A DRAFT REPORT ON ON COMPARISON OF BRAND FAIURES & BRAND SUCCESS (SELECTED CASES OF MNCs
SUBMITTED TO Dr.Neeraj Anand Associate Professor, CMES, UPES
SUBMITTED BY ANSHUL TOMAR (R020208005) UTSAV NEGI VIVEK ZAVERI (R020208040) (R020208045)
MBA (Oil & Gas), II Semester
UNIVERSITY OF PETROLEUM & ENERGY STUDIES COLLEGE OF MANAGEMENT & ECONOMICS STUDIES DEHRADUN
TABLE OF CONTENTS
Acknowledgement Certificate from the candidate Certificate from the Guide Preface Executive summary CHAPTERS 1. INTRODUCTION 2. LITERATURE SURVEY: CASE STUDIES 3. RESEARCH METHODOLOGY 3.1 OBJECTIVES 3.2 RATIONALE OF THE STUDY 3.3 RESEARCH QUESTIONS (HYPOTHESES) 3.4 SCOPE 3.5 LIMITATIONS 4. FACTS & FINDINGS 4.1 BRAND MEASUREMENT 4.2 STRATEGIC BRAND ASSESSMENT 4.3 BRAND REPORT CARD 4.4 CONSUMER REPORT SURVEY FOR TOYOTA & FORD 4.5 BRAND EXTENSION STRATEGY
I II III IV V PAGE NO. 9 - 13 14 - 37 38- 39
5. ANALYSIS & INTERPRETATIONS 61-67 6. CONCLUSIONS & SUGGESTIONS/ RECOMMENDATIONS 68 BIBLIOGRAPHY ANNEXURE I – Balanced Scorecard
It gives us a great sense of achievement and pleasure to present this report on out MBA research project undertaken during the second semester (Ist year) as a part of our curriculum. We owe special debt and gratitude to Dr. Neeraj Anand (Program Director, LSCM) for his consistent support and invaluable guidance throughout this endeavor. Whenever we were puzzled and confused about the concepts, his innovative ideas gave us a way to proceed. His sincerity, thoroughness and perseverance had been a great source of inspiration for us. It is only his cognizant guidance and motivation that our efforts saw light of the day.
We also take this opportunity to acknowledge the contribution of all the faculty members of the CMES engineering department who are guiding us during our MBA without which we wouldn’t have been able to understand the concepts involved.
Finally, we acknowledge ourselves for our individual efforts in the completion of this project.
Regards, ANSHUL UTSAV NEGI VIVEK ZAVERI
CERTIFICATE FROM CANDIDATES
We hereby declare that the project entitled “Comparison of Brand Failures & Brand Success-Selected Cases” submitted for the Research in our MBA Program is our original work and the project has not formed the basis for the award of any degree, associateship, fellowship or any other similar titles.
Signature Of the Candidate: Place: Dehradun Anshul Date: 31/03/2009 Utsav Negi Vivek Zaveri
CERTIFICATE FROM PROJECT GUIDE
This is to certify that the work contained in this report on “Comparison of Brand Failures & Success-Selected Cases” by Anshul, Utsav Negi and Vivek Zaveri student of MBA(Oil & Gas Management),College of Management & Economic Studies , University Of Petroleum & Energy Studies, Dehradun was done under my guidance and supervision for their Research Project (Brand Management) during the IInd semester.
The work has been completed to my satisfaction.
____________________ Dr. Neeraj Anand
(College Of Management & Economic Studies)
University of Petroleum & Energy Studies, Dehradun
We feel a sense of achievement on completion of our Research Project(Brand Management) on Comparison of Brand Failures & Success. We undertook the Brand Management for two reasons. Firstly, it involves nearly all the marketing concepts which is very essential for now-a-days competitive world of globalised era. Secondly, as a management students it is very important for us to understand that what is the necessity of brand & how a brand management aids the organization to increase its market share , to generate trust & faith in customer perception. We have tried to present a blend of qualitative and quantittive aspects pertaining to brand management by giving the inputs and learnings given in our MBA & acquired by us through our work experience. We have tried our best to keep our work away from errors but still we apologise if we made any. This report has seen the daylight due to the efforts of our project guide Dr. Neeraj Anand and the faculty members of the CMES Department of UPES , Dehradun and we thank them dearly. We hope we could come up with a report that will be a true reflection of the efforts put in by us.
Building and properly managing brand equity has become a priority for companies of all sizes, in all types of industries, in all types of markets. After all, strong brand equity flow customer loyalty and profits. The rewards of having a strong brand are clear. The concept of brand management hinges on the use of marketing techniques that would optimize brand recognition. These include activities designed to increase the perceived value of brand names to target customers. With efficient brand management, an increase in branch equity and branch franchise can be expected. Brand equity is commonly defined as an asset that is dependent on the mind associations of consumers. It can be measured through financial data, through brand extension and consumerbased attitudes. Brand equity can be measured financially by determining how much a customer is willing to pay for a particular product or service. It may also be measured through brand extension or the use of the same brand name for a product or service that can be classified in another category. Lastly, brand equity can be assessed based on the general attitude of consumers toward a particular brand name. Once a brand has already gained widespread recognition, companies can benefit from reduced promotional costs and larger market shares. Brand evaluation is crucial in effective brand management. This process enables marketers to obtain a more accurate idea about how powerful a brand name is. In turn, this will help marketers decide what their future marketing strategy would be. Some of the more common metrics used in measuring a brand are brand perception, brand financial value and brand performance. Why focus on failure? The aim of this reserach is to provide ‘how not to’ advice by drawing on some of the largest branding blunders of all time. Brands which set sail with the help of multi-million dollar advertising campaigns shortly before sinking without trace are clear contenders. However, the research will also look at acknowledged brand mistakes made by usually successful companies such as Virgin, McDonald’s, IBM, Coca-Cola, General Motors and many others.
Welcome, then, to the brand graveyard where companies have either put their flagging brand to rest or have allowed it to stagger around with no direction in a state of limbo. While these branding ‘horror stories’ may suggest that failure is inevitable, their example has helped to identify the key danger areas. It is hoped then, that this research will provide an illuminating, if rather frightening read. Don’t have nightmares.
The process of branding was developed to protect products from failure. This is easy to see if we trace this process back to its 19th-century origins. In the 1880s, companies such as Campbell’s, Heinz and Quaker Oats were growing ever more concerned about the consumer’s reaction to mass-produced products. Brand identities were designed not only to help these products stand out, but also to reassure a public anxious about the whole concept of factory-produced goods. By adding a ‘human’ element to the product, branding put the 19thcentury shoppers’ minds at rest. They may have once placed their trust in their friendly shopkeeper, but now they could place it in the brands themselves, and the smiling faces of Uncle Ben or Aunt Jemima which beamed down from the shop shelves. The failure of mass-produced items that the factory owners had dreaded never happened. The brands had saved the day. Fast-forward to the 21st century and a different picture emerge. Now it is the brands themselves that are in trouble. They have become a victim of their own success. If a product fails, it’s the brand that’s at fault. They may have helped companies such as McDonald’s, Nike, CocaCola and Microsoft build global empires, but brands have also transformed the process of marketing into one of perception-building. That is to say, image is now everything. Consumers make buying decisions based around the perception of the brand rather than the reality of the product. While this means brands can become more valuable than their physical assets, it also means they can lose this value overnight. After all, perception is a fragile thing. If the brand image becomes tarnished through a media scandal or controversial incident or even a rumour spread via the Internet, then the company as a whole can find itself in deep trouble. Yet companies cannot opt out of this situation. They cannot turn the clock back to an age when branding didn’t matter. And besides, they can grow faster than ever before through the creation of a strong brand identity. So branding is no longer simply a way of averting failure. It is everything. Companies live or die on the strength of their brand. Yet despite the fact that branding is more important than at any previous time, companies are still
getting it wrong. In fact, they are worse at it than ever before. Brands are failing every single day and the company executives are left scratching their heads in bafflement. As the examples show, brand failure is not the preserve of one certain type of business. Global giants such as Coca-Cola and McDonald’s have proved just as likely to create brand flops as smaller and younger companies with little marketing experience. It will also become clear that companies do not learn from each other’s mistakes. In fact, the opposite seems to happen. Failure is an epidemic. It is contagious. Brands watch each other and replicate their mistakes. For instance, when the themed restaurant Planet Hollywood was still struggling to make a profit, a group of supermodels thought they should follow the formula with their own Fashion Café. Companies are starting to suffer from ‘lemming syndrome’. They are so busy following the competition that they don’t realize when they are heading towards the cliff-edge. They see rival companies apply their brand name to new products, so they decide to do the same. They see others dive into new untested markets, so they do too. While Coca-Cola and McDonald’s may be able to afford the odd costly branding mistake, smaller companies cannot. For them, failure can be fatal. The branding process which was once designed to protect products is now itself filled with danger. While this danger can never be completely eliminated, by learning from the bad examples of others it is at least possible to identify where the main threats lie.
Why brands fail?
A long, long time ago in a galaxy far away, products were responsible for the fate of a company. When a company noticed that its sales were flagging, it would come to one conclusion: its product was starting to fail. Now things have changed. Companies don’t blame the product, they blame the brand. It isn’t the physical item sitting on the shop shelf at fault, but rather what that item represents, what it conjures up in the buyer’s mind. This shift in thinking, from product-blame to brand-blame, is therefore related to the way buyer behavior has changed. ‘Today most products are bought, not sold,’ write Al and Laura Ries in The 22 Immutable Laws of Branding. ‘Branding “presells” the product or service to the user. Branding is simply a more efficient way to sell things.’ Although this is true, this new focus means that perfectly good products can fail as a result of bad branding. So while branding raises the rewards, it also heightens the risks. Scott Bedbury, Starbucks’ former vice-president of marketing, controversially admitted that ‘consumers don’t truly believe there’s a huge difference between products,’ which means brands have to establish ‘emotional ties’ with their customers. However, emotions aren’t to be messed with. Once a brand has created that necessary bond, it has to handle it with care. One step out of line and the customer may not be willing to forgive. This is ultimately why all brands fail. Something happens to break the bond between the customer and the brand.
This is not always the fault of the company, as some things really are beyond their immediate control (global recession, technological advances, international disasters etc). However, more often than not, when brands struggle or fail it is usually down to a distorted perception of either the brand, the competition or the market. This altered view is a result of one of the following seven deadly sins of branding: Brand amnesia- For old brands, as for old people, memory becomes an increasing issue. When a brand forgets what it is supposed to stand for, it runs into trouble. The most obvious case of brand amnesia occurs when a venerable, long-standing brand tries to create a radical new identity, such as when Coca-Cola tried to replace its original formula with New Coke. The results were disastrous. Brand ego- Brands sometimes develop a tendency for over-estimating their own importance, and their own capability. This is evident when a brand believes it can support a market single-handedly, as Polaroid did with the instant photography market. It is also apparent when a brand enters a new market for which it is clearly ill-suited, such as Harley Davidson trying to sell perfume. Brand megalomania- Egotism can lead to megalomania. When this happens, brands want to take over the world by expanding into every product category imaginable. Some, such as Virgin, get away with it. Most Lesser brands, however, do not. Brand deception- ‘Human kind cannot bear very much reality,’ wrote T S Eliot. Neither can brands. Indeed, some brands see the whole marketing process as an act of covering up the reality of their product. In extreme cases, the trend towards brand fiction can lead to downright lies. For example, in an attempt to promote the film A Knight’s Tale one Sony marketing executive invented a critic, and a suitable quote, to put onto the promotional poster. In an age where markets are increasingly connected, via the Internet and other technologies, consumers can no longer be deceived. Brand fatigue- Some companies get bored with their own brands. You can see this happening to products which have been on the shelves for many years, collecting dust. When brand fatigue sets in creativity suffers, and so do sales. Brand paranoia- This is the opposite of brand ego and is most likely to occur when a brand faces increased competition. Typical symptoms include: a tendency to file lawsuits against rival companies, a willingness to reinvent the brand every six months, and a longing to imitate competitors. Brand irrelevance- When a market radically evolves, the brands associated with it risk becoming irrelevant and obsolete. Brand managers must strive to maintain relevance by staying ahead of the category, as Kodak is trying to do with digital photography.
When their brands fail companies are always taken by surprise. This is because they have had faith in their brand from the start, otherwise it would never have been launched in the first place. However, this brand faith often stems from an obscured attitude towards branding, based around one or a combination of the following brand myths: If a product is good, it will succeed. This is blatantly untrue. In fact, good products are as likely to fail as bad products. Betamax, for instance, had better picture and audio quality than VHS video recorders. But it failed disastrously. Brands are more likely to succeed than fail. Wrong. Brands fail every single day. According to some estimates, 80 per cent of all new products fail upon introduction, and a further 10 per cent die within five years. By launching a product you are taking a one in ten chance of long-term success. As Robert McMath, a former Procter & Gamble marketing executive, once put it: ‘it’s easier for a product to fail than it is to survive.’ Big companies will always have brand success. This myth can be dismantled with two words: New Coke. As this report will show, big companies have managed to have at least as much failure as success. No company is big enough to be immune to brand disaster. In fact, many of the examples will highlight one of the main paradoxes of branding – namely, that as brands get bigger and more successful, they also become more vulnerable and exposed. Strong brands are built on advertising. Advertising can support brands, but it can’t build them from scratch. Many of the world’s biggest brand failures accompanied extremely expensive advertising campaigns. If it’s something new, it’s going to sell. There may be a gap in the market, but it doesn’t mean it has to be filled. This lesson was learnt the hard way for RJR Nabisco Holdings when they decided to launch a ‘smokeless’ cigarette.‘It took them a while to figure out that smokers actually like the smoke part of smoking,’ one commentator said at the time. Strong brands protect products. This may have once been the case, but now the situation is reversed. Strong products now help to protect brands. As the cases show, the product has become the ambassador of the brand and even the slightest decrease in quality or a hint of trouble will affect the brand identity as a whole. The consumer can cause the most elaborate brand strategy to end in failure.
ON LIGHTER SIDE OF FEW FAILURES
Every company venturing into a new international market has to tread very carefully. In a bid to rush into uncharted territories, they often commit grave errors which prove very difficult to undo later on. Some of these errors are absolutely unwarranted and provide no logic as to why the best marketing companies across the world committed them. A few examples...
Scandinavian vacuum manufacturer Electrolux used the following in an American ad campaign: “Nothing sucks like an Electrolux.” The name Coca-Cola in China was first rendered as Ke-kou-ke-la. Unfortunately, the Coke company did not discover until after thousands of signs had been printed that the phrase means “bite the wax tadpole” or “female horse stuffed with wax” depending on the dialect. Coke then researched 40,000 Chinese characters and found a close phonetic equivalent, kokouko-le, which can be loosely translated as “happiness in the mouth.” In Taiwan, the translation of the Pepsi slogan “Come alive with the Pepsi Generation” came out as “Pepsi will bring your ancestors back from the dead.” Also in Chinese, the Kentucky Fried Chicken slogan “finger-lickin’good” came out as “eat your fingers off.” The American slogan for Salem cigarettes, “Salem - Feeling Free,” got translated in the Japanese market into “When smoking Salem, you feel so refreshed that your mind seems to be free and empty.” When General Motors introduced the Chevy Nova in South America, it was apparently unaware that “no va” means “it won’t go.” After the company figured out why it wasn’t selling any cars, it renamed the car in its Spanish markets to the Caribe. Ford had a similar problem in Brazil when the Pinto flopped. The company found out that Pinto was Brazilian slang for “tiny male genitals”. Ford pried all the nameplates off and substituted Corcel, which means horse. When Parker Pen marketed a ball-point pen in Mexico, its ads were supposed to say “It won’t leak in your pocket and embarrass you.” However, the company mistakenly thought the Spanish word “embarazar” meant embarrass. Instead the ads said that “It wont leak in
your pocket and make you pregnant.” An American T-shirt maker in Miami printed shirts for the Spanish market which promoted the Pope’s visit. Instead of the desired “I Saw the Pope” in Spanish, the shirts proclaimed “I Saw the Potato.” Chicken-Man Frank Perdue’s slogan, “It takes a tough man to make a tender chicken,” got terribly mangled in another Spanish translation. A photo of Perdue with one of his birds appeared on billboards all over Mexico with a caption that explained “It takes a hard man to get a chicken aroused.” Hunt-Wesson introduced its Big John products in French Canada as Gros Jos before finding out that the phrase, in slang, means “big breasts.” In this case, however, the name problem did not have a noticeable effect on sales. Colgate introduced a toothpaste in France called Cue, the name of a notorious porno mag. In Italy, a campaign for Schweppes Tonic Water translated the name into Schweppes Toilet Water. Japan’s second-largest tourist agency was mystified when it entered Englishspeaking markets and began receiving requests for unusual sex tours. Upon finding out why, the owners of Kinki Nippon Tourist Company changed its name.
