A Brand is forever ! A framework for revitalizing declining and dead brands.

A Harvard Business School case(Sunil Thomas, Chiranjeev Kohli )

Let us analyze the case…

What is the present situation?

Numerous Brands have met untimely deaths over the years. Many more have steadily declined into oblivion, while others have been revived.

PAN AM

Oldsm

obile

woolw

orth

Unfortunately, even the strongest brands with high net worth are not immune from brand decline and subsequent death….

THE CONSEQUENCES BEING..

Significant investments that were made to build the brand are also lost.

And In today’s market, new product introductions are both expensive and risky.

Hi. I am “old brand”. It is my time to retire !

I am the “New Brand”. Yahoo!

OH DAMN. MY PARACHUTE

DOESN’T WORK !

Now, The questions we Face..

Is it worthwhile to evaluate brands that are declining and invest in revitalizing them?

Why do brands decline and die?

How to highlight signs of an impending decline?

What are the various approaches that can strengthen a brand and give it a second life?

LITERALLY !

For a more Practical look on the problem addressed, Let us First look at the revival of two famous brands that almost died…

Ford’s Taurus became one of the company’s top

selling models and was the best selling car in the U.S. For 3 years in a row !

However, Intense competition from two Japanese brands- the Honda Accord and Toyota Camry- weakened the brand, so much so that Ford decided to pull the plug on Taurus in 2006..

Consider Harley-Davidson…After Decades of Market dominance, the brand started bleeding in the early 1970s

upon the advent of smaller Japanese Motor bikes..

To counter this action, they took a hasty decision of launching it’s own line of smaller vehicles…

But, these were perceived by loyal Harley customers to

be of Poor quality and the sales continued to drop. The company faced huge losses and it looked like…..

Death was Certain for the brand !!

But sometimes dying or dead brands may still have significant Brand equity (which is addressed later on in detail) in terms of high brand awareness and a strong brand image….

Ford realized that instead of trying to use another brand name that meant little to the market, it would be better off utilizing the Taurus brand name and thus did

an about-face and reintroduced the Taurus brand into the market

On the other hand, Harley decided to make a significant investment in its Quality and distinctive styling..

It is now once again a well-known and revered American Brand !

It is defined as “the differential effect that consumer knowledge about a brand has on the customer’s response to marketing activity”.

The Brand Equity may decline with the passage of time, sometimes leading to a Brand’s demise….

Decline and Death of Brands

Pan American Airways was one of the oldest airlines in north America and the most trusted one..

Two major Reasons for It’s death :

Rise of Intense Competition over the years .

Tarnished Brand Image due to Significant amount

of Negative Publicity regarding The 1988 PanAm air crash in Scotland.

A brand of GM, the iconic Oldsmobile was known for its pioneering designs and innovations

Who was the

murderer of

this brand?

Its Brand Image. It was perceived as an “old Brand” among consumers

The Uniformity in design across GM’s different Brands made Oldsmobile lose its unique identity as an innovator

Why do Brands decline?

Brand’s Success or Decline is affected by Three forces , just like Organisms..

1. Generative Forces : Managerial and Entrepreneurial activities.

2. Selective Forces : The market environment.

3. Mediative Forces : Competitor’s actions and responses to marketing initiatives .

THE PEC FRAMEWORK

1. When Management…

Bad management can significantly impact brand health, even when the environmental factors and competitive actions remain static. Such actions can be qualified into five categories :

eaks

D.

1.1 Product QualityThe brand starts to decline when Compromises in product quality for cost cutting reasons Bring about a dissatisfaction among the customers..

1.2 Price IncreasesIf a company continues to raise prices without offering a corresponding increase in benefits, sooner or late the customers will start to abandon the brand.

Volkswagen was unable to control the costs and had to keep raising prices of the new model Golf GTI , Until it effectively drove itself out of the market.

1.3 Price cuts Desperation drives the companies to cut prices to increase sales. It can damage the brand.

In 1980s, when sales began to decline for Lacoste, a popular brand in the U.S. , They hastily lowered prices.

The company was forced to use cheaper material.

LACOSTE This proved disastrous and the Brand’s image took a major hit !

1.4 Brand NeglectManagers get wrapped up in the inertia of a brand and begin to miss changes in the market. Black & Decker's DeWalt brand was ignored until it virtually ceased to exist.

Organizational Shake-ups can also result in less attention being paid to a strong brand associated with earlier management.

Ovaltine suffered from corporate neglect because it wasn’t a core brand of the acquiring pharm company Sandoz.

