and expanded distribution. To maintain low prices, the companyhad to in turn use cheaper material, Negative Image

Brand neglect

Popularity Inaction

Organizational shakeups Less attention to strong brand associated with earlier management

Example: Ovaltive, wasn’t a core brand of the acquiring pharmaceutical company, Sandoz

Inability to stay with the target market

When the target market moves away

from the brandDecline

Examples: GAP and St. John

GAP

In the 1990s, Gap decided to do more to reach out to teenagers and young adultsbecause they represented a growth segment which offered better rewards.

The company started to position itself to appeal to this audience butin the process alienated its core customers, whofelt neglected as the product strived to become youthful and trendy.

2. Environment action

Market is dynamic and influenced by the changes that happens in its proximity.

It may include Changes in legal environment, Technological advancements, economic and political conditions etc.

Examples: Cigarette brands- R.J. Reynold, Polaroid: negative adaptaion Kodak: Positive adaptaion

Polaroid A household name since it popularized instant photography

Even today, it retains high brand awareness, but the company spiralled into decline and wentbankrupt as the environment changed and digital imaging became popular

Kodak

For the next 90 years or so, films were the standard platform for photography

Emergence of digital cameras posed challenge to Kodak

The firm was quick to realize the implications of this environmental factor, and made necessary Investments in the future.

Today, it maintains a 16% market share.

3. Competitive action

Puma and Adidas in Europe were in strong position but in USA were squeezed out by Nike and Reebok

Dell started Direct–to-customer distribution system, resulted in considerably lower markups for Dell, creating a savings which the company was able to pass along to its customers in the form of low prices

Prevention Deconstructing Brand Decline

To avoid (or reverse) a damaging outcome,it is important to deconstruct the decline in terms of reliable precursors to sales

Elements of Brand Equity

1. Differential effect Why Customer choose a particular brand among all other options?

Differentiation approaches

Value Priced Additional or different feature

2. Brand Knowledge Communicating Values

Components

Brand Awareness Brand Image

Brand Awareness

• Falling brand awareness Serious long term problem

• Indicators of brand awareness:

1. Aided recall: Tend to decline more gradually

2. Unaided recall: better indicator of brand’s health

Brand Image

Need to maintain “Strong, favorable, and unique brand association “.

Monitor the brand image is done by monitoring changes in customer perception

3. Customer response

Determination by monitoring

Sales Purchase intension

Brand loyalty measures

Brand switching behavior

Reasons for brand switching

:

Negative publicity

Entry of new competitors in

market

Increase in the price of the

brand

Revitalizing Brands

Is the brand worth reviving?

Examining three elements of brand equity:

(1) Can the brand regain some of its former glory (brand knowledge)?

(2) Can its old equity be enhanced through new positioning that is relevant and will stand out (differential effect)?

(3) Can the company effectively deal with logistical issues (put plans in place that will get an appropriate customer response)?

Brand Audit

Realistic investment in

reviving a brand

Cost of replacing a brand with a

new brand

Brands with negative image and low awareness are better to kill.

Brands having commanded a premium in recent past and has singular focus with well defined differentiation can be revived .

Take a long term perspective

Revitalization can be started1. Addressing the cause of decline2. Understanding the brand promise3. Why it may have failed to maintain its relevance4. Adjusting this5. Educating market about it

Example: Blockbuster

Long term perspective may causes losses in the interim.

Marketing research

Integral part of exercise to assess and track brand awareness

Examples: Nutri-grain , used research to reinforce itsimage as a maker ‘‘of healthy breakfast and snackfoods’’ through brand extensions

Repositioning, Investing in Brand and Educating the market

Strong brand differentiation can be re-established with a focus on the right positioning , and then emphasizing that consistently in the brand’s communication.

Managers faced with a declining brand must find what’s unique about their product and hammer it home throughoutall aspects of the transaction–‘‘before, during, andafter the sale’’

Example: GM’s Cadillac brand

Cadillac experienced a steady decline, while competing Japanese and German brands gained strength

Cadillac was committed to going head-to-head with the competitionand repositioning itself as providing a driving experience as good as any offered by rival brands,while undercutting them on pricing.

Correct mismanagement of Brands

Rebuild quality

Example: Harley-Davidson

Resist temptation to “milk”

Cost cutting: An aggressive form of milking

Example: Levi’s Signature brand

Once a marketleader, Levi’s entry into Wal-Mart with its lowerqualitySignature jeans has hurt the image of thebrand’s entire line. Such actions should be avoided.

Pursue carefully defined target marketTarget markets: Shrinks or matures

Moving with the dwindling target market is not an appealingoption, but neither is abruptly switching to anothertarget market, as this risks alienating the corecustomer base

Line extensions with a sub-brand can be a very effective strategy.

Example : Levi’s Docker

During the 1980s–when it was still a strong brand–Levi’s adopted such a strategy.It successfully used the strength of its brand name to launch Dockers and enter a new market; that is, business casual clothing.

Once Dockers became well-known, Levi’s removed its name, and Dockers became a stand-alone brand.

DisclaimerCreated by Namrata Yadav, IIT Roorkee, during an internship byProf. Sameer Mathur, IIM Lucknow.

www.IIMinternship.com

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