2) LITERATURE SURVEY
• Brand Image Some people distinguish the psychological aspect of a brand from the experiential aspect. The experiential aspect consists of the sum of all points of contact with the brand and is known as the brand experience. The psychological aspect, sometimes referred to as the brand image, is a symbolic construct created within the minds of people and consists of all the information and expectations associated with a product or service. • Brand Recognition A brand which is widely known in the marketplace acquires brand recognition. When brand recognition builds up to a point where a brand enjoys a critical mass of positive sentiment in the marketplace, it is said to have achieved brand franchise. One goal in brand recognition is the identification of a brand without the name of the company present. For example, Disney has been successful at branding with their particular script font (originally created for Walt Disney's "signature" logo), which it used in the logo for go.com. Consumers may look on branding as an important value added aspect of products or services, as it often serves to denote a certain attractive quality or characteristic (see also brand promise). From the perspective of brand owners, branded products or services also command higher prices. Where two products resemble each other, but one of the products has no associated branding (such as a generic, store-branded product), people may often select the more expensive branded product on the basis of the quality of the brand or the reputation of the brand owner. • Brand name The brand name is often used interchangeably within "brand", although it is more correctly used to specifically denote written or spoken linguistic
elements of any product. In this context a "brand name" constitutes a type of trademark, if the brand name exclusively identifies the brand owner as the commercial source of products or services. A brand owner may seek to protect proprietary rights in relation to a brand name through trademark registration. Advertising spokespersons have also become part of some brands, for example: Mr. Whipple of Charmin toilet tissue and Tony the Tiger of Kellogg's.The act of associating a product or service with a brand has become part of pop culture. Most products have some kind of brand identity, from common table salt to designer clothes. • Brand identity How the brand owner wants the consumer to perceive the brand - and by extension the branded company, organization, product or service. The brand owner will seek to bridge the gap between the brand image and the brand identity. Brand identity is fundamental to consumer recognition and symbolizes the brand's differentiation from competitors.
➢ Company name Often, especially in the industrial sector, it is just the company's name which is promoted (leading to one of the most powerful statements of "branding"; the saying, before the company's downgrading, "No one ever got fired for buying IBM"). In this case a very strong brand name (or company name) is made the vehicle for a range of products (for example, Mercedes-Benz or Black & Decker) or even a range of subsidiary brands (such as Cadbury Dairy Milk, Cadbury Flake or Cadbury Fingers in the United States). ➢ Individual branding Each brand has a separate name (such as Seven-Up or Nivea Sun (Beiersdorf)), which may even compete against other brands from the same company (for example, Persil, Omo, Surf and Lynx are all owned by Unilever). ➢ Attitude branding Attitude branding is the choice to represent a larger feeling, which is not necessarily connected with the product or consumption of the product at all. Marketing labeled as attitude branding include that of Nike, Starbucks, The Body Shop, Safeway, and Apple Computer. In the 2000 book, No Logo, attitude branding is described by Naomi Klein as a "fetish strategy". "A great brand raises the bar -- it adds a greater sense of purpose to the experience, whether it's the challenge to do your best in sports and fitness, or the affirmation that the cup of coffee you're drinking really matters." Howard Schultz (president, ceo and chairman of Starbucks ➢ "No-brand" branding
Recently a number of companies have successfully pursued "No-Brand" strategies, examples include the Japanese company Muji, which means "No label, quality goods" in English. Although there is a distinct Muji brand, Muji products are not branded. This no-brand strategy means that little is spent on advertisement or classical marketing and Muji's success is attributed to the word-of-mouth, a simple shopping experience and the anti-brand movement. Another brand which is thought to follow a no-brand strategy is American Apparel, which like Muji, does not brand its products. ➢ Derived brands In this case the supplier of a key component, used by a number of suppliers of the end-product, may wish to guarantee its own position by promoting that component as a brand in its own right. The most frequently quoted example is Intel, which secures its position in the PC market with the slogan "Intel Inside". • Brand extension The existing strong brand name can be used as a vehicle for new or modified products; for example, many fashion and designer companies extended brands into fragrances, shoes and accessories, home textile, home decor, luggage, (sun-) glasses, furniture, hotels, etc. Mars extended its brand to ice cream, Caterpillar to shoes and watches, Michelin to a restaurant guide, Adidas and Puma to personal hygiene. Dunlop extended its brand from tires to other rubber products such as shoes, golf balls, tennis racquets and adhesives. There is a difference between brand extension and line extension. When Coca-Cola launched "Diet Coke" and "Cherry Coke" they stayed within the originating product category: non-alcoholic carbonated beverages. Procter & Gamble (P&G) did likewise extending its strong lines (such as Fairy Soap) into neighboring products (Fairy Liquid and Fairy Automatic) within the same category, dish washing detergents. • Multi-brands Alternatively, in a market that is fragmented amongst a number of brands a supplier can choose deliberately to launch totally new brands in apparent competition with its own existing strong brand (and often with identical product characteristics); simply to soak up some of the share of the market which will in any case go to minor brands. The rationale is that having 3 out of 12 brands in such a market will give a greater overall share than having 1 out of 10 (even if much of the share of these new brands is taken from the existing one). In its most extreme manifestation, a supplier pioneering a new market which it believes will be particularly attractive may choose immediately to launch a second brand in competition with its first, in order to pre-empt others entering the market.
Individual brand names naturally allow greater flexibility by permitting a variety of different products, of differing quality, to be sold without confusing the consumer's perception of what business the company is in or diluting higher quality products. Once again, Procter & Gamble is a leading exponent of this philosophy, running as many as ten detergent brands in the US market. This also increases the total number of "facings" it receives on supermarket shelves. Sara Lee, on the other hand, uses it to keep the very different parts of the business separate — from Sara Lee cakes through Kiwi polishes to L'Eggs pantyhose. In the hotel business, Marriott uses the name Fairfield Inns for its budget chain (and Ramada uses Rodeway for its own cheaper hotels). Cannibalization is a particular problem of a "multibrand" approach, in which the new brand takes business away from an established one which the organization also owns. This may be acceptable (indeed to be expected) if there is a net gain overall. Alternatively, it may be the price the organization is willing to pay for shifting its position in the market; the new product being one stage in this process. • Own brands and generics With the emergence of strong retailers the "own brand", a retailer's own branded product (or service), also emerged as a major factor in the marketplace. Where the retailer has a particularly strong identity (such as Marks & Spencer in the UK clothing sector) this "own brand" may be able to compete against even the strongest brand leaders, and may outperform those products that are not otherwise strongly branded.Concerns were raised that such "own brands" might displace all other brands (as they have done in Marks & Spencer outlets), but the evidence is that — at least in supermarkets and department stores — consumers generally expect to see on display something over 50 per cent (and preferably over 60 per cent) of brands other than those of the retailer. Indeed, even the strongest own brands in the UK rarely achieve better than third place in the overall market. This means that strong independent brands (such as Kellogg's and Heinz), which have maintained their marketing investments, are likely to continue their strong performance. More than 50 per cent of UK FMCG brand leaders have held their position for more than two decades, although it is arguable that those which have switched their budgets to "buy space" in the retailers may be more exposed. The strength of the retailers has, perhaps, been seen more in the pressure they have been able to exert on the owners of even the strongest brands (and in particular on the owners of the weaker third and fourth brands). Relationship marketing has been applied most often to meet the wishes of such large customers (and indeed has been demanded by them as recognition of their buying power). Some of the more active marketers have now also switched to 'category marketing' - in which they take into account
all the needs of a retailer in a product category rather than more narrowly focusing on their own brand. At the same time, probably as an outgrowth of consumerism, "generic" (that is, effectively unbranded) goods have also emerged. These made a positive virtue of saving the cost of almost all marketing activities; emphasizing the lack of advertising and, especially, the plain packaging (which was, however, often simply a vehicle for a different kind of image). It would appear that the penetration of such generic products peaked in the early 1980s, and most consumers still appear to be looking for the qualities that the conventional brand provides.
WHY BRAND MATTERS?
Whether you realize it or not, every business has a brand. How you develop it is the difference between creating your point of distinction or blending in with the crowd; projecting a positive image or eliciting a negative one; growing your business or merely existing; successfully reaching your target audience or missing the mark altogether. Brand does matter. Those who build their brand and manage it successfully can profit mightily. Here are six principles for creating and building brand as well as real-world examples of why it matters. 1)Strong brands trigger hot buttons in the consumer. We buy for emotional reasons and then rationalize those purchases. Know what triggers your target audience. For Volvo buyers, it’s safety. In fact, Volvo and safety have become synonymous. Volvo has taken this emotional connection and strategically built its brand around safety. The company’s Web site says, “Explore the beauty of safety with 2006 Volvos”. The site even has a “Volvo Saved My Life Club” section with stories of real people who were protected by their Volvos in car accidents. These stories are emotional, but also underscore how the Volvo brand is associated with safety. As a result, the company has developed a very loyal customer base. 2)Brand isn’t just a smart logo and tagline. These are merely applications of the true brand—a concept that exists in the mind of your consumer. Your brand is an experience for the customer. Nobody delivers this idea better than MasterCard® with their “Priceless” advertising campaign. Although they rely on consumers to purchase items with their MasterCard® credit cards, they know that buyers want to feel good about their purchases. What will make them feel that way? The experience tied to that purchase. “There are some things money can’t buy.
For everything else there’s MasterCard®.” Although they acknowledge that there are some experiences you can’t buy, they also elude to the fact that there are many more experiences that you can buy. In other words, they make the consumer feel as though MasterCard® can give them the experiences they desire. Experiences are reinforced through the company’s regular promotions in which cardholders can win trips, cars, cash and in a recent promotion, a house. A brilliant ad campaign: Thousands of dollars. A 60 second television commercial: Hundreds of thousand of dollars. Building a brand that makes customers feel good about their purchases and results in double-digit revenue growth for MasterCard®: Priceless.
3) Know what customers associate with your brand and how to
capitalize on it. You know that brand taps into emotion. Since customers buy for emotional reasons, their perceptions color your brand. Take Martha Stewart. She is well aware that living well appeals to consumers on an emotional level. Her company, Martha Stewart Living Omnimedia (MSLO), has branded itself accordingly, stating on the Web site that “...Martha Stewart shares the creative principles and practical ideas that have made her America’s most trusted guide to stylish living.” Even when Martha was charged with insider trading, she continued to reinforce—even capitalize on—the “stylish living” brand from behind bars: making delicious meals in the prison microwave, collecting apples from the prison grounds to make applesauce, entering Christmas decorating contests, etc. In the process, she won the admiration of her fellow inmates and the continued brand loyalty of her customers. The MSLO brand remained strong in spite of the challenges the company faced. Today, it is a nearly $500 million empire with television shows, books, a magazine, house wares merchandised through Kmart, a catalog business and a furniture line with Bernhardt. MSLO has deftly mastered the art of convincing consumers that they can live the good life. Reinforcing, capitalizing and continuing to build on that brand has worked and “it’s a good thing” for MSLO. Brand is part art, part science. The balance is a delicate one. Creativity strengthens and enlivens brand. But the science of branding is equally important. You can’t build a successful brand without both. You must understand your target audience’s likes and dislikes as well as their hot buttons. A brand campaign can be artistically presented, but if the consumer doesn’t know what you’re selling or can’t identify with it, your campaign has failed. The Disney Company has done a masterful job of creating a brand that blends art and science. Visit the company’s overview section on their web site and you will understand why
this approach has created a powerful brand worldwide. “The Walt Disney Company has remained faithful in its commitment to producing unparalleled entertainment experiences based on its rich legacy of quality creative content and exceptional storytelling. Today, Disney is divided into four major business segments: Studio Entertainment, Parks and Resorts, Consumer Products, and Media Networks. Each segment consists of integrated, wellconnected businesses that Operate in concert to maximize exposure and growth worldwide.” Careful market research, focus groups, maximizing brand exposure, continual education and advanced technologies are all part of Disney’s brand science. The organization is in tune with what their target audience wants: wholesome, family entertainment in a world of imagination. And, they are constantly measuring, evaluating and adjusting their efforts to maintain this brand. The artistic component of their brand obviously can be found in the creativity and quality of amusement parks, movies, merchandise and media channels (i.e. television, web, magazines) that have represented the Disney brand since 1923. Together, art and science have built the world’s largest entertainment company. 4)Successful brands are the sum of all of its parts. As illustrated above, Disney has been able to address all aspects of the branding process to create a powerful brand and an organization that has continued to grow in size, offerings and sales over the last 83 years. Likewise, multiple aspects of your business must integrate to drive the effectiveness of your brand. Some of these aspects include: Understanding your market and your customer. Brands should be customer-driven. What does the customer want or need? What kind of experience does the customer want to have with my brand? How does my product/service make the customer feel? You cannot affect brand perceptions of your business without understanding your customers. Ensuring that brand is reinforced within the corporation as well as externally. A strong brand is represented in every customer touch point including customer service, direct sales, call center interactions, product/service delivery and all other direct and indirect contact with your customers and/or the media. Marketing alone cannot carry a brand. Moreover, your brand is built on customer experience and perception. The best marketing and advertising means nothing if your brand isn’t carried beyond it or the promises don’t ring true. Reflecting your business values and goals through your brand.
It is one thing to imply that your brand reflects these philosophies or values; however, it is quite another to back up those assertions with specific actions. In doing so, you will strengthen your brand as well as customer loyalty. Disney presents a great example. The company has a worldwide outreach program, which supports public service initiatives, community outreach and volunteer programs helping families, children and the arts, as well as a program that supports environmental efforts. Disney’s environmental beliefs have led the company to create The Disney Wildlife Conservation Fund. The fund has distributed more than $6 million among 200 environmental conservation projects in more than two dozen countries. Their worldwide outreach program has donated more than $190 million in cash, public service announcements and volunteerism globally. Disney employees volunteer their time and talents in their communities, contributing more than 402,000 hours of service to outreach projects. These actions are deliberate and help project a community-focused and environmentally conscious image. In turn, this concept drives customers’ perceptions of the Disney brand as a magical kingdom where all is good. Crafting external communications, both oral and written, to properly represent your brand. The message and tone in these communications should align with your brand. Every opportunity in front of your customer is an opportunity to reinforce brand. A visit to any of the Disney properties reinforces the importance of consistently representing your brand. Cast members (as they call their employees) adhere to strict brand guidelines—from meticulous detail about their appearance to how they communicate with park guests. Park cast members and characters are warm, friendly and helpful. Their interactions with customers convey the notion that they truly care about children and families. Moreover, Disney’s career site states, “Yes, there really are dream jobs.Here, the bottom line is imagination, our culture is magic and wonder, and required previous work experience: childhood dreams.” When employees feel that they are living out a dream, they will perform better and customer interactions will be stronger. As a result, guests will walk away with a “feel good” impression and the notion that they really did live out a dream. Representing your brand through your products and services. McDonald’s golden arches represent more than hamburgers. They reflect the company’s commitment to quality across the board—quality in its food products as well as quality in its employees, franchises and community outreach programs. To reinforce their brand, the company maintains high standards throughout the organization. Franchise operations are held to rigorous quality assurance requirements. The company recognizes how
crucial these franchises are to representing the McDonald’s brand. As founder Ray Kroc once said, “McDonald’s doesn’t confer success on anyone. It takes guts and staying power to make it with one of our restaurants.” It is that commitment to superior service that consistently has made McDonald’s the premier franchising company around the world. This same philosophy extends to its community outreach programs like the Ronald McDonald House. Since its inception in 1974, more than 10 million families have benefited from the company’s dedication to this program throughout the world.
5) Brands gain value over time…if they are consistently built and
reinforced. It worked for Nike. Less than 15 years after their entrance into the marketplace, the athletic shoe giant became a global brand. Their success came from an intimate understanding of their consumers’ needs and desires; continuously introducing innovative products; establishing good management practices and, of course, great branding. To build brand value over time, you must give careful attention to ongoing assessment and management of your brand, exploring questions such as: Does my brand have a substantial and positive impact on sales? On growing market share? Can my customer relate to my brand? Are we building brand loyalty with every customer interaction? Building your brand is an evolving process that should be a constant driver for your business. You can’t wait until something goes wrong or sales start to plummet. You must be proactive in building on your brand thoughtfully and consistently. Follow Nike’s lead on building brand: “Just Do It.” You won’t be sorry. Ultimately, brand matters. And not just for the big consumer product giants like Coca-cola, Nike and Disney. For service companies, it is all about brand. Your company’s success is determined by the perception your customers have about your services. In short, your brand must grow with your business. You need to continuously reevaluate what is and isn’t working with your brand in your customer’s mind. Brand is not static. It needs to evolve in order to thrive. It must also reflect philosophical and operational changes within the company. It is easy to implement a brand strategy and then leave it to its own devices. However, if you seek to build strength and longevity in business, then your brand must be tended to carefully and regularly.