1.5 Inability to stay with the Target Market

As the companies start to shift their focus mid way and position themselves according to a more promising younger audience, The brand runs the risk of alienating its core customer base. Example : GAP, St. John

GAP ads became too edgy for its key target market.

ST.JOHN’s decision to chose Angelina Jolie as the face of the brand was aimed at appealing to the less conservative rebellious younger audience. Unfortunately, consumers were not buying its message. Ultimately, they stopped using her to promote its products.

2. The Market environmental Factors

Markets are dynamic in nature and can undergo major transformations, which in turn have an impact on the various companies in an industry and their brands

For example, Cigarette brands in the US have been affected by changes in the legal environment. R.J. Reynolds Camel has been accused of using communication tactics to attract children.

This led to lawsuits against the company and A lot of negative publicity which damaged the Brand’s image

Another good example is Polaroid..

With it’s unique product offering i.e. instant results , Polaroid quickly gained popularity.

But, the company spiraled into decline as the environment changed and digital imaging became popular.

Kodak Faced a similar situation..

Moral of the story : Kodak, never allowed the transformation of the market to derail its Brand and thus avoided possible death.

But, the company was quick to realize the implications of this digital environmental factor and made necessary investments in the future!

It was one of the first companies to introduce digital camera, the DCS-100 in 1991 and thus continued to take lead in digital technology !

3.Competitive Actions :

In most markets today, a brand faces relentless onslaught from its competitors.

Brands that declined in the face of intense competition :

Nike and Reebok which were more in tune with the trends in the American market completely squeezed adidas and puma out of the U.S. markets.

Wal-mart proved as a formidable challenger in this arena and crushed the then retail giant Kmart by making cost cutting a science

and its operations became brutally efficient.

Newer competitors are frequently nimble and are able to leverage novel technologies and marketing approaches to their advantage.

Like Dell’s Innovative lower prices and direct-to-customer method of

distribution system crushed Competitors like

Compaq.And Netflix’s offering of video rentals via postal mail to the comfort of the clients homes forced Blockbuster, A giant in the Video rental business to close 300 stores in one year.

How to highlight the signs of an impending decline?

Let us revisit the definition of Brand Equity :

It is defined as “the differential effect that consumer knowledge about a brand has on the customer’s response to marketing activity”.

These are three highlighted key elements of a brand’s equity and a change in one or more of these can signal a brand’s impending decline.

1. The Differential Effect.

Marketers must provide an evidence so that consumers believe their product is more appealing than competing brands. Only then can see a differential effect of this brand knowledge on consumers behavior towards their brand. This can be pursued in two different approaches…

Firstly by focusing on the value the brand provides to the consumers.

A strong case can be made if it is “value priced’ . i.e. if the brand offers good quality at a low or competitive price.

The second approach is by creating differentiation from other brands on the basis of superior quality, physical attributes, or

intangible benefits.

“Brands must offer something different; they cannot just be another flavor of vanilla !”- Volkswagen P.R. Manager.

Managers should not only monitor differentiation. They should carefully articulate it.

Chevron emphasizes its trademarked additive, Techron, A kind of Detergent.

What many customers do not know is that, all major brands of gasoline have detergents in them !

Chevron has just seized on it as a source of differentiation !

2. Brand Knowledge and Awareness

For a Brand to be successful, consumers should be knowledgeable about it. They ought to know why it is more compelling choice than the other alternatives.

Aided Recall Unaided recall

Two major indicators of Brand awareness :

Both levels of Recall drop drastically when the brand awareness is falling. This could be a serious, long-term Problem.

Often managers are lulled into complacency by past success and continues high awareness levels, prompting them to cut back on advertising even when a brand begins to struggle.

Also, The company must make sure they protect the Brand’s Image.

It is not uncommon to see an innovative brand losing its well defined and focused image.

Strong, favorable, and Unique brand associations can help maintain a company’s Brand image.

Volkswagen had failed in the past when they used marketing strategies or

introduced new products that strayed from the company’s image of being approachable, friendly, and a German brand.

Levis began to lose its leadership as the jeans market moved towards new styles.

It failed to follow this shift and stuck to its classic image. Sales declined

sharply and in a desperate attempt, it sold it’s signature brand through Wal-Mart at 35% less prices. This association with an arguable low-end retailer pushed the image further down-market.

3. Customer response.

Sales FiguresPurchase intentions and brand loyalty measures

Brand Switching BehaviorThree simple and standard

indicators to measure customer response and monitor Brand decline.

Now let us recap the definition of brand equity…

It is defined as “the differential effect that consumer knowledge about a brand has on the customer’s response to marketing activity”.