MAJOR BRAND FAILURES IN PAST
1. New Coke
Think of a brand success story and you may well think of Coca-Cola. Indeed, with nearly 1 billion Coca-Cola drinks sold every single day, it is the world’s most recognized brand. Yet in 1985 the Coca-Cola Company decided to terminate its most popular soft drink and replace it with a formula it would market as New Coke. To understand why this potentially disastrous decision was made, it is necessary to appreciate what was happening in the soft drinks marketplace. In particular, we must take a closer look at the growing competition between Coca-Cola and Pepsi-Cola in the years and even decades prior to the launch of New Coke. The relationship between the archrivals had not been a healthy one. Although marketing experts have believed for a long time that the competition between the two companies had made consumers more colaconscious, the firms themselves rarely saw it like that. Indeed, the Coca-Cola company had even fought Pepsi-Cola in a legal battle over the use of the word ‘cola’ in its name, and lost. Outside the courts though, Coca-Cola had always been ahead. Shortly after World War II, Time magazine was already celebrating Coke’s ‘peaceful near-conquest of the world.’ In the late 1950s, Coke outsold Pepsi by a ratio of more than five to one. However, during the next decade Pepsi repositioned itself as a youth brand. This strategy was a risky one as it meant sacrificing its older customers to Coca-Cola, but ultimately it proved successful. By narrowing its focus, Pepsi was able to position its brand against the old and classic image of its competitor. As it became increasingly seen as ‘the drink of youth’ Pepsi managed to narrow the gap. In the 1970s, Coke’s chief rival raised the stakes even further by introducing the Pepsi Challenge – testing consumers blind on the difference between its own brand and ‘the real thing’. To the horror of Coca-Cola’s longstanding company president, Robert Woodruff, most of those who participated preferred Pepsi’s sweeter formula. In the 1980s Pepsi continued its offensive, taking the Pepsi Challenge around the globe and heralding the arrival of the ‘Pepsi Generation’. It also signed up celebrities likely to appeal to its target market such as Don Johnson and Michael Jackson (this tactic has survived into the new millennium, with figures like Britney Spears and Robbie Williams providing more recent endorsements). By the time Roberto Goizueta became chairman in 1981, Coke’s number one status was starting to look vulnerable. It was losing market share not only to Pepsi but also to some of the drinks produced by the Coca-Cola company itself, such as Fanta and Sprite. In particular the runaway success of Diet Coke was a double-edged sword, as it helped to shrink the sugar cola market. In 1983, the year Diet Coke moved into the number three position behind standard Coke and Pepsi, Coke’s market share had slipped to an alltime low of just under 24 per cent. Something clearly had to be done to secure Coke’s supremacy. Goizueta’s first response to the ‘Pepsi Challenge’ phenomenon was to launch an advertising campaign in 1984, praising Coke
for being less sweet than Pepsi. The television ads were fronted by Bill Cosby, at that time one of the most familiar faces on the planet, and clearly someone who was too old to be part of the Pepsi Generation. The impact of such efforts to set Coca-Cola apart from its rival was limited. Coke’s share of the market remained the same while Pepsi was catching up. Another worry was that when shoppers had the choice, such as in their local supermarket, they tended to plump for Pepsi. It was only Coke’s more effective distribution which kept it ahead. For instance, there were still considerably more vending machines selling Coke than Pepsi. Even so, there was no getting away from the fact that despite the proliferation of soft drink brands, Pepsi was winning new customers. Having already lost on taste, the last thing Coca-Cola could afford was to lose its number one status. The problem, as Coca-Cola perceived it, came down to the product itself. As the Pepsi Challenge had highlighted millions of times over, Coke could always be defeated when it came down to taste. This seemed to be confirmed by the success of Diet Coke which was closer to Pepsi in terms of flavour. So in what must have been seen as a logical step, Coca-Cola started working on a new formula. A year later they had arrived at New Coke. Having produced its new formula, the Atlanta-based company conducted 200,000 taste tests to see how it fared. The results were overwhelming. Not only did it taste better than the original, but people preferred it to Pepsi-Cola as well. However, if Coca-Cola was to stay ahead of Pepsi-Cola it couldn’t have two directly competing products on the shelves at the same time. It therefore decided to scrap the original Coca-Cola and introduced New Coke in its place. The trouble was that the Coca-Cola company had severely underestimated the power of its first brand. As soon as the decision was announced, a large percentage of the US population immediately decided to boycott the new product. On 23 April 1985 New Coke was introduced and a few days later the production of original Coke was stopped. This joint decision has since been referred to as ‘the biggest marketing blunder of all time’. Sales of New Coke were low and public outrage was high at the fact that the original was no longer available. It soon became clear that Coca-Cola had little choice but to bring back its original brand and formula. ‘We have heard you,’ said Goizueta at a press conference on 11 July 1985. He then left it to the company’s chief operating officer Donald Keough to announce the return of the product. Keough admitted: The simple fact is that all the time and money and skill poured into consumer research on the new Coca-Cola could not measure or reveal the deep and abiding emotional attachment to original Coca-Cola felt by so many people. The passion for original Coca-Cola – and that is the word for it, passion – was something that caught us by surprise. It is a wonderful American mystery, a lovely American enigma, and you cannot measure it any more than you can measure love, pride or patriotism. In other words, Coca-Cola had learnt that marketing is about much more than the product itself. The majority of the tests had been carried out blind, and therefore
taste was the only factor under assessment. The company had finally taken Pepsi’s bait and, in doing so, conceded its key brand asset: Originality. When Coca-Cola was launched in the 1880s it was the only product in the market. As such, it invented a new category and the brand name became the name of the product itself. Throughout most of the last century, Coca- Cola capitalized on its ‘original’ status in various advertising campaigns. In 1942, magazine adverts appeared across the United States declaring: ‘The only thing like Coca-Cola is Coca-Cola itself. It’s the real thing.’ By launching New Coke, Coca-Cola was therefore contradicting its previous marketing efforts. Its central product hadn’t been called new since the very first advert appeared in the Atlanta Journal in 1886, billing Coca-Cola as ‘The New Pop Soda Fountain Drink, containing the properties of the wonderful Coca-plant and the famous Cola nuts.’ In 1985, a century after the product launched the last word people associated with Coca-Cola was ‘new’. This was the company with more allusions to US heritage than any other. Fifty years previously, the Pulitzer Prize winning editor of a Kansas newspaper, William Allen White had referred to the soft drink as the ‘sublimated essence of all America stands for – a decent thing, honestly made, universally distributed, and conscientiously improved with the years.’ Coca-Cola had even been involved with the history of US space travel, famously greeting Apollo astronauts with a sign reading ‘Welcome back to earth, home of Coca-Cola.’ To confine the brand’s significance to a question of taste was therefore completely misguided. As with many big brands, the representation was more significant than the thing represented, and if any soft drink represented ‘new’ it was Pepsi, not CocaCola (even though Pepsi is a mere decade younger). If you tell the world you have the ‘real thing’ you cannot then come up with a ‘new real thing’. To borrow the comparison of marketing guru Al Ries it’s ‘like introducing a New God’. This contradictory marketing message was accentuated by the fact that, since 1982, Coke’s strap line had been ‘Coke is it’. Now it was telling consumers that they had got it wrong, as if they had discovered Coke wasn’t it, but rather New Coke was instead. So despite the tremendous amount of hype which surrounded the launch of New Coke (one estimate puts the value of New Coke’s free publicity at over US $10 million), it was destined to fail. Although Coca-Cola’s market researchers knew enough about branding to understand that consumers would go with their brand preference if the taste tests weren’t blind, they failed to make the connection that these brand preferences would still exist once the product was launched. Pepsi was, perhaps unsurprisingly, the first to recognize Coca-Cola’s mistake. Within weeks of the launch, it ran a TV ad with an old man sitting on a park bench, staring at the can in his hand. ‘They changed my Coke,’ he said,
clearly distressed. ‘I can’t believe it.’ However, when Coca-Cola relaunched its original coke, redubbed ‘Classic Coke’ for the US market, the media interest swung back in the brand’s favor. It was considered a significant enough event to warrant a newsflash on ABC News and other US networks. Within months Coke had returned to the number one spot and New Coke had all but faded away. Ironically, through the brand failure of New Coke loyalty to ‘the real thing’ intensified. In fact, certain conspiracy theorists have even gone so far as to say the whole thing had been planned as a deliberate marketing ploy to reaffirm public affection for Coca-Cola. After all, what better way to make someone appreciate the value of your global brand than to withdraw it completely? Of course, Coca-Cola has denied that this was the company’s intention. ‘Some critics will say Coca-Cola made a marketing mistake, some cynics will say that we planned the whole thing,’ said Donald Keough at the time. ‘The truth is we are not that dumb, and we are not that smart.’ But viewed in the context of its competition with Pepsi, the decision to launch New Coke was understandable. For years, Pepsi’s key weapon had been the taste of its product. By launching New Coke, the Coca-Cola Company clearly hoped to weaken its main rival’s marketing offensive. So what was Pepsi’s verdict on the whole episode? In his book, The Other Guy Blinked, Pepsi’s CEO Roger Enrico believes the error of New Coke proved to be a valuable lesson for Coca-Cola. ‘I think, by the end of their nightmare, they figured out who they really are. Caretakers. They can’t change the taste of their flagship brand. They can’t change its imagery. All they can do is defend the heritage they nearly abandoned in 1985. Lessons from New Coke Concentrate on the brand’s perception. In the words of Jack Trout, author of Differentiate or Die, ‘marketing is a battle of perceptions, not products’. Don’t clone your rivals. In creating New Coke, Coca-Cola was reversing its brand image to overlap with that of Pepsi. The company has made similar mistakes both before and after, launching Mr Pibb to rival Dr Pepper and Fruitopia to compete with Snapple. Feel the love. According to Saatchi and Saatchi’s worldwide chief executive officer, Kevin Roberts, successful brands don’t have ‘trademarks’. They have ‘lovemarks’ instead. In building brand loyalty, companies are also creating an emotional attachment that often has little to do with the quality of the product. Don’t be scared to U-turn. By going back on its decision to scrap original Coke, the company ended up creating an even stronger bond between the product and the consumer.
Do the right market research. Despite the thousands of taste tests Coca-Cola carried out on its new formula, it failed to conduct adequate research into the public perception of the original brand.
2. The Ford Edsel
Among many US marketing professors, the story of the Edsel car is considered the classic brand failure of all time. Dubbed ‘the Titanic of automobiles’, the Edsel is certainly one of the biggest branding disasters to afflict the Ford Motor Company. As with other, more recent brand failures featured in the report, the Edsel car was launched amid a vast amount of hype. Although the car didn’t appear in showrooms until September 1957, ads promoting it had begun to appear months previously bearing the teaser slogan: ‘The Edsel is coming ’. Ford decided though, to fuel public interest, the car itself should not be seen in the ads, and even when Ford dealers started stocking the car in their showrooms, they were told they had to keep the vehicles undercover. If they did not they risked a fine and the loss of their franchise with the company. As Ford hoped, interest was fuelled. The company did not think for one moment that the product would not be able to match the hype, and would lead to a consumer backlash. After all, more work and research had gone into the development of this car than almost any previously. However, some of the research had already proven futile by the time of the launch. For instance, part of the market research process had been to find a suitable name for the new car. This should have been a good idea. After all, the highly popular Ford Thunderbird car, which had been launched in 1954, had gained its evocative name as a result of market research findings. This time, research teams were sent out to New York, Chicago and Michigan, where members of the public were asked what they thought of certain names and to come up with their own suggestions. There was also a competition among employees to come up with the best name, and the company even contacted the popular poet Marianne Moore. Her brief was to find a name which would signify a ‘visceral feeling of elegance, fleetness, advanced features and design.’ Her rather eccentric suggestions included Mongoose Civique, Resilient Bullet, Utopian Turtle top and the Varsity Stroke. Altogether, the company now had a pool of 10,000 names to choose from. Too many, according to company chairman, Ernest Breech, as he scanned through the names during a meeting of the Ford Executive Committee in November 1956. ‘Why don’t we just call it Edsel?’ he asked, exasperated. Henry Ford II, the grandson of Henry Ford, agreed. Edsel was the name of his father, and the Ford founder’s only son. Not everyone held the same opinion though. The PR director, C Gayle Warnock, knew that Edsel was not the right name. It had been an early suggestion, and had not been liked by those members of the public who had taken part in the market research (in word27
association tests, it had been associated with ‘weasel’ and ‘pretzel’ – hardly the best associations for a dynamic new car). Warnock had preferred other names on the list, such as Pacer, Ranger, Corsair or Citation. When the decision was made, Warnock made his feelings perfectly clear. According to Robert Lacey in his book Ford: The Men and the Machine, Warnock responded to the new Edsel name by declaring: ‘We have just lost 200,000 sales.’ For Warnock, a rose by any other name clearly didn’t smell as sweet. As it turned out, the name was the least of the Edsel’s problems. There was also the design. The first blueprint for the Edsel looked truly impressive, as Robert Lacey writes in his book on Ford. ‘With concealed air scoops below the bumpers, this first version of the car was original and dramatic – a dreamlike, ethereal creation which struck those who saw it as the very embodiment of the future.’ However, this magnificent design never got to see the light of day. The people who held onto the purse strings at Ford decided it would simply be too expensive to manufacture. The design that eventually emerged was certainly unique. Edsel’s chief designer, Roy Brown Jr had always set out to design a car that would be recognizable instantly, from any direction. And indeed, there is no denying that the first Edsel to emerge in 1957 fulfilled this objective. In particular, the car’s front-end bonnet and grille commanded the most attention. ‘The front end design was the most prominent feature,’ confirms Phil Skinner, a respected Edsel historian, ‘If you consider other cars from the mid-1950s, they all looked somewhat alike. Basically it was two headlights and a horizontal grille. By having the big impact ring in the middle – what we now call a horse collar – it really set the Edsel apart.’ Although some members of the automotive press commended this distinctive look, most were unappreciative. One reviewer famously remarked that it looked ‘like an Oldsmobile sucking a lemon.’ While another thought the front-end grille was less like a horse collar, and more like a toilet seat. (The customer comments later proved to be even worse with some saying that the grille looked like a ‘vagina with teeth’. However, Ford had good relations with the press and Warnock, the PR director was determined to maximize the media coverage immediately before and after the launch date. Articles subsequently appeared in both Time and Life magazines heralding the Edsel as a breakthrough and explaining how it had been planned for over a decade – a blatant exaggeration on the part of Warnock as Roy Brown had only begun designing the car in 1954. The promotional brochure to mark the September launch of the Edsel also promised a great deal. ‘There has never been a car like the Edsel,’ it promised. This was a big claim, but Ford had equally big ambitions. The company expected to produce 200,000 units in the car’s first year. This constituted around five per cent of the entire market. Anyway, the pre-publicity had initially seemed to work. Car showrooms became packed with curious visitors, desperately seeking their first glance of the car. In the first week of its launch, almost three million members of the US public visited Edsel
showrooms. The Edsels they saw had a number of distinct features, in addition to the ‘love-it-or-hate-it’ front-end grille. For instance, the car was the first ever to have self-adjusting brakes and an electronic hood release. It also had a very powerful engine for a medium range car. However, these features weren’t enough. In the minds of the public, the car simply didn’t live up to the hype. And unfortunately for Ford, neither did the sales. Edsel sold only 64,000 units in its first year, way below the number anticipated. Ford launched 1959 and 1960 Edsel models but sales fell even further (to 44,891 and 2,846 respectively). In November 1959 Ford printed the last ever ad for the car and halted production. So what had gone wrong? In the case of Edsel there are almost too many reasons to identify. In fact, it would be easier to ask: what hadn’t gone wrong? The marketing campaign was certainly a key factor. In simple terms, Ford had overstated its case. Buoyed by the success of the Thunderbird only a few years previously the company must have felt invincible, and this was reflected in the rather too self-assured advertising material. However, no-one can excuse Ford of underexposure. On 13 Oct 1957 the marketing campaign for Edsel took product promotion to new heights when Ford joined forces with the CBS television network, to run a one-hour special called The Edsel Show. The show, a parody of 1950s favorite The EdSullivan Show featured celebrities such as Frank Sinatra and Bing Crosby. But even with such primetime promotion Ford was unable to shift anywhere near enough units of the car. Consumers didn’t care whether it was ‘revolutionary’ or not. All they knew was that it looked ugly and had a name that sounded like ‘weasel’. Furthermore, in an age when all the successful cars had tailfins, the Edsel was finless. According to Bob Casey, curator of transportation at the Henry Ford Museum, this fact meant that the Edsel ‘didn’t quite fit into people’s vision of a car’. In addition to misguided advertising, bad looks and a stupid name, Edsel faced a further problem – it was too expensive. As Sheila Mello explains in her informative book, Customer Centric Product Definition, the launch of the Edsel coincided with a move towards cheaper models: Ford’s decision to highlight the Edsel’s powerful engine during a period when the buying public was gravitating toward smaller, more fuel efficient cars alienated potential customers. The first models in the showroom were the most expensive, top-of-the-line models, resulting in what we refer to today as sticker shock. Unfortunately, too, while some Edsel models were more expensive than comparable cars, they had an equivalent or greater number of quality problems. Often parts did not fit properly or were simply missing, since Ford frequently built Edsels between Fords and Mercurys on the same assembly line. Many dealers were ill equipped to replace these parts or add accessories. The car ended up looking more expensive than it actually was because of poor timing. In the 1950s, US new car models typically appeared in November for the following year. For instance, a 1956 Thunderbird would have come out in November 1955. However, Edsel was launched in September, two months before the other new models arrived. It was
therefore a 1958 car competing against 1957 models – and more importantly, 1957 prices. In fact, the situation was even worse than that. Not only had Edsel decided to push its most expensive models first, but the 1957 models it was competing with were being offered at a discounted price in order to sell them before next year’s models were wheeled into the showroom. A high price may have been acceptable if it had been worth paying. However, the experience of those few early Edsel customers quickly gave the car a reputation for mechanical problems. Edsel now popularly stood for Every Day Something Else Leaks. One thing though was completely beyond Ford’s control. After a boom period for the US car industry during the mid1950s, the end of 1957 saw the start of a recession. In 1958 almost all car models saw a drop in sales, some by as much as 50 per cent. Ironically, one of the very few models to witness an increase in sales that year was the Ford Thunderbird. In a September 1989 article for The Freeman, a publication of The Foundation for Economic Education, car industry journalist Anthony Young explained how Ford had paid little attention to market research, and that this was the true reason why the Edsel failed: The Edsel serves as a textbook example of corporate presumption and disregard for market realities. It also demonstrates that advertising and predelivery hype have their limits in inducing consumers to buy a new and unproven car. In a free market economy, it is the car-buying public, not the manufacturer, which determines the success or failure of an automobile. A manufacturer shouldn’t oversell a new car, or unrealistic expectations will be built up in the minds of consumers. If the newly introduced car doesn’t live up to expectations, it is practically doomed on the showroom floor. However, Ford quickly learnt its lesson. A few years later the spectacular failure of the Edsel was counterbalanced by the equally spectacular success of the Ford Mustang. Launched in 1964, the Mustang sold half a million vehicles in its first year of production. Not only did it have a better name and a good-looking bonnet, the Mustang had one further advantage over its predecessor – it was affordable. As Sheila Mello points out, between 1960 (when the Edsel was phased out) and 1964 (when the Mustang was launched) Ford, along with most of the car industry, had shifted its focus towards what the consumer actually wanted. ‘The success of the Mustang demonstrates that Ford Motor Company did learn from the Edsel experience,’ she writes. ‘The key difference between the ill-fated development of the Edsel and the roaring success of the Mustang was the shift from a product-centric focus to a customer-centric one.’ This view is supported by Lee Iacocca, who oversaw the creation of the Mustang as Ford president, before taking over the reins at Chrysler. In his autobiography, Iacocca explains the approach behind the Mustang: ‘whereas the Edsel had been a car in search of a market it never found, here was a market in search of a car. The normal procedure in Detroit was to build a car
and then try to identify its buyers. But we were in a position to move in the opposite direction – and tailor a new product for a hungry new market.’ As a result, the Mustang went from strength to strength and is still in production today. So while the whole Edsel episode may have been a costly embarrassment for Ford in the short term, it helped the company learn some valuable lessons which it has carried with it to this day. Lessons from Edsel Hyping an untested product is a mistake. ‘I learned that a company should never allow its spokespersons to build up enthusiasm for an unseen, unproven product,’ confessed C Gayle Warnock, the PR director responsible for the publicity surrounding the Edsel launch. Your name matters. At the most basic level, your brand is your name. It doesn’t matter how important the brand name is to the company, it’s what it means to the public that counts. If the name conjures up images of weasels and pretzels it might be a good time to scrap it. Looks count. Visual appearance is a key factor in creating a brand identity for most products. It was the distinctive shape of Coca-Cola bottles which helped that brand become so big. In the car industry, looks are particularly important and as Edsel proved, ugly ducklings don’t always become swans. Price is important. Products can be too expensive or too cheap. When some brands price themselves too low, they lose their prestige. However, with a car such as the Edsel, the high price couldn’t be justified in the minds of the public. The right research is important. Ford spent time and money carrying out the wrong kind of market research. Instead of hunting for names, the company should have been concentrating on whether there was a market for its new car in the first place. As it turned out, the market it spent millions trying to reach didn’t even exist. Quality is important. Of course, product quality is always important but when it comes to cars it is a matter of life and death. Bad quality control proved an extra nail in Edsel’s coffin.
Don’t say a word Many companies and organizations have had to deal with a crisis during their history. Only a very few, however, come to represent corporate
incompetence and irresponsibility through one critical event. Oil Company Exxon is among them. In 1989, the Exxon Valdez oil tanker ran aground and began spilling oil off the coast of Alaska. Within a very short period of time, significant quantities of the tanker’s 1,260,000 barrels had entered the water, making it the largest tanker oil spill in US history. At the moment of impact the ship’s third mate, Gregory Cousins, who was not certified to pilot the tanker into those waters, was at the helm. The whereabouts of the captain, Joseph Hazelwood, at the time of the accident was not immediately explained. A Coast Guard investigator had the blood of the captain and the third mate tested for alcohol. The results were that the captain had unacceptably high levels of alcohol in his blood even nine hours after the accident. The captain was later fined and sentenced to 90 days in prison, a sentence many considered ‘too light’. Efforts to contain the oil spill lagged from the start. ‘The initial response was inadequate and didn’t match the planned, outlined response measures to be taken in a spill,’ said Dennis Kelso, commissioner of the Alaska Department of Environmental Conservation. ‘As of 24 hours into the spill, we still haven’t seen adequate containment.’ According to most observers, the company did too little and too late. Not only was the action to contain the spill slow to get going but the company refused to communicate openly with the press. The Exxon Chairman, Lawrence Rawl, was immensely suspicious of the media, and reacted accordingly. Within hours an army of journalists had arrived to begin extensive coverage. A company spokesman pointed to the existence of procedures to cover the eventuality – procedures which the TV shots belied. When asked if he would be interviewed on TV, Rawl’s response was that he didn’t have time for ‘that kind of thing’. While the company was getting off to a bad start with the media, the operation on the ground was failing to control the spill. Around 240,000 barrels had been spilled, with another million still on the ship. During the first two days, when calm weather would have allowed it, little was done to contain the spillage. This spillage spread out into a 12 square mile slick. Then the rain and wind started to make things worse, meaning further containment was near impossible. A week later the company was still tight-lipped. Following President Bush’s declaration that the spill represented a ‘major tragedy’, Frank Iarossi, the Director of Exxon Shipping, flew to Valdez to hold a press conference. It went badly. Small pieces of good news claimed by the company were immediately contradicted by the eyewitness accounts of the present journalists and fishermen. John Devens, the Mayor of the Alaskan town Valdez, commented that the community felt betrayed by Exxon’s inadequate response to the crisis. ‘Over the years, they have promised they would do everything to clean up a spill and to maintain our quality of life. I think it’s quite clear right now that our area is faced with destruction of our entire way of life.’ Alaskan Lieutenant Governor Stephen McAlpine also said that he was ‘severely disappointed’ in
the company’s response. ‘Despite all statements to the contrary, I don’t think they ever had a handle on it.’ Eventually, the Exxon boss deigned to go onto television. In a live interview he was asked about the latest plans for the clean-up. Rawl started to look nervous. It turned out he had neglected to read these, and cited the fact that it was not the job of the chairman to read such reports. He placed the blame for the crisis at the feet of the world’s media. Exxon’s catastrophe was complete. The consequences for Exxon of both the disaster, and the poor way in which it was handled, were catastrophic. The spill cost around US $7 billion, including the clean-up costs. Most of this was made up of the largest punitive fines ever handed out to a company for corporate irresponsibility. The damage to the company’s reputation was even more important, although more difficult to quantify. However, Exxon fell from being the largest oil company in the world to the third largest. The ‘Exxon Valdez’ became synonymous with corporate arrogance, and the story remained prominent in the media for over a year. According to a 1990 US news poll, 65 per cent of respondents said that ‘the Valdez oil spill was the key element in raising public consciousness about environmental issues.’ Lessons from Exxon Live up to your promises. The company failed to show that it had effective systems in place to deal with the crisis – and in particular its stated ability to move quickly once the problem had occurred was not in evidence. Act like a good corporate citizen. Exxon acted indifferently to the environmental destruction, and therefore did little to help the company’s case.
According to received branding wisdom, the best way to become a strong brand is to be first in a new category. This theory has been repeatedly emphasized by the world-renowned brand guru Al Ries. ‘Customers don’t really care about new brands, they care about new categories,’ he writes in The 22 Immutable Laws of Branding. ‘By first preempting the category and then aggressively promoting the category, you create both a powerful brand and a rapidly escalating market.’ There are indeed a number of cases to support this point. Domino’s was the first company to offer home-delivered pizza and remains the leader in that particular market. Coca-Cola, the world’s most popular and financially successful brand, was the first in the cola category. In technology markets.
Owing to the fact that consumer behaviour tends to be approximately five years behind technological breakthroughs, the first mover advantage is often lost. Furthermore, companies have often proved to be very bad at predicting how new technologies will be used. For example, most of the European mobile phone companies were caught completely unaware by the rapid rise of text messaging, a facility which some didn’t even bother to explain in their instructions booklets. The all-time classic among technology brand failures was Sony’s Betamax video recorders. During the 1970s, Sony developed a machine designed to deliver home video-taping equipment. The machine used Betamax technology, and hit the stores in 1975. In its first year, 30,000 Betamax video recorders (or VCRs) were sold in the United States alone. But a year later Sony’s rival JVC came out with the VHS – short for ‘video home system’ – format VCR. By January 1977, there were four more Japanese electronics companies manufacturing and marketing VHS-based machines. Whereas Sony had either been unwilling or unable to license Betamax technology (depending on which account you believe), JVC had been more than happy sharing their VHS format. This would later prove a critical factor in the demise of Betamax. Although Sony pioneered most of the advancements, JVC and the other VHS manufacturers were not slow to catch up. For instance, JVC and Panasonic introduced VHS hi-fi formats only weeks after Sony’s introduction of Betamax hi-fi. However, most experts agree that the tape quality on Betamax was superior to that of its rival. As the two formats were incompatible, consumers were forced to decide between them. Pretty soon Sony was feeling under pressure as its competitors started to drop prices to as much as US $300 below Sony’s machines. By 1982 the price war was in full swing and Sony reluctantly joined in, offering a US $50 rebate as a ‘Home Improvement Grant’. There were other marketing problems too. Up until the early 1980s the word ‘Betamax’ was used as a synonym for ‘video recorder’. This association had negative as well as positive consequences because in 1979, Universal Studios and Disney took legal action against Sony, claiming VCRs were infringing the copyrights of movie producers. Although Sony emerged apparently unscathed from the lawsuit, several commentators have suggested that the case had a detrimental impact on the way Sony marketed its Betamax products. One thing is for sure, from 1981 onwards Betamax-based machines were rapidly losing popular favour. In 1982, the year of the price war, Betamax VCRs accounted for a paltry 25 per cent of the entire market and the public were being warned that the selection of video rentals available for Betamax owners would be slightly smaller than that for VHS owners. Furthermore, while Sony continued to claim that Betamax was a technically superior format, video owners were becoming increasingly aware of one serious failing. Whereas VHS machines could record for a considerable length
of time, Betamax machines could only record for one hour – meaning that most films and football matches couldn’t be recorded in one go. This was the price Sony paid for enhanced sound and picture quality. To deliver that better standard, Sony used a bigger, slower moving tape. As a result, it sometimes took as many as three cassettes to show an entire movie. This caused frustration both among video owners, who had to swap tapes over, and retailers, who had to supply more cassettes. The problem is explained by one anonymous VHS fan on the blockinfo.com Web site: ‘What made VHS succeed was that you could get a whole movie on a tape. Okay, maybe the picture and sound weren’t as good as Beta; but what the heck, you didn’t have to get up in the middle and switch cassettes. VHS delivered value on a dimension that mattered to consumers. Beta delivered excellent value on dimensions that did not.’ Sony refused to bite the bullet though. Indeed, it may have been losing market share but the number of units sold still continued to rise, peaking with global sales of 2.3 million units in 1984. However, three years later VHS had gone way beyond the tipping point with a 95 per cent share of the market. In 1987, Rolling Stone magazine ran an article on Betamax (entitled ‘Format Wars’) and declared ‘the battle is over’. On 10 January 1988 Sony finally swallowed its pride and announced plans for a VHS line of video recorders. Although Sony was adamant that the press should not see this as the ‘death’ of Betamax, the press weren’t listening. On 25 January, only a fortnight after Sony’s announcement, Time magazine published a eulogy to the brand with the headline, ‘Goodbye Beta’. The same article also argued that Betamax had failed because it had refused to license the format to other firms. ‘While at first Sony kept its Beta technology mostly to itself, JVC, the Japanese inventor of VHS, shared its secret with a raft of other firms.’ This claim has since been hotly disputed by the defenders of Betamax. For instance, one AFU (Alt Folklore Urban) white paper on The Decline and Fall of Betamax refers to the statement as ‘blatantly untrue’. According to James Lardner, author of Fast Forward, Sony invited JVC and Matsushita to license the Betamax technology in December 1974, but both companies declined the offer. Either way, the fact that Betamax video recorders were only manufactured by Sony meant that it couldn’t compete against the growing number of companies pushing VHS. However, even when Sony started to make VHS machines it didn’t abandon Betamax. Overseas production of Betamax hobbled on until 1998, and in Sony’s home territory, Japan, machines were still being made until 2002, although not in huge numbers (Sony produced just 2,800 units in 2001). On 22 August 2002 Sony finally announced it would be discontinuing Betamax products. ‘With digital machines and other new recording formats taking hold in the market, demand has continued to decline and it has become difficult to secure parts,’ the company said in a statement. Now, of course, VHS itself is under threat from the rapid rise in digital versatile disc (DVD) players, and may not be able to survive into the long
term. While DVD has finally drawn a line under the battle between Betamax and VHS, it has also managed to create its own destructive war between different DVD formats, and therefore delayed the take-off of that market. However, at least some of the lessons of Betamax have been learnt. Sony and eight of its competitors eventually joined forces in 2002 to create a common format for DVD, meaning this time Sony will not be left on the sidelines. Lessons from Betamax Don’t go it alone. ‘Contrary to popular belief, what would help every category pioneer is competition,’ says Al Ries. True, providing the competition isn’t pushing a format incompatible with your own. Let others in. Whether Sony refused to license its format or not, there is no question that the company would have had a better chance if its rivals had adopted Betamax. Cut your losses. Sony’s decision to ignore VHS until 1987 was, with hindsight, an undeniable mistake. Supply equals demand. When the manufacturers of pre-recorded tapes decreased their supply of Beta format tapes, demand for Sony’s Betamax recorders inevitably waned.
MAJOR SUCCESS IN THE PAST
5. HYUNDAI “SANTRO”
Very often, there is an analogy drawn between the state of the great Indian roads and the pace of economic development in the country. Needless to say, it’s not a very pleasing comparison. So the average Indian customer who rides the roads of India is naturally extremely cautious when it comes to investing in a vehicle. Only those rough and tough enough to survive the potholes and nightmarish surfaces can pass muster. In such a scenario, a foreign company launching a car in the Indian market was bound to be looked upon with scepticism and suspicion, more so, if it had South Korean origins. South Korean companies were perceived not to be quality oriented.
The failure of Korean companies like Lucky Goldstar (later to be re-launched as LG, which is another marketing success) and the bad word of mouth for Daewoo led to this perception. How to bell the cat? In the late 1990s, car manufacturers like Ford, General Motors, and Fiat were faring miserably in the Indian market. Maruti had a market share of a whopping 79 per cent in the passenger car segment. Daewoo and Telco were creating hype over the impending launches of their cars Matiz and Indica, respectively. In such a scenario, the top management of Hyundai Motor India Ltd, which has South Korean origins, had a tough decision to make. It was a big gamble to go ahead with the launch of the small car –Santro.The Hyundai management stuck to a simple strategy – launch a quality product in the most promising segment with the latest technology and price it aggressively. In the pre-launch period in late 1997, the company commissioned market research project to understand the Indian consumer psyche and specify a benchmark for the pricing policy. The results of this survey and the actions taken thereafter had a bearing upon the success of the product later on. The Indian consumers showed an immense dislike to the shape of Santro. One consumer even likened it to a “funeral hearse”. A second important result was that Hyundai is an unknown brand with almost zero brand equity amongst Indian consumers. The company immediately undertook the initiative of reshaping and customising the car for the Indian customer. The tall rear end was reduced and made more aesthetically appealing. The Santro was all set for the Indian launch. Marketing genius -Here came the most important aspect of the launch – the marketing strategy. This was a factor that could make or mar the success of the Santro. Hyundai tied up with the advertising agency Saatchi and Saatchi, who hit upon a novel strategy. Bollywood star Shah Rukh Khan was roped in to be the brand ambassador. A three-pronged strategy was designed to attract the consumer: - Educate Indian Consumers about Hyundai -Create hype and expectations about the Santro -Explain the virtues of the Santro The TV & Press Campaign broke in June 1998. The initial TV spots and the press campaign showed Shah Rukh Khan being approached by a Hyundai official to advertise the Santro. Shah Rukh was not convinced about Hyundai and he was shown to ask all questions a normal Indian consumer is expected to ask. What is Hyundai? Why should I advertise for the Santro? Will it match customer service expectations? What about dealer networks? How can an international car meet the requirements of Indian roads? As the campaign went through all of these questions, the Hyundai official answered Shah Rukh Khan. By the time the car was actually launched, Shah Rukh Khan proclaims, “he is convinced”. He declares that he is now ready to advertise the Santro since he is certain that the Santro is the car for India. This high profile
campaign backed by some very innovative media buying, which went for maximum coverage with the minimum budget, broke all grounds in terms of creating consumer expectations and hype in the market. Along with the Advertising Campaign, the Sales Team worked burning midnight oil in creating the dealer network across the length and breadth of the country. The wide dealer network would prove to be invaluable in ensuring that the Santro would be available to anyone who wants to buy it. An important prerequisite for the dealer network was a fully functional workshop area with imported international standard equipment and engineers trained in Hyundai’s parent training centre in South Korea and localised training provided in the Chennai Plant. The success story September 23, 1998 saw the launch of the Santro. There was an unprecedented rush for bookings in spite of the fact that Hyundai was accepting bookings only against full payment for the car and booking was opened only for a few days. Hyundai closed the calendar year 1998 with sales of 8,447. The next year (October 1998-August 1999) saw Hyundai consolidating its market share, as these figures of monthly sales show: Thus, the cumulative sales during October 1998-August 1999 were 42,283 units. This accounted for 30 per cent of the market share in the small car segment and 10 per cent of the overall auto industry.Within a year of its launch, the Santro had dislodged the Maruti Zen as the no.1 car in its category and slipped in behind Maruti Suzuki as the no.2 car manufacturer in India. The launch of the Daewoo Matiz and the TATA Indica failed to dampen the demand for the Santro.Ever since the historic launch of the Santro, Hyundai has consistently taken the no.1 spot in all the segments of the passenger car industry in which it had launched a product. Santro stands tall undisputedly market leader in the compact car segment. The tool behind the successful launch – the marketing campaign – won numerous awards for its innovative concept, previously unheard of in India. This was a case of celebrity endorsement with the celebrity actually not advertising the product but playing the role of a common Indian consumer. Thus, the launch of the Santro stands as an excellent exercise in understanding consumer needs and lucrative portrayal of a product to capitalise on its design. Lessons from HYUNDAI”SANTRO” Marketing Campaign: Marketing campaign – won numerous awards for its innovative concept, previously unheard of in India. This was a case of celebrity endorsement with the celebrity actually not advertising the product but playing the role of a common Indian consumer. Thus, the launch of the Santro stands as an excellent exercise in understanding consumer needs and lucrative portrayal of a product to capitalize on its design. Leaders versus Followers: Interestingly, research supports the logic that a direct comparative ad from a small-share market follower is least likely to lead to higher awareness for the compared-to market leader (because the
market leader already has high awareness), whereas a market-leading highshare brand has the most to lose from a direct comparative ad (by creating "free" awareness for the compared-to smaller brand). This leads to the conclusion that while low-share brands ought to use direct comparative ads; market leaders perhaps ought to use non comparative or indirectly comparative ads (those that don't name competitors).