The aforementioned signs of decline must be detected quickly if corrective action is to be taken. All three aspects of EQUITY need to be considered since they are linked to each other !

Recap : The questions we Face..

Is it worthwhile to evaluate brands that are declining and invest in revitalizing them?

Why do brands decline and die?

How to highlight signs of an impending decline?

What are the various approaches that can strengthen a brand and give it a second life?

LITERALLY !

REVITALIZING BRANDS !

Is the brand worth reviving??

A brand is worth reviving if there is significant residual value in one or more of the components of brand equity.

Significant amount of equity

Proper diagnosis

strategy execution

Brand can be revived !

Three critical questions need to be pondered when considering revitalization of a brand…

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 issue? (put plans in place to get an appropriate customer response)

HOWEVER.

Some may just not be worth the effort. True for brands that suffer from low awareness and a negative image. It may be better to Kill the brand than to invest in it.

Take a Long term Perspective.

Most brands take a long time to build, and a long time to die. Reviving a brand is also a long-term initiative !

A long term perspective is imperative even if that means taking losses in the interim.

Marketing research should be an integral part of this exercise to assess and track brand awareness and brand

image.

Nutri –Grain understood this and used research to reinforce its image as a “Healthy breakfast and snack food” by fortifying its breakfast cereal bards with ‘calcium’ and ‘vitamins.’

Carefully reposition the brand, invest in it, and educate the market.

Consider, General Motor’s Portfolio of Buick, Chevrolet , Pontaic, Oldsmobile…

Chevrolet Entry-level segment

Buick Families

Pontaic Built for “excitement”

What about Oldsmobile?

The Brand did not invest sufficiently in quality and was always playing catch up with the

competition. It suffered from a major lack of Clear Positioning.

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

Find that Unique Cloud/differential of your declining brand and hammer it home throughout all aspects of the transaction- “before, during and after the sale “.

Correct mismanagement of the brand

Failure to clearly understand the cause of decline.

The lack of commitment to do what is necessary to reverse the trend.

No change in strategies that weakened the brand in the first place.

Leading and most common causes for the death of a brand.

Let us look at the three consistent themes that have emerged in declining Brands..

• Rebuild the quality.Poor quality rarely goes unnoticed for long, though, and at some point customers will begin to abandon the brand. Once, a decision has been made to revive the brand, expensive as his might prove, quality issues must be addressed.

Brands like Harley Davidson, Hyundai subsequently achieved a complete turn-around by significant financial investment in quality.

• Resist temptation to “milk” the brand

An aggressive form of “milking” entails cutting prices steadily, a reflection of the brand’s weakened position. Once a market leader, Levi’s entry into Wal-mart with its lower quality signature jeans had hurt the image of the brand’s entire line.

•Pursue a carefully defined target market.

Target markets can mature or shrink over time.

Moving with the dwindling target market is not an appealing option, but neither is abruptly switching to another target market, as this risks alienating the core customer base.

In such situations ,a line extension with a sub-brand can be a very effective strategy.

Levi’s adopted such a strategy and successfully launched Dockers to enter a new market of business-casual clothing as opposed to it’s usual Denim youthful rugged jeans.

Dockers became so successful that Levi’s removed it name and it became a standalone brand !

LET THE REVITALIZATION BEGIN!Given the high cost of launching new brands, companies are increasingly looking to revitalize dying or dead brands in their portfolio. History shows that this is possible….

Well, let us look at an example .

During the latter quarter of the 20th century , Cadillac, A flagship brand of GM experienced a steady decline due

to competition and various other factors.

However, the brand was determined to reposition itself as providing a driving experience as good as any offered by rival brands, while undercutting them on pricing.

Invested $4 Billion in the quality of its cars and redesigned them for the global market.

So, What did they do ?

Offered more models like CTS, the STS etc each positioned to compete directly with the bestsellers in their respective categories.

GM came up with distinctive and daring designs for Cadillac and committed itself to strengthen the Brand’s image.

And the results…

It was rated more favorable than the best German or Japanese Brands.

Recap : The questions we Face..

Is it worthwhile to evaluate brands that are declining and invest in revitalizing them?

Why do brands decline and die?

How to highlight signs of an impending decline?

What are the various approaches that can strengthen a brand and give it a second life?

LITERALLY !

Managers need to constantly watch for signs of brand decline. Using a Brand equity framework, we suggest that most brands with high levels of awareness or positive brand image are the candidates for revival!

These slides were created by Kandukuri Aishwarya, as part of an internship done under the guidance of Prof. Sameer Mathur (www.IIMInternship.com).