Pepsi Cola: the choice of a new generation
The Pepsi Cola brand began life in 1898 and has survived several ownerships, two bankruptcies and intense competition to become one of the world’s largest and most recognizable brands. The brand was historically marketed as a value product, priced significantly cheaper than the competition to encourage sales, but as World War II drew to a close, Pepsi began to reposition the brand and to assimilate it into American culture. Pepsi’s marketing in the 1950s was aimed squarely at youth, the baby boomers that they labelled ‘The Pepsi Generation’. The brand adopted the now familiar swirl logo on their bottles and employed the crude but effective slogan ‘Be Sociable – Have a Pepsi’. This was the first Pepsi campaign to focus on youth, a technique they would become renowned for over the coming decades. The 1960s and 1970s saw further youth orientated marketing, continuing the Pepsi Generation theme and even hitting the American Top 40 in 1964 with their catchy jingle Girlwatchers – produced to mark the launch of the new Diet Pepsi product. And by the mid 1970s Pepsi was beginning to close to gap on their largest competitor, Coca-Cola. Around this time a series of consumer tests were conducted and, to the marketers delight, they showed that the majority of participants preferred the taste of Pepsi to their competitors. These results gave rise to the near legendary ‘Pepsi Challenge’ campaign, again aimed predominantly at the youth market, where consumers across the US were invited to take a blind taste test of both Pepsi and Coca-Cola. With results favourable, the challenge soon found it’s way into television advertising.By the beginning of the 1980s, Pepsi had established itself as the top selling brand in take-home sales in the soft drinks market and they continued their successful tactic of placing themselves firmly as a youth product. The Pepsi Generation campaign was finally laid to rest but the brand became known for expensive sponsorships of high profile youth icons and adverts featuring superstars such as Michael Jackson, Cindy Crawford, Michael J Fox and the Spice Girls. The youth pitch was continued with copy such as ‘GeneratioNext’, ‘Be young, have fun, drink Pepsi’ and ‘The Choice of a New Generation’. The late 1990s were Pepsi’s most successful times yet as turnover grew to $32billion and they consolidated their position as the world’s second largest beverage company. In February 1996, Pepsi launched one of the most ambitious entertainment sites on the World Wide Web with Pepsiworld.com and in 1998 they
premiered a new logo to give the brand a more modern look for the coming new Millennium. The Pepsi brand continues to focus on youth as its greatest core value and recent campaigns have seen associations with the new Star Wars films and Britney Spears. For the past half century, Pepsi has tried to be younger, cooler and more relevant than their competitors and this consistent strategy has enabled the brand to grow and acquire a fundamental identity. By putting Pepsi in direct and open competition with Coca-Cola in terms of product quality, the Pepsi Challenge campaign was also a key tactic in the brand’s positioning and has recently been re-launched to take the challenge into the future.
7. Apple: imagination, innovation and differentiation
Apple is a brand that is always defying the odds. The company commands global market share of just 3%, almost went out of business after a financial nosedive in the mid 1990s and its main products compete with the obiquitous IBM compatible PC. Yet despite the difficulties it has faced and continues to face, it remains an amazing success. The brand was voted brand of the year by Interbrand in 2001, came a close second to branding ‘wonderkid’ Google in 2002 and continues to command amazing loyalty amongst users. The value of the brand to a company such as Apple is almost incalculable; so much so that it prompted Wired News to claim recently that ‘without the brand, Apple would be dead… The power of their branding is all that keeps them alive’. Why has Apple been so successful? Because it concentrated on building a powerful brand based on emotional rather than functional values. Apple may have produced a range of powerful computers and innovative products such as the iPod and the iMac but by far their greatest success has been in enticing customers in – forging deep bonds and encouraging them to fall in love with the brand. Apple has always played on the emotions. It has been David taking on the Goliath of IBM, its ethos is
power to the people through technology and it seeks to build communities around its products. The brand has become synonymous with creativity, the choice for designers everywhere, and has communicated itself as funky, quirky and colourful – a vibrant alternative to its drab and businesslike competitors. The equity produced by this powerful branding is without a doubt Apple’s key asset. Competitors such as Commodore and Amstrad were slain by the growth of the PC but the loyalty and affection that the Apple brand commanded allowed it to keep its head above water and become the success it is today. In a faceless market, Apple showed character and built an image.When former CEO John Scully talks of his timein the company during the late 1980s and early 1990s he has no illusions about Apple’s role, pointing out that ‘people talk about technology but Apple was a marketing company. It was the marketing company of the decade.’ This kind of thinking built the brand equity Apple enjoys today – the brand equity that both kept Apple afloat and promises future profits. This asset may be intangible but it is also truly invaluable.
3) RESEARCH METHODOLOGY
Following methodology will be followed for knowing the importance of brand management & evaluation. We draw few characteristics of strong brand with the help of few case studies & real world examples in industries. 3.1) Objectives • • • •
To assess the principles for creating and building brand as well as realworld examples of why it matters. To look into the importance of branding or brand management Whether the brand can be measured or not. We will identify the few characteristics that the world's strongest brands share Brand Evaluation- constructing a brand report card- a systematic way for managers to think about how to grade their brand's performance for each of those characteristics.
3.2) Rationale of study Building and properly managing brand equity has become a priority for companies of all sizes, in all types of industries, in all types of markets. After all, from strong brand equity flow customer loyalty and profits. The rewards of having a strong brand are clear. The problem is, few managers are able to
step back and assess their brand's particular strengths and weaknesses objectively. Most have a good sense of one or two areas in which their brand may excel or may need help. But if pressed, many (understandably) would find it difficult even to identify all of the factors they should be considering. When you're immersed in the day-to-day management of a brand, it's not easy to keep in perspective all the parts that affect the whole. Brand often boils down to perception – a slippery, hard-to-get quality, not an in-the-bank quantity. Avon can come back from the brink, despite years of cultural maladjustment and corporate disinterest, because of residual brand value and new vision, energy and discipline. IBM nearly fell apart as a brand yet rebounded with a new corporate strategy and a missionary sense of brand value. In ten years will women still find Avon relevant? Executives opt for services from IBM? What makes people decide? These, we believe, are better questions than the proverbial, “How much is my brand worth today?” And while the better questions are more difficult to answer, they provoke answers that build brands and invigorate companies. • The main significance of the study will be that by first gaining a deep understanding of its brand, company will be able to begin life as a public company with a rock-solid business strategy. This work will provide comprehensive study material for the academic purpose Convincing brand features form an integrated whole. The brands of the future will take greater notice of the customer.
3.3) Research Hypothesis NULL HYPOTHESIS- “ BRAND DOESN’T MATTER”. 3.4) Scope of Study The area of the study will cover the branding strategy followed by many of the companies / industry & their practice in brand management. The scope of the study will include identifying the market factors, determining the basic pricing issues to be considered, and determining the necessity of brand management. 3.5) Limitations Brand Management ,Brand Equity &Brand Evaluation are very essential & very vast for the study in themselves , therefore, research report cannot cover all the characteristics that a brand should possess which should be maintained updated by the firm periodically but it will cover the important aspect of branding. Studying the history of brand/product failures may
generate some insight into the reason for those failures and create a list of factors that may increase the opportunity for success, but there are no guarantees.
4) FACTS & FINDINGS
4.1) BRAND MEASUREMENT -
HOW TO MEASURE THE
A single number that tells you what your brand is worth today won’t help you make it worth more tomorrow. There is a great interest among many to understand what their brand is worth in sheer financial terms. However, we believe this financial valuation approach has little value. Moreover, relying on the relative financial value of brands for certain decisions can be overly simplistic. For example, a company must choose between two brands. The numbers show that Brand A
Conduct has a higher value than Brand B. The assumption often made is that Brand A is the right one to use. Not necessarily, if: Brand B is used in other geographic markets and has not been promoted in Brand A’s territory, or • Brand B has greater long-term potential, e.g., can be stretched or expanded and used in other categories, or • Brand B is the corporate name and the strategy is to build one brand long-term, not support multiple brands. The prevailing methods produce a rough number that is half right-brain, half left-brain – and, at best, a half-answer. It might help decide whether to pull the trigger on a merger or divestiture, but it does little to tell management how to protect and grow the value of its brand. There is a better path. It, too, involves measurement, particularly of the feelings and perceptions in the marketplace about a brand and competing brands, as well as other factors. Its aim is not merely a number, but a clear direction to improved business performance, and the ability to refine this path over time. We call it Strategic Brand Assessment. The desire to determine a brand’s value is understandable – in fact, commendable. In the aftermath of dot-coms with sky-high market capitalization passed off as “brand value,” brands are under the microscope as never before. But a single number approach is, we firmly believe, tangential to effective brand-building and brand management. In fact, for most purposes, brand simply cannot be reduced to a number. Any large, mature brand is an enormously complex set of values, not a single value. Making corporate decisions based on a numeric value for the brand is like managing an economy knowing only its gross domestic product. Consider that for many companies, business and brand are inseparable. What is Nike without the swoosh or IBM without its richly cultivated identity? Commodity businesses aren’t compelling. Would teenagers clamor for generic Asian44
made sneakers? Would CIOs buy anonymous e-business services? Not likely. The proof of this is often at the extreme, when a brand becomes so tarnished (think of Arthur Andersen) the license to operate is removed and the business destroyed. At that point, the question of dollar value becomes moot. The value of the brand was the value of the business. Brand is as understandable and manageable as any other activity – if measured with a business tool other than a calculator. Valid Brand Measurement Brand is no more or less than the expression of a company’s essential business. As a result, it should be as understandable and manageable as any other business activity. It can be molded, steered back on course, refreshed, adapted to changing circumstances and reinvented. Or it can be distorted, diluted, squandered and neglected into oblivion. This is precisely why brand can and should be measured, but with quite different tools than balance sheets and calculators. Think of a company’s brand as a living, breathing being that resides in the collective imagination of everybody touched by the company as it conducts business. This very real human phenomenon – kids jostling to buy the newest Air Jordan, CIOs hiring IBM because they count on its ability to deliver – is best understood as social and psychological, not arithmetic. Yet one result of any brand measurement will be the allocation of financial resources to address what the measurement process discovers. Therefore, brand measurement must produce analysis that’s persuasive to financial managers, and provide the means to assess return on investment. To manage a corporate brand, we believe, requires translating the social behavior around it into rational terms, so that its important qualities are quantified as intensities and values and precisely defined components that can be acted upon. This too is measurement – not solely as a function of shareholder value, but rather as two more inclusive measures of value: stakeholder value and contextual value. The stakeholders include everyone who has a personal interest in the brand, and in proportion to their stake – customers, potential customers, disenfranchised customers, employees, potential employees, investors and brand influencers from financial analysts to community leaders. Contextual value measures the brand and its drivers relative to those of competitors, similar industries and parallel situations. Strategic brand measurement is a process. It combines standard marketing practices and closely
Brand 1 2 3 4 related methods from the social, behavioral and statistical sciences. As in all good science, there is an art to its application. Properly managed, this process produces information and tools that help senior management make critical decisions, point the business in the right direction and achieve objectives that can: focus and intensify the brand , clarify and refine strategy, create compelling new offers , protect against brand risk, produce competitive advantage, reduce brand-support costs, improve short-term profitability In addition, this process will help enhance the traditional benefits of a strong, clearly defined brand , employee retention and recruitment, ready sources of funding and customer loyalty. Pinpointing Brand Drivers At the core of any brand are a handful of elements that can influence and change behavior. We call them “brand drivers.”They come from a small, specific universe of “brand attributes.” Knowing the brand drivers provides managers with a powerful array of options for bringing brand to bear to solve business problems, seize market opportunities and plot the most profitable course for the business. There are two elements to brand drivers: The attributes people consider when deciding to purchase a brand in a category, and the actual differentiators – the elements that spur behavior. A company typically has a half dozen or so key brand drivers, which vary in relative importance depending on audience and circumstance. Any brand-driver research needs to be sufficiently deep to understand the changes in relative importance among not only the company’s drivers, but also those of competitors. Over time, additional studies will show shifts in this picture,
particularly the effects of any actions taken to achieve some desired result. Depending on industry, brand drivers generally don’t alter dramatically year to year. But if the business is technology-dependent or otherwise full of flux, drivers can change quickly. For example, as people become familiar with technology through use, second-order drivers become more important. It makes sense to promote a company’s ability to innovate in advance of an important product launch, but after the launch emphasis may need to shift to tangible features, benefits and price. Despite the decided benefits of Strategic Brand AssessmentSM, few companies fully know and understand their key brand drivers.Yet companies commit sizable resources to other less strategic brand measurements. The marketing department probably gauges awareness and perceptions of the brand. Advertising recall is typically measured. This research may provide a picture of the brand at a point in time, but no roadmap for the future. To complicate matters, brand measurement in large companies often consists of decentralized, uncoordinated research efforts. The brand “picture” becomes a series of fragments by line of business, geographies and target markets. Yet even the most robust of conventional brand studies tends to fall short in helping determine future brand direction. The biggest benefit of valid brand measurement is direction for the business itself.
Measure a Brand’s Value
4.2) Strategic Brand Assessment
Our approach isolates the impact of brand. It digs down and exposes customer decision-making.It involves a comprehensive assessment of the brand in the hearts and minds of all critical audiences,external and internal. The process has four major parts: information gathering and preparation,experimental design, back-end analysis and decision modeling. Of the four, the work up front is the most important. From the initial preparation and analysis – why and what you’re trying to achieve – everything flows.The results come in terms of strategic options: What’s important, a brand’s strengths and weaknesses, competitive brand strengths and weaknesses, are there white spaces – important areas not served that a brand is positioned to own.What starts to emerge is a roadmap for the brand
linked to what the company has been doing recently,what it should do in the future, and direction on how to get there.In light of this new information, the company’s vision and mission may need modification. It will help the company refine its positioning. Defining the key image attributes follows in a process that starts with the study results, filters them through top management’s knowledge and experience, and makes sure they differentiate in their competitive arena. Next in the process: a communications plan with audiences identified and messages by key audiences. Finally comes implications for the business itself. These can be the biggest benefits of strategic brand assessment – areas of vulnerability that must be buttressed to improve credibility, or unique strengths that suggest paths for future service offerings. The more extensive and well planned the research, the more likely that these business implications will have real substance.Another key measure is organizational alignment – how well the vision is being supported. Are the company’s values well understood internally or are there pockets of confusion or resistance? Is employee behavior toward customers consistent with the image the company wishes to project, or are there disconnects? Clearly, strategic brand measurement can be a powerful and versatile tool, not only to move a company forward in the directions indicated by its strengths, but also to identify and address weaknesses. It doesn’t merely try to place a value on the corporate brand: It provides the means to maximize brand value and project value into the future. Therefore, realizing that brand has value is a fundamental first step. If attaching a number to the corporate brand is the only way to gain high-level attention and make the point, then by all means do so – but quickly move on to more fundamental goals: Understand the brand, make sure it is strong and relevant and learn how to maximize the brand’s positive impact on tangible business results. To do these things effectively and efficiently requires a brand measurement process that monitors brand drivers –the attributes of the brand relevant to key audiences. Companies that are first to invest in such a process will understand better than their competitors how to differentiate their business, gain share of mind and keep their brand and company vital. These companies are more likely to become industry leaders.
4.3) BRAND REPORT CARD
We have identified the ten characteristics that the world's strongest brands share and construct a brand report card- a systematic way for managers to think about how to grade their brands’ performance for each of those characteristics. The report card can help you identify areas that need improvement, recognize areas in which your brand is strong, and learn more about how your particular brand is configured. Constructing similar report cards for your competitors can give you a clearer picture of their strengths and weaknesses. One caveat: Identifying weak spots for your brand doesn't necessarily mean identifying areas that need more attention. Decisions that might seem straightforward-"We haven't paid much attention to innovation: let's direct more resources toward R&D" - can sometimes prove to be serious mistakes if they undermine another characteristic that customers value more. BRAND REPORT CARD SAMPLE
4.4) Overall brand perception Leadershi p Brand percentag e Toyota Ford Honda Volvo 37% 29 27 24
Chevrol 22 et SURVEY SAYS Toyota and Ford lead in overall brand perception. Toyota, Ford top car brands in consumer perception Consumer Reports first Brand Report Card survey finds few car brands stand as leaders Automakers collectively spend $10 billion a year to promote their vehicles. But few brands appear to be distinguished in the crowded marketplace and often reality doesn't reflect consumer perceptions, according to new findings by the Consumer Reports National Research Center. The recent Brand Report Card study reveals that only five brands stand out from the competition based on the number of survey respondents who named them best in design/style, performance, quality, safety, technology/innovation, or value. Toyota, Ford, Honda, and Chevrolet are among the sales-volume leaders, with broad vehicle offerings, large dealer networks, and deep-pocket advertising budgets. Volvo made the top five based largely on the strength of its safety image, drawing the highest single score in any one area. Other key findings from the survey include: Seven of 10 consumers considered safety and quality when evaluating a new car. • The most-important individual features in a new car are safety related. • Technology and innovation were rated least important, even though marketing messages often focus on those factors. • Brand-wide focus on performance alone does not ensure the vehicles are considered among the sportiest.
• Nearly one quarter of Americans are considering buying a new Toyota. 4.5) BRAND EXTENSION STRATEGY CASE ANALYSIS: DANONE STRATEGY FOR BRAND EXTENSION STRATEGY The strategy of Danone will be studied to have a practical example of company using it. Indeed, Danone launched Taillefine in the dairy product with 0% fat in 1964. Then Danone used the image of both leanness and wellbalanced food associated to the dairy products with 0% fat of Taillefine in order to extend this brand to the light cookies. As a consequence Danone saved time and surprised its competitors in the cookies market. Three years after the launch of Taillefine in the biscuits fields in 1998, the success has been extraordinary. And, in 2000, the sales of Taillefine increased from 40%. With this success met by this extension, Danone decided to target the water market still with its brand Taillefine and the same promise than with the dairy product: the leanness which is a segment that has been controlled by Contrex (the water brand of a competitor, Nestlé). Brand extension is one of the strategies a company can use and it is not actually a new concept. This marketing strategy dates back from the 1960`s (with retailers` brands in different products categories in this period) but it really becomes popular since the 1980`s.Indeed, it is very expensive to create and launch a new brand in the market. In addition, the market is already full of different brands. Thus brand extension is a way of “restricting” expenses and risks compared to the creation of a new brand. This strategy consists in using a current brand name to launch a product in a category considered as new for the company-according to Aaker&Keller (1990). This new product has different functions and a different nature in comparison with the product the brand used to do. For instance, Mars is well-known in the sweets department but can be found in the ice-cream department as well. Usually, this current brand has a good image within consumers what drives this process “easier” because the brand already benefits both from a good fame and from a recognized level of quality within consumers. Thus these latter are less reluctant to test the new product because they like buying what they already know. Usually they don’t like to “take risk” by trying a new product from an unknown brand. This strategy of brand extension can be very efficient for companies to reach new consumers and penetrate new markets. However, a company has to be careful when using this strategy because it can, for example, weakened the image of the main brand. I.Problem
A brand needs to evolve or change products if it wants to continue existing. Face to the tough competition, companies have to reduce the amount of brands owned -e.g. Unilever decided to keep only the 400 most sold brands out of 1600. To reduce the brand’s portfolio companies have several strategies and brand extension is one of them. This is a method which seems appealing at first but actually there are some constraints with it. So, is the brand extension a good strategy for companies instead of brand creation? However, this strategy cannot only have advantages so what are the weaknesses of this strategy and which precautions have to be taken when using it? Delimitation This paper will focus on the strategy of the group Danone which decided to use the brand extension strategy with its brand Taillefine. Indeed, it is only for Taillefine that Danone decided to use brand extension because otherwise, it prefers creating new brands. So, it will be interesting to study the reason why Danone is not giving the priority to brand extension even if in our theoretical part, David Taylor (2004, p1) said that a 2003 Brand gym survey showed that 83% of managers considered that brand extensions were the most important way to launch new products and services in next 2-3 years to 2% for new brand creation. II. Frame of reference II.1. Presentation of Danone Danone has been founded in 1919 in Spain and is now the leading brand worldwide in the fresh dairy products. Danone yoghurt was first selling in pharmacies because of research led by Isaac Carasso after thousands of children contracted intestinal disorders. He wanted to relieve them. He looked into Nobel-prize-winning research led about 10 years ago about yoghurt lactic acid bacteria. Afterwards, he bought “lactic cultures from the Pasteur Institute in Paris and launches the first Danone yoghurt through pharmacists” Matt Haig (2004, p119). Danone decided to operate in the mass market but it still considered as a healthy brand.Furthermore, the “Danone Vitapole research ensures that the health claims made by the brand are scientifically backed up” Matt Haig (2004, p119). For the promotion of products made by Danone, a special importance is given both to their health benefits and their taste. In the United States, the motto is “How can something that is so good for you taste so good?” So, they are simple messages but they “tackle the main consumer deterrents of health food (taste worries) and tasty food (health worries) both together” Matt Haig (2004, p119). The secrets of success of Danone can be listed as following: Differentiation, Danone products are creating a new market instead of taking share on an old one. This difference is can be seen with the packaging with for example the unique bottle shape and “dose” size of the product Actimel -belonging to Danone.
Education, Danone can easily explain a complicated science concept into a simple message for customers. Health associations are putting forward both by the different Danone institutes and by its International Prize for Nutrition.It is because Danone is associated with health that it could launch successful extensions with its brand Taillefine. II.2. Advantages and disadvantages of brand extension strategy II.2.1. Advantages of brand extension strategy According to David Taylor (2004, p1), this strategy of brand extension is popular because it is less risky and cheaper compared to the creation of a new brand. Leslie de Chaternatony and Malcolm McDonald (1998, p315) point the same economical advantage by indicating that “the economics of establishing new brands are pushing companies more towards stretching their existing name into new markets. Daunted by the heavy R&D costs, and more aware of the statistics about failure rates for new brands, marketers are increasingly taking their established names into new product fields” Leslie de Chaternatony and Malcolm McDonald, (1998, p315).Taylor (2004, p1) emphasizes the advantages connected to this strategy instead of brand creation as following: Consumer knowledge: the remaining strong brand used to “promote a new product” makes it less critical to create “awareness and imagery”. The association with the main brand is already done and the “main task is communicating the specific benefits of the new innovation” Taylor (2004, p1). Consumer trust: the existing well-known-strong brands represent a promise –of quality, useful features etc. - for the consumer. Thus, the extension will benefit from this fame and this good opinion about the brand to create “a compelling value proposition in a new segment or markets” Taylor (2004, p1). In addition, according to a Brandgym survey in 2003, “58% of UK consumers will be more likely to try a new product from a brand they knew, versus only 3% for a new brand”, Taylor (2004, p1). However, this has still to be done with ability to be successful. Catherine Viot (2007, p42) agrees to this concept when she considers that “the customer is expecting to transfer his information from the brand to the extension. If the general opinion about the brand is favourable, the behaviour regarding the extension should be the positive as well”. She adds that a successful brand extension can enable to get the customer loyalty. A satisfied customer by an extension will be more willing to repurchase the same brand. For example in the sport field, a customer will more likely prefer a brand offering a complete equipment-shoes, outfit and accessories. Lower cost: compared to launching a new brand, brand extension strategy is cheaper especially because the new product use the name of an already well-known brand.
Taylor (2004, p2) said that “Studies show that cost per unit of trial is 36 % lower and that repurchase is also higher” with an extension Indeed, Smith & Park (1992, p296) confirm this idea when suggesting that regarding the advertising effectiveness, it seems for same market share, the advertisement budget for brand extension are smaller than for new brands. Aaker (2004, p194) gives some advantages more or less close to Taylor or C. Viot (2007) beliefs: Enhancement of brand visibility: when a brand appears in another field it can “be a more effective and efficient brand-building approach than spending money on advertising” In addition, he suggests that the relationship with loyal customers will be strengthen because they will use the brand “in another context” and it is expected as well that they will rather this brand to the competitors’ one. Provide a source of energy for a brand: the brand image-especially when the brand is a bit tired- is expected to be reinforced by the extension. Indeed, this latter gives energy to the brand because it increases the frequency with which the brand is associated with good quality, innovations and large range of products. In addition, the customer sees the brand name more often and it can strengthen his idea that it is a good one. Thus, C. Viot states that the presence of the brand on a wider number of products should improve the popularity of the brand. The probability of being in contact with the brand –both in the communication and in the supermarkets – is more important and then should improve the brand memorization. Defensive strategy: an extension can prevent competitors from gaining or exploiting a foothold in the market and can be “worthwhile even though it might struggle” according to Aaker (2004). Microsoft for instance has decided to operate in different areas with the aim of limiting the “ability of competitors to encroach on core business areas”. II.2.2. Disadvantages of brand extension strategy Dilution of the existing brand image: C. Viot (2007) underlines that the extensions are using the most important asset of the company that i.e. its brand name. It can be a major advantage for the extension but it represents as well a huge risk for the existing brand because the brand image can be diluted. Park, McCarthy & Milberg, (1993, p60) said that those positive and negative consequences are “reciprocity effects” and defined as “a change in the initial customer’s behaviour regarding the brand, after an extension”. She explains that a brand extension can damage the brand. A dilution of the brand capital can happen by the occurrence of undesirable associations or by the weakening of the existing associations. This latter can be a consequence of new associations transferred from the extension.
Indeed, an accident occurring with a product can lead to tarnish the image of the all brand. In addition, it is sometimes difficult to associate one brand to two products without weakening the brand position in the customer’s mind. Aaker (2004, p211) points this problem when he argues that “the associations created by an extension can fuzz a sharp image that had been a key asset, and at the same time reduce the brand’s credibility within its original setting”. So he claims like the former authors that companies have to be careful of the confusion in the customer’s mind when making extensions. Aaker (2004, p211) adds that when a brand benefits are ensure by the fact that it is not “for or available to everyone”, doing too much extensions could reduce this image of brand selectivity. He takes the example of the overuse of the name Gucci – at one moment therewere 14,000 products Gucci- was a part of the factors leading to the “fall of that brand”. Cannibalization: Aaker (2004, p214) states that the extensions can cannibalize the existing products of the brand when there are positioned in a close market. It means the extensions sales are increasing while those of the existing brand’s products are following the opposite curved. Aaker (2004) underlines that these good sales figures for the extensions cannot compensate the damage produced to the original brand’s equity. He argues that this situation is however better than seeing this happening with a competitor’s brand. Taylor (2004) listed as well this risk and he says like Aaker that this situation can happen when range extensions are “brand clones” i.e. they can not be enough differentiate from the existing products. He gives the example of the brand Crest which was launching for years new toothpaste twists –e.g. gum protection and whitening, tartar control. Its share fell from 50 with one product to 25% with 50 products. Thus, “each introduction competed for the same usage occasion and introduced novelty value but not enough added values to create incremental growth” Taylor (2004, p25). And David Taylor continues his reasoning by saying that people wanted an “all-in-one version” successfully provided by Colgate i.e. Colgate Total. A disaster can occur: Aaker (2004, p212) explains that a disaster which cannot be controlled by the firm –e.g. that Firestone tires used for the Ford Explorers were potentially unsafe- can happen to any brand. The more extensions the brand made, more important the damages will be. This occurred to Audi when the Audi 5000 cars were suspected to have sudden-acceleration problem. Adverse publicity started to appear from 1978 and continue to the extent that it was mentioned on CBS’s “60 minutes” in November 1986. Audi did not make efforts to change this situation and as a consequence its sales fell from 74000 in 1985 to 23000 in 1989. Audi needed fifteen years to recover while it was manufacturing good cars.
III. Methodology III.1. Qualitative or quantitative data III.1.1. Qualitative research According to Kumar (2001, p218) “the purpose of qualitative research is to find out what is in a consumer’s mind. It is done to access and also get a rough idea about the person’s perspective. It helps the researcher to become oriented to the range and complexity of consumer activity and concerns. Qualitative data are collected so researchers can know more about things that cannot be directly observed and measured. Feelings, thoughts, intentions,and behaviour that took place in the past are a few examples of those things that can be obtained only through qualitative data collection methods”. Focus group, in-depth interviews and repertory grid technique are typical methods used in this type of approach.For this dissertation we want to know feelings, thoughts, intentions and behaviors comparing to brand extension. For that we apply in-depth interviews. III.1.1.1. Data collection Individual in-depth interview For this dissertation, this approach will be followed and two individual indepth interviews will be made to understand “the feelings, thoughts, intentions and behaviour compare to brand extension” like advice it Kumar (2007). To make these individual in-depth interviews a list of questions need to be prepared to be asked and answered by the respondent. For this dissertation, Danone has been chosen as an example so it is crucial to question one person working in Danone marketing team.” In qualitative research the concern are more the quality and depth than the proportions of people that gave one response or another” Hague, Paul (2004, p63). To have an interview with this person the graduate yearbook of the Business School of Toulouse will be used. When this person will be found, it will be possible to ask for an interview through the phone because it will be easier because of his or her workplace. III.1.2.Quantitative Research While according to Craig, Samuel (1999, p318) the “qualitative data collection techniques aid in identifying relevant constructs and concepts to be examined, survey research provides a means of quantifying these concepts and examining relevant relationships in-depth”. It is possible to say that quantitative research let quantify or precisely measure a problem. It is often used for sophisticated statistical procedures and scientifically drawn samples. It is possible to collect quantitative data from respondents by two means: “the communication and the observation” Kinner and Taylor (1996). In our case, we will not use qualitative data because we will only do two interviews and not questionnaires. III.2. Research methods III.2.1. Secondary data
First of all, to collect some information about brand extension, look for some secondary data was the first step because “the researcher should always start with secondary data.” Churchill, Gilbert A., Iacobucci and JR. Dawn (2005, p167). Indeed, as they argue, secondary data represent “cost and time economies” because you only need to “get online or to go to the library, locate the appropriate sources and extract and record the information desired”. With this data, the researcher can have a first idea about what have already been done about his topic. Most of the time huge amount of information can be gotten through secondary data. However, secondary data are not enough to answer a problem and has furthermore two main disadvantages. So they argue as well that “they typically do not completely fit the problem, and there may be problems with their accuracy”. Indeed, according to them first of all, the data had been “collected for someone else’s purposes”, so it is unusual that they can answer your problem perfectly. It can occur that the class definition is not what the researcher is expecting i.e. he wants maybe to study the behaviour of people between 18-24 years old but can only get data about those of 2534 years old for example.The second disadvantage is the problem of accuracy. Indeed at least when collecting and analysing the data some errors are always possible misleading the researcher using them to make decisions. As a consequence, the researcher has to be critical when using secondary data. Among the secondary data, it can be found the internal and external data. The internal data are “originate within the firm” Churchill, Gilbert A., Iacobucci and JR. Dawn (2005, p173). In this paper, the opportunity of having this kind of data was able with thanks to the information got both from M. Sudre -working for Danone- and from a letter –dating back from March 2005to inform the shareholders of Danone about its financial situation. The external one originates from outside sources. Thus, information originates from Internet and Danone website has been used, articles and literature dealing with brand extensions as well. III.2.2. Primary data As it was previously stressed, secondary data cannot be sufficient to help answering a topic. Thus, we need as well to use primary data. It is important to find out what companies are thinking about brand extension strategy. Thus, in this paper, communication techniques will be used by making an interview of someone working in the Marketing field at Danone Company through telephone. This technique is used as well to interview M. Marcel Bottom working at Nomen France, which is a a company creating brand name or companies’ names. This method is quick and implies lower cost. Indeed, according to Churchill, Gilbert A., Iacobucci and JR. Dawn (2005, p215), the “communication is often a faster means of data collection, because researchers are not forced to wait for events to occur as they are with the observation method”.
However, using communication has some weaknesses. Indeed, it is not sure that objective answers will be obtained and data collected are less accurate when using communication because this method is dependent of the respondent willingness or capability to give the information desired. “For example, respondents are often reluctant to cooperate whenever their replies would be embarrassing or would in some way place them in an unfavorable light” Churchill, Gilbert A., Iacobucci and JR. Dawn (2005, p215).Use Danone‘s website seems to be a good idea to have more details about Danone‘s strategy. III.2.2.1. Population and sampling In this paper, the population considered is companies which are using or which used brand extensions. Indeed, this work is about the advantages and disadvantages of the brand extension strategy for companies so they are the proper target.This way, it will be possible to ask them if they would agree to make an interview to get more information about brand extensions such as the reason explaining that the company decided to use it, the advantages and disadvantages of this strategy. While looking for these companies, Danone appeared to be a good target for this paper. Indeed, the strategy of brand extension has been used by one of Danone`s brand: Taillefine; and it is the case study.So, an interview with a brand manager of Danone in Spain was made. The purpose was to know if brand extension was still considered as a good alternative to brand creation and which are the problems the company may had to face. The questions were asked to the respondent personally so, he did not have too much time to prepare a “politically correct” answer and it is a means to get frank answers. Moreover even if it has been done through the phone, it can be considered as a personal relationship so it was maybe easier for the respondent to feel at ease to answer. This method is as well cheaper, quick and more convenient. This respondent had been chosen because he was a former graduate student from the Business School of Toulouse and one of our group members is actually studying there. As a Consequence, it was easier to ask for an interview. This interview had been done through Skype – enabling cheaper call from computers to landlines or to mobiles- and had been recorded in order to have the opportunity to listen this record several times and try to lower the amount of information missed in relation with an interview realized without recording. This interview lasted approximately 20 minutes. However, it has to be stressed that this interview was sometimes difficult to make because the quality of the connection was not very good. Thus, it was necessary to call a second time to finish this interview because the first time, the interlocutor could not hear correctly the questions and in the opposite side his answers and in addition he found the questions too theoretical. So, the questions had to be rephrased. It has to be emphasized that if it was possible to make this interview again it would be better to call him from a landline or a mobile phone to have better connection. For additional information, another interview had been made – about 15 minutes
through mobile phone- with M. Marcel Bottom who is working at Nomen, which deals with the creation of brands names and companies’ names. He has been interviewed as well because he has lot of knowledge about brand in general and about brand’s strategies. III.3. Validity and reliability The information obtained, have to be valid and reliable. Indeed, in this paper, there are two interviews which have been then analysed. The interpretation will depend upon our backgrounds and one’s knows that each one has a different one. For a measure, validity means that what we want to measure is really measured, neither more nor less. Precisely the question we have to ask ourselves is “are we measuring what we think we are measuring?” according to Kinnear and Taylor (1996, p331). It is crucial not to move further away from the topic of this dissertation which is brand extension. Thietart, Raymond-Alain (2007) consider that reliability means that the “measuring instrument must allow different observers to measure the same subject with the same instrument and arrive at the same results, or permit an observer to use the same instrument to arrive at similar measures of the same subject at different time” . Thus, it will be important to be careful when getting the answers and especially when analyzing them and the fact that one of the interviews has been recorded will enable to lose less information about the respondent’s answers. Finally, in order to deal with the topic of this paper more deductive than inductive approach has been used because it was possible to find quite a lot of literature about brand extension. Thus, these previous researches were a guide for a great part of this paper work. IV. Empirical data IV.1. Interview of Marcel BOTTON, CEO of Nomen France, 07-04-10 Nomen is one of the world leaders companies in naming. It is situated in many countries Germany, France, China etc- and the company‘s mission is to look both for names for a new company and brand for a new product. Nomen has created well-known names such as Vivendi, Miracle (a Lancôme woman perfume), Clio (Renault’s brand cars) etc. Marcel Botton who is the CEO of Nomen France agreed to give us an interview. And, the answers obtained will be analysed in this paper. He had to answer to the following questions: 1. Brand extension is considered as more advantageous than new brand creation. What do you think about this statement? According to M. Bottom, it is true and the main point is that brand extension is obviously cheaper than brand creation. Indeed, he said that brand creation “is very expensive whereas with an extension the company can use the image of one existing brand” and as a consequence make some economics on advertising, marketing etc. In our theoretical part, David Taylor subscribed to this point of
view when he said that companies considered brand extension as “a cheaper and less risky way of launching innovation than creating new brands”. Further, Taylor adds that because of the “associations which have already been establish” with the strong brand, “the main task is communicating the specific benefits of the new innovation”. On the contrary, “a new brand starts from scratch: it has to spend heavily just to get itself known” Taylor David (2004, p1). M. Bottom underlined that the second advantage of brand extension was the fact that it was “easier to negotiate with retailers to put in their shops departments a brand which already exists compared to a new brand”. Indeed, the retailers already know if a brand sales figure are good and in this case they don’t worry about adding a new product of this brand if they think it will make people willing to buy this product because it is not a new unknown brand. This statement seems to be quite logical. Indeed, nowadays, the competition is very tough and in shops departments, there are so many brands that the retailers have to use the more efficiently as possible the space available. It means that even if a retailer would like to give a chance to some new brands to show to what extend they can attract customers, he will nevertheless give the priority to an extension from a wellknown brand which already proved its ability to get good sales figures. 2. What are the advantages and disadvantages of brand extension strategy? M. Bottom said that when a company decides to do a brand extension strategy, it enhances the existing brand fame but at the same time it can lead to the weakening of the brand. Thus he took the example of Danone. He said that “Danone is known for its good quality and healthy products. However, if it decides to extend to some desserts like jam, it will enhance the power of the extended product –increase of awareness for Danone and, the new product will benefit from the image of the existing Danone’s productsbut they will be a dilution of the brand image”. This means that the customers will be confused about the characteristics they were associating to Danone because jam is not the same as yogurt and is not “so healthy” compared to yogurt. And he added that “an extension is more profitable in the short-run and more disadvantageous in the long-run”. Thus, he said that in the short-term, a brand extension enables to save money compared to the launch of a new brand but in the long-run companies have to be very careful not to make too many extensions and not to extend its brand to some areas too far from its main and first line of business. This problem of brand image dilution was already underlined by (Viot, 2007). Indeed, she explained that an extension uses the brand name as an asset and represents the major advantage for the extension. However, she said that this main advantage can as well be a main disadvantage because it can dilute the image of the brand. Besides, Aaker quotes the dilution of existing brand associations as one risk of brand extension strategy. Actually, he considers that the associations following from the extension can decrease
the credibility of the brand perceived by the customer. It can occur when a brand makes too many extensions. 3. What are your advices to obtain a successful brand extensions strategy? According to Marcel Bottom, to be successful, there is a need of “image synergy” which he explained by the fact that the “own quality of the existing brand products has to fit with the extension’s one”. Indeed, he took the example of Danone to make us understand his argument. He said that if “Danone starts making chocolate desserts, the image of the new product will be build at the expense of Danone’s former products because they have the same position on the market”. He took the example of Yamaha as well. He said that this brand is positioned in the piano’s market and in the motorcycles one as well. These areas have no common link, each product has a territory. This way they cannot compete with each other because the customer can easily avoid mixing up the products characteristics. Thus, it can be considered that M. Botton is talking about the phenomenon of cannibalization. Taylor (2004,p25) states that it occurs when the range extensions are “lacking of differentiation versus the existing products”. As a consequence, the customer has difficulties to make a clear split in his mind between the existing product’s field of the brand and the extension’s one. Thus, the sales of the extension can increase at the expense of the brand existing products. Aaker is talking about this danger as well in his book which named Brand portfolio Strategy. Indeed he states that an extension being launched in a close market to the existing brand’s products can cannibalize the brand’s sales. It means that the extension’s sales are growing but those of the existing brand’s products can slow down and even decrease. According to this interview, it can be stressed that the theory and the empirical data have similarities. Thus, brand extension seems to be a good alternative to brand creation. However, like every strategy, some precautions have to be taken by a company willing to use brand extension. We can quote the fact that marketers need to inquire to measure if with the extension the company will bring added values in the market compared to competitors to avoid long term brand spoiling. The company has also to take care not making too many extensions to avoid weakening the brand capital. But the first step is to have a strong brand because the customer will easily be attracted by an extension if he already knows the brand and make good associations with it. Indeed, the brand is a guarantee for the customer and if he trusts its ability to deliver its promise, he will apply this judgement to the extension and then buy it. IV.2. Interview of M. Sudre, Brand Manager of Actimel products, 0705-08 Actimel product is a subdivision of Danone. An interview of M. Sudre who is working for Danone in Barcelona –Spain- has been made. To be more precise, he is the brand manager of Actimel. According to the presentation of Actimel in
Danone’s website, it is a yogurt you drink and which helps to strengthen the body natural immunity system because of some leavens contained in yogurt and a special one selected by Actimel and patented.As a brand manager, he seemed to be the right person who would be able to give some information about the topic of this dissertation which is brand extension. He had to answer to the following questions: 1. People consider brand extension is more beneficial than the creation of a new brand. What do you think about it? Brand extension is easier to do, because when creating a new brand you need to develop everything from the beginning again. You need to invest more in advertising to get yourproduct/service known by the consumer while in brand stretching return on investment is quicker. These statements are underlying by Peter Doyle and Phil Stern (2001, p175) when they said that brand extensions are more and more used because of two main reasons “first, the high failure rate of new products has encouraged companies to look to extensions to reduce the odds failure. Attaching a successful brand name to a new product reduces the buyer’s perceived risk... the brand name may offer an implicit quality guarantee. Second, building a complete new brand is expensive”. It is possible to say that the same belief is shared by Taylor (2004, p1) when he says that “a new brand starts from a scratch: it has to spend heavily just to get itself known”, contrary to brand extension. However, M. Sudre added that this statement is not always true and that each company being different may consider that it is better or them to create new brand each time instead of brand extension. This is actually the case of Danone because Taillefine is the only brand they use to make brand extensions and actually these extensions were very successful. Indeed, generally, Danone prefers create new brands. It will be possible to have some clue –in the rest of the interview- about the reason of this decision from the group Danone whereas as it has been said before that Taillefine extensions were very successful so it would be normal to think it would not be the only one. 2. How was the creation of Taillefine extensions in water after biscuits perceived by the consumer knowing that Taillefine was first launched in the 1960’s in the dairy products? They accepted it very well. Indeed, the group Danone saw the opportunity to use the fact that consumers accepted the introduction of Taillefine in the biscuits field high sales rate to extend Taillefine in the water field. Thus, in a letter to its shareholders dated from March 2005, Danone states that:“their asset brands are performing each one several hundred millions euros of sales in the world and experiencing growth with two figures. Mainly, we can find them in the dairy products…. With each time an important investment in R&D. Only with Actimel, Activia and Taillefine, increasing on an average of more than 25%, they are the source of half of the group’s growth”.To be more precise, in 2000 –three years after the launch of Taillefine in the biscuit field-“the sales of Taillefine leapt from 40%, reaching 122 million euros in
France and 830 million euros in the world under a different brand name Vitalinea…and better, by reinforcing itself, the brand Taillefine gained greater recognition and it increases its sales in its original markets! With the success of the biscuits, the sales figures of yogurts soared with an increase of both volumes and prices. Taillefine biscuits are sold on average, 20% more expensive than non light competitors”. 3. How many brand extension were created by Danone? The only one we have in the group is Taillefine. We don’t have any other cases. 4. Why Taillefine was the only brand extension in the group Danone whereas it was a success? Indeed, it was a success especially because the notion of health was put forward and consumers saw that there was a connection between the well-balanced and 0% fat dairy products offered first by Taillefine and then the biscuits and the water which play on these promise. Indeed, even if Taillefine is present in three different fields, it still in the food field.M. Sudre added that it was not as if “Danone was doing healthy products and at the same time was selling beer for example”. So it means that a company cannot keep extending its brand because the consumer may not understand why the same brand can be found in wide and different fields. This is again the problem of brand dilution which appears and which is described by Aaker as the fact that the associations to one brand extension can weakened the credibility of the existing brand amongst customers. He said that Danone policy was to create brands and not to extend them. He told us that each company has a different strategy. Thus, the group Danone chose the extension strategy with Taillefine because it considered it would give added values to the consumer to conduce them to buy more. With Taillefine, people believe that they can eat tasty products –with chocolate for example in the Taillefine biscuits- without being scared about the consequences on their weight. When M. Sudre said that Danone prefers to create brands instead of doing brand extension, it may seem that there is a difference between the theory and the reality. Indeed, it can be read in Doyle and Stern (2001, p175) that “with too many brands, promotional resources can be fragmented and the brands can be outgunned by competitors able to concentrate support around one name”. However, it has to be underlined that Danone decided to focus on three main sectors –dairy products, biscuits and cereal products- and that the group decided to put in the front-rank only three brand leaders which are Danone, Evian and Lu. This means that the group did not create so many brands as it may seem when listening to M. Sudre answers. This is what actually Doyle & Stern (2001, p159) state:“the trend today is clearly away from companies launching new free-standing brands in the way Unilever and Procter Gamble did in the past: the marketing costs are simply too great and the risks too high. Instead they are … concentrating on a handful of strong ‘pillar’ brand names and using these as range brands or the core for line and
brand extensions”. In addition, when the managerial organization of Danone is considered, it appears that there is a flexible hierarchy. Most of decisions are made locally by each subsidiaries company, so each subsidiaries is close as possible to its market to make the decision which seem better to attract customers. 5. How did the competition react to your brand extension? Danone is the leader in his field. So, Nestle which is our main competitor needs to be more and more competitive if it wants to follow us on the market. When the group develops a product, Nestlé develops it quite soon after. But since Danone was created it has always been the leader. So, this means that the fact that Danone is the leader in its fields gives it a competitive advantage compared to its competitors. The fact that Danone succeeded to be associated by customers to health - i.e. caring about making products of good quality which aim to reinforced our immunity defences, facilitating the digestion etc.- enables the company to get customer loyalty and as a consequence to keep being the leader. 6. Can you give us and example of a brand which failed? Activia strawberry didn’t work at all. We had to erase the brand from our portfolio a few time after it was launched. However he said that he could not give us much more details about this failure because he is product manager of Actimel -based in Spain- and that the fallout of launching a brand is not measured by the product manager but by the brand manager. In Danone case, they are seating in Paris. According to this interview with M. Sudre, it appears that brand extension represents a way to make economics – mainly on advertising and marketing- and is beneficial for the company because the consumer already know the brand. When creating a new brand, the process is longer than brand extension because the company needs to do research on law, marketing to get the product known by the consumer, copyright, and of course customer satisfaction. The advantage of brand extension is that the company can use the promises associated with its existing and wellknown brand by the customer. Thus some customers will not chose the same drinks, depending on the fat it contains or on the consequences it will have on his body for example. But brand extension cannot be applied to every company; it depends on its strategy. As each company is different; Virgin prefers to adopt a product extension whereas Danone doesn’t. V. Analysis After these previous interviews, it can be stressed that if Danone did not find it relevant to make much more brand extensions, it is because first -as underlined by M. Sudre- each company has a different strategy and second, the risk of brand image dilution can not be underestimate. This problem of brand image dilution is moreover underlined by M. Marcel Bottom. This latter explained us that it was not good for the image of a brand when too many extensions were done. In addition, a company has really to be careful to the fields to which it wants to extend its brand. As M. Bottom said, it would not appear credible if Danone started to do desserts like jam. In the instance of
Taillefine, the brand regarded the fact that it was known for its promise of provided both healthy and tasty products when it made its extensions. Finally, it can be emphasized that Taillefine is positioned in the health area with the most important aspect which is that its products contain 0% fat. Volvic, which is a brand of Danone commits to provide both tasty and good quality drinks while having few quantity of sugar inside –from 0% to 6%.However, Taillefine and Volvic are not competing with each other because each product has its own delimited positioning in the market. As a consequence, Taillefine did not face the problem of cannibalization which can occur and which has been underlined by Marcel Bottom.As a conclusion, it seems that one of the clues of Taillefine extensions success is their ability to avoid some mistakes which are source of failure –too many extensions leading to brand image dilution, extensions having the same market position. VI. Conclusion Brand extensions are a means for companies to make economics on advertising, marketing which account a lot when a company wants to create a new brand because it has to make this brand known by customers. Indeed, the customers perceive his purchase as risky and like buying well-known brands. That is the reason why C. Viot (2007, p64) says that “a successful brand extension can create favorable conditions to make the customer loyal. A customer satisfied by an extension will have a greater tendency to repurchase the same brand”. And as emphasize Doyle and Stern (2006, p175), customer loyalty is the means for a company to keep existing despite the tough competition in the market by insuring future revenues. However, even if Taylor (2004, p1) states that brand extensions are favoured by companies instead of brand creation, the setting up of this strategy needs to be carefully done. Indeed, a company which decides to use it has to evaluate carefully this decision. It has to measure if its existing brand already benefit from a good fame amongst customers and which field it wants to target its extension. This is actually the case of Taillefine which was already well-known across customers when it was in the dairy product with 0% fat. And its fame increase with the extension of Taillefine in the biscuits field. At the same time the company has to be aware that it has to position its extension in a way that it will not compete with its other brands by a lack of differentiation between the existing products labelled and the extension one. And a company does not have to forget that it has to avoid overusing brand extension. The company must be aware that the existing brand image is an asset for it –benchmark for the customer - and an extension can lower this image or destroy it. The extension must respect the features linked to the brand by customers. Taillefine respected all these precautions. First of all because it is associated with leanness and wellbalanced food and it put forward these features with its extensions in both biscuits and water fields.
So, the extensions did not lower the image of Taillefine but on the contrary it reinforced its image. Secondly, Taillefine has a clear and different positioning compared to the other brands of Danone, so the risk that they compete to each other is divert. And finally, Taillefine is the only example of brand extension within Danone. The company did not overuse the strategy of brand extension.With the example of Danone strategy brand extension does not appear as better than brand creation for all companies. It is a strategy and then it is after a deep evaluation that a company will choose if it applies only one of these strategies or mix them, keeping in mind both advantages and disadvantages of each of them. Each company is different and a strategy.
5) ANALYSIS & INTERPRETATIONS
The Top Ten Traits The world's strongest brands share these ten attributes: 1. The brand excels at delivering the benefits customers truly desire. Why do customers really buy a product? Not because the product is a collection of attributes but because those attributes, together with the brand's image, the service, and many other tangible and intangible factors, create an attractive whole. In some cases, the whole isn't even something that customers know or can say they want. Consider Starbucks. It's not just a cup of coffee. In 1983, Starbucks was a small Seattle-area coffee retailer. Then while on vacation in Italy, Howard Schultz, now Starbucks chairman, was inspired by the romance and the sense of community he felt in Italian coffee bars and coffee houses. The culture grabbed him, and he saw an opportunity. "It seemed so obvious," Schultz says in the 1997 book he wrote with Dori Jones Yang, Pour Your Heart Into It. "Starbucks sold great coffee beans, but we didn't serve coffee by the cup. We treated coffee as produce, something to be bagged and sent home with the groceries. We stayed one big step away from the heart and soul of what coffee has meant throughout centuries." And so Starbucks began to focus its efforts on building a coffee bar culture, opening coffee houses like those in Italy. Just as important, the company maintained control over the coffee from start to finish from the selection and procurement of the beans to their roasting and lending to their ultimate consumption. The extreme vertical integration has paid off. Starbucks locations thus far have successfully delivered superior benefits to customers by appealing to all five senses- through the enticing aroma of the beans, the rich taste of the coffee, the product displays and attractive artwork adorning the walls, the contemporary music playing in the background, and even the cozy, clean feel of the tables and chairs. The company's startling success is evident: The average Starbucks customer visits a store 18 times a month and spends $3.$0 a visit. The company's sales and profits have each grown more than 50% annually through much of the 1990s. 2. The brand stays relevant. In strong brands, brand equity is tied both to the actual quality of the product or service and to various intangible factors. Those intangibles include "user imagery" (the type of person who uses the brand); "usage imagery" (the type of situations in which the brand is used); the type of personality the brand portrays (sincere, exciting, competent, rugged); the feeling that the brand tries to elicit in customers (purposeful, warm); and the type of relationship it seeks to build with its customers (committed, casual, seasonal). Without losing sight of their core strengths, the strongest brands stay on the leading edge in the product arena and
tweak their intangibles to fit the times. Gillette, for example, pours millions of dollars into R&D to ensure that its razor blades are as technologically advanced as possible, calling attention to major advances through subbrands (Trac II, Atra, Sensor, Mach3) and signaling minor improvements with modifiers (Atra Plus, Sensor Excel). At the same time, Gillette has created a consistent, intangible sense of product superiority with its long running ads, "The best a man can be," which are tweaked through images of men at work and at play that have evolved over time to reflect contemporary trends. These days, images can be tweaked in many ways other than through traditional advertising, logos, or slogans. "Relevance" has a deeper, broader meaning in today's market. Increasingly, consumers' perceptions of a company as a whole and its role in society affect a brand's strength as well. Witness corporate brands that very visibly support breast cancer research or current educational programs of one sort or another. 3. The pricing strategy is based on consumers' perceptions of value. The right blend of product quality, design, features, costs, and prices is very difficult to achieve but well worth the effort. Many managers are woefully unaware of how price can and should relate to what customers think of a product, and they therefore charge too little or too much. For example, in implementing its value-pricing strategy for the Cascade automatic-dishwashing detergent brand, Procter & Gamble made a cost-cutting change in its formulation that had an adverse effect on the product's performance under certain-albeit somewhat atypical-water conditions. Lever Brothers quickly countered, attacking Cascade's core equity of producing "virtually spotless" dishes out of the dishwasher. In response, P&G immediately returned to the brand's old formulation. The lesson to P&G and others is that value pricing should not be adopted at the expense of essential brand building activities. By contrast, with its well-known shift to an "everyday low pricing" (EDLP) strategy, Procter & Gamble did successfully align its prices with consumer perceptions of its products' value while maintaining acceptable profit levels. In fact, in the fiscal year after Procter & Gamble switched to EDLP (during which it also worked very hard to streamline operations and lower costs), the company reported its highest profit margins in 21 years. 4.The brand is properly positioned. Brands that are well positioned occupy particular niches in consumers' minds. They are similar to and different from competing brands in certain reliably identifiable ways. The most successful brands in this regard keep up with competitors by creating points of parity in those areas where competitors are trying to find an advantage while at the same time creating points of difference to achieve advantages over competitors in some other areas. The Mercedes-Benz and Sony brands, for example, hold clear advantages in
product superiority and match competitors' level of service. Saturn and Nordstrom lead their respective packs in service and hold their own in quality. Calvin Klein and Harley-Davidson excel at providing compelling user and usage imagery while offering adequate or even strong performance. Visa is a particularly good example of a brand whose managers understand the positioning game. In the 1970s and 1980s, American Express maintained the high-profile brand in the credit card market through a series of highly effective marketing programs. Trumpeting that "membership has its privileges," American Express came to signify status, prestige, and quality. In response, Visa introduced the Gold and the Platinum cards and launched an aggressive marketing campaign to build up the status of its cards to match the American Express cards. It also developed an extensive merchant delivery system to differentiate itself on the basis of superior convenience and accessibility. Its ad campaigns showcased desirable locations such as famous restaurants, resorts, and events that did not accept American Express while proclaiming, "Visa. It's everywhere you want to be." The aspirational message cleverly reinforced both accessibility and prestige and helped Visa stake out a formidable position for its brand. Visa became the consumer card of choice for family and personal shopping, for personal travel and entertainment, and even for international travel, a former American Express stronghold. Of course, branding isn't static, and the game is even more difficult when a brand spans many product categories. The mix of points of parity and point of difference that works for a brand in one category may not be quite right for the same brand in another. 5. The brand is consistent. Maintaining a strong brand means striking the right balance between continuity in marketing activities and the kind of change needed to stay relevant. By continuity, I mean that the brand's image doesn't get muddled or lost in a cacophony of marketing efforts that confuse customers by sending conflicting messages. Just such a fate befell the Michelob brand. In the 1970s, Michelob ran ads featuring successful young professionals that confidently proclaimed, "Where you're going, it's Michelob." The company's next ad campaign trumpeted, "Weekends were made for Michelob." Later, in an attempt to bolster sagging sales, the theme was switched to "Put a little weekend in your week." In the mid- 1980s, managers launched a campaign telling consumers that "The night belongs to Michelob." Then in 1994 we were told, "Some days are better than others," which went on to explain that "A special day requires a special beer." That slogan was subsequently changed to "Some days were made for Michelob." Pity the poor consumers. Previous advertising campaigns simply required that they look at their calendars or out a window to decide whether it was the right time to drink Michelob; by the mid-1990s, they had to figure out exactly what kind of day they were having as well. After receiving so many different messages, consumers could hardly be blamed if they had no idea when they were supposed to drink the beer. Predictably, sales suffered. From
a high in 1980 of 8.1 million barrels, sales dropped to just 1.8 million barrels by 1998. 6. The brand portfolio and hierarchy make sense. Most companies do not have only one brand; they create and maintain different brands for different market segments. Single product lines are often sold under different brand names, and different brands within a company hold different powers. The corporate, or companywide, brand acts as an umbrella. A second brand name under that umbrella might be targeted at the family market. A third brand name might nest one level below the family brand and appeal to boys, for example, or be used for one type of product. Brands at each level of the hierarchy contribute to the overall equity of the portfolio through their individual ability to make consumers aware of the various products and foster favorable associations with them. At the same time, though, each brand should have its own boundaries; it can be dangerous to try to cover too much ground with one brand or to overlap two brands in the same portfolio. The Gap's brand portfolio provides maximum market coverage with minimal overlap. Banana Republic anchors the high end, the Gap covers the basic style-and-quality terrain, and Old Navy taps into the broader mass market. Each brand has a distinct image and its own sources of equity. BMW has a particularly well designed and implemented hierarchy. At the corporate brand level, BMW pioneered the luxury sports sedan category by combining seemingly incongruent style and performance considerations. BMW's clever advertising slogan, "The ultimate driving machine," reinforces the dual aspects of this image and is applicable to all cars sold under the BMW name. At the same time, BMW created well-differentiated subbrands through its 3, 5, and 7 series, which suggest a logical order and hierarchy of quality and price. General Motors, by contrast, still struggles with its brand portfolio and hierarchy. In the early 1920s, Alfred P. Sloan decreed that his company would offer "a car for every purse and purpose." This philosophy led to the creation of the Cadillac, Oldsmobile, Buick, Pontiac, and Chevrolet divisions. The idea was that each division would appeal to a unique market segment on the basis of price, product design, user imagery, and so forth. Through the years, however, the marketing overlap among the five main GM divisions increased, and the divisions' distinctiveness diminished. In the mid1980s, for example, the company sold a single body type (the Jody) modified only slightly for the five different brand names. In fact, advertisements for Cadillac in the 1980s actually stated that "motors for a Cadillac may come from other divisions, including Buick and Oldsmobile.'' In the last ten years, the company has attempted to sharpen the divisions' blurry images by repositioning each brand. Chevrolet has been positioned as the value-priced, entry level brand. Saturn represents no haggle customer-oriented service. Pontiac is meant to be the sporty, performance oriented brand for young people. Oldsmobile is the brand for larger, medium-priced cars. Buick is the premium, "near luxury" brand. And Cadillac, of course, is still the top of the line. Yet the goal remains challenging. The financial performance of Pontiac
and Saturn has improved. But the top and bottom lines have never regained the momentum they had years ago. Consumers remain confused about what the brands stand for, in sharp contrast to the clearly focused images of competitors like Honda and Toyota. 7. The brand makes use of and coordinates a full repertoire of marketing activities to build equity. At its most basic level, a brand is made up of all the marketing elements that can be trademarked- logos, symbols, slogans, packaging, signage, and so on. Strong brands mix and match these elements to perform a number of brand-related functions, such as enhancing or reinforcing consumer awareness of the brand or its image and helping to protect the brand both competitively and legally. Managers of the strongest brands also appreciate the specific roles that different marketing activities can play in building brand equity. They can, for example provide detailed product information. They can show consumers how and why a product is used, by whom, where, and when. They can associate a brand with a person, place, or thing to enhance or refine its image. Some activities, such as traditional advertising, lend themselves best to "pull" functions-those meant to create consumer demand for a given product. Others, like trade promotions, work best as "push" programs-those designed to help push the product through distributors. When a brand makes good use of all its resources and also takes particular care to ensure that the essence of the brand is the same in all activities, it is hard to beat. Coca-Cola is one of the best examples. The brand makes excellent use of many kinds of marketing activities. These include media advertising (such as the global "Always Coca-Cola" campaign); promotions (the recent effort focused on the return of the popular contour bottle, for example); and sponsorship (its extensive involvement with the Olympics). They also include direct response (the Coca-Cola catalog, which sells licensed Coke merchandise) and interactive media (the company's Web site, which offers, among other things, games, a trading post for collectors of Coke memorabilia, and a virtual look at the World of Coca-Cola museum in Atlanta). Through it all, the company always reinforces its key values of "originality, classic refreshment," and so on. The brand is always the hero in Coca-Cola advertising. 8. The brand's managers understand what the brand means to consumers. Managers of strong brands appreciate the totality of their brand's image- that is, all the different perceptions, beliefs, attitudes, and behaviors customers associate with their brand, whether created intentionally by the company or not. As a result, managers are able to make decisions regarding the brand with confidence. If it's clear what customers like and don't like about a brand , and what core associations are linked to
the brand, then it should also be clear whether any given action will dovetail nicely with the brand or create friction. The Bic brand illustrates the kinds of problems that can arise when managers don't fully understand their brand's meaning. By emphasizing the convenience of inexpensive, disposable products, the French company Societe Bic was able to create a market for non refillable ballpoint pens in the late 1950s,disposable cigarette lighters in the early 1970s, and disposable razors in the early 1980s. But in 1989,when Bic tried the same strategy with perfumes in the United States and Europe, the effort bombed.The perfumestwo for women ("Nuit" and "Jour") and two for men ("Bic for Men" and "Bic Sport for Men")- were packaged in quarterounce glass spray bottles that looked like fat cigarette lighters and sold for about $$ each. They were displayed in plastic packages on racks at checkout counters throughout Bic's extensive distribution channels, which included 100,000 or so drugstores, supermarkets, and other mass merchandisers. At the time of the launch, a Bic spokesperson described the products as logical extensions of the Bic heritage: "High quality at affordable prices, convenient to purchase and convenient to use." The company spent $20 million on an advertising and promotion blitz that featured images of stylish people enjoying the perfumes and used the tag line "Paris in your pocket." What went wrong? Although their other products did stand for convenience and for good quality at low prices, Bic's managers didn't understand that the overall brand image lacked a certain cachet with customers- a critical element when marketing something as tied to emotions as perfume. The marketers knew that customers understood the message they were sending with their earlier products. But they didn't have a handle on the associations that the customers had added to the brand image- a utilitarian, impersonal essence- which didn't at all lend itself to perfume. By contrast, Gillette has been careful not to fall into the Bic trap. While all of its products benefit from a similarly extensive distribution system, it is very protective of the name carried by its razors, blades, and associated toiletries. The company's electric razors, for example, use the entirely separate Braun name, and its oral care products are marketed under the Oral B name. 9. The brand is given proper support, and that support is sustained over the long run. Brand equity must be carefully constructed. A firm foundation for brand equity requires that consumers have the proper depth and breadth of awareness and strong, favorable, and unique associations with the brand in their memory. Too often, managers want to take shortcuts and bypass more basic branding considerations- such as achieving the necessary level of brand awareness -in favor of concentrating on flashier aspects of brand building related to image. A good example of lack of support comes from the oil and gas industry in the 1980s. In the late 1970s, consumers had an extremely positive image of Shell Oil and, according to market research, saw clear differences between that brand and its major competitors. In the early 1980s, however, for a
variety of reasons, Shell cut back considerably on its advertising and marketing. Shell has yet to regain the ground it lost. The brand no longer enjoys the same special status in the eyes of consumers, who now view it as similar to other oil companies. Another example is Coors Brewing. As Coors devoted increasing attention to growing the equity of its less-established brands like Coors Light, and introduced new products like Zima, ad support for the flagship beer plummeted from a peak of about $43 million in 1985 to just $4 million in 1993. What's more, the focus of the ads for Coors beer shifted from promoting an iconoclastic, independent, western image to reflecting more contemporary themes. Perhaps not surprisingly, sales of Coors beer dropped by half between 1989 and 1993 Finally in 1994, Coors began to address the problem, launching a campaign to prop up sales that returned to its original focus. Marketers at Coors admit that they did not consistently give the brand the attention it needed. As one commented: "We've not marketed Coors as aggressively as we should have in the past ten to 15 years." 10.The company monitors sources of brand equity. Strong brands generally make good and frequent use of in-depth brand audits and ongoing brand-tracking studies. A brand audit is an exercise designed to assess the health of a given brand. Typically, it consists of a detailed internal description of exactly how the brand has been marketed (called a "brand inventory'') and a thorough external investigation, through focus groups and other consumer research, of exactly what the brand does and could mean to consumers (called a "brand exploratory"). Brand audits are particularly useful when they are scheduled on a periodic basis. It's critical for managers holding the reins of a brand portfolio to get a clear picture of the products and services being offered and how they are being marketed and branded. It's also important to see how that same picture looks to customers. Tapping customers' perceptions and beliefs often uncovers the true meaning of a brand, or group of brands, revealing where corporate and consumer views conflict and thus showing managers exactly where they have to refine or redirect their branding efforts or their marketing goals. Tracking studies can build on brand audits by employing quantitative measures to provide current information about how a brand is performing for any given dimension. Generally, a tracking study will collect information on consumers' perceptions, attitudes, and behaviors on a routine basis over time; a thorough study can yield valuable tactical insights into the short-term effectiveness of marketing programs and activities. Whereas brand audits measure where the brand has been, tracking studies measure where the brand is now and whether marketing programs are having their intended effects. The strongest brands, however, are also supported by formal brand-equity-management systems. Managers of these brands have a written document-a "brand equity charter"-that spells out the
company's general philosophy with respect to brands and brand equity as concepts (what a brand is, why brands matter, why brand management is relevant to the company, and so on). It also summarizes the activities that make up brand audits, brand tracking, and other brand research; specifies the outcomes expected of them; and includes the latest findings gathered from such research. The charter then lays out guidelines for implementing brand strategies and tactics and documents proper treatment of the brand's trademark- the rules for how the logo can appear and be used on packaging, in ads, and so forth. These managers also assemble the results of their various tracking surveys and other relevant measures into a brand equity report, which is distributed to management on a monthly, quarterly, or annual basis. The brand equity report not only describes what is happening within a brand but also why. Even a market leader can benefit by carefully monitoring its brand, as Disney aptly demonstrates. In the late 1980s, Disney became concerned that some of its characters (among them Mickey Mouse and Donald Duck) were being used inappropriately and becoming overexposed. To determine the severity of the problem, Disney undertook an extensive brand audit. First, as part of the brand inventory, managers compiled a list of all available Disney products (manufactured by the company and licensed) and all third party promotions (complete with pointof-purchase displays and relevant merchandising) in stores worldwide. At the same time, as part of a brand exploratory, Disney launched its first major consumer research study to investigate how consumers felt about the Disney brand. The results of the brand inventory were a revelation to senior managers. The Disney characters were on so many products and marketed in so many ways that it was difficult to understand how or why many of the decisions had been made in the first place. The consumer study only reinforced their concerns. The study indicated that people lumped all the product endorsements together. Disney was Disney to consumers, whether they saw the characters in films, or heard them in recordings, or associated them with theme parks or products. Consequently, all products and services that used the Disney name or characters had an impact on Disney's brand equity. And because of the characters' broad exposure in the marketplace, many consumers had begun to feel that Disney was exploiting its name. Disney characters were used in a promotion of Johnson Wax, for instance, a product that would seemingly leverage almost nothing of value from the Disney name. Consumers were even upset when Disney characters were linked to well regard premium brands like Tide laundry detergent. In that case, consumers felt the characters added little value to the product. Worse yet, they were annoyed that the characters involved children in a purchasing decision that they otherwise would probably have ignored. If consumers reacted so negatively to associating Disney with a strong brand like Tide, imagine how they reacted when they saw the hundreds of other Disney-licensed products and joint promotions. Disney's characters were hawking everything from diapers to
cars to McDonald's hamburgers. Consumers reported that they resented all the endorsements because they felt they had a special, personal relationship with the characters and with Disney that should not be handled so carelessly. As a result of the brand inventory and exploratory, Disney moved quickly to establish a brand equity team to better manage the brand franchise and more selectively evaluate licensing and other third-party promotional opportunities. One of the mandates of this team was to ensure that a consistent image for Disney reinforcing its key association with fun family entertainment-was conveyed by all third-party products and services. Subsequently, Disney declined an offer to co-brand a mutual fund designed to help parents save for their children's college expenses. Although there was a family association, managers felt that a connection with the financial community suggested associations that were inconsistent with other aspects of the brand's image.
6.) CONCLUSIONS & SUGGESTIONS/ RECOMMENDATIONS
It may be worthwhile for marketing managers and practitioners to give as much importance to brand failures as they give to successful brands. As it not only help the companies introspect and think where it went wrong, but what are the things that need to be avoided in the future so that the company does not encounter such things in the future. Product and Brand failures occur on an ongoing basis to varying degrees within most productbased organizations. This is the negative aspect of the development and marketing process. In most cases, this failure rate syndrome ends up being a numbers game. There must be some ratio of successful products to each one that ends up being a failure. When this does not happen, the organization is likely to fail, or at least experience financial difficulties that prohibit it from meeting profitability objectives. The primary goal is to learn from product and brand failures so that future product development, design, strategy and implementation will be more successful. There should be planning and implementation process to learn from the mistakes of other product and brand failures. Each product failure can be investigated from the perspective of what, if anything might have been done differently to produce and market a successful product rather than one that failed. The ability to identify key signs in the product development process can be critical. If the product/brand should make it this far, assessing risk before the product is marketed can save an organization budget, and avoid
the intangible costs of exposing their failure to the market. The factors which contribute maximum to the brand failures are: -Category , Timing , Cultural factors ,Top Management Complacency( Brands are doomed when top executives drink the deadly glass of complacency mixed with arrogance) & Bookish Funda than Consumers Insight: Brands also fail when they base decisions on marketing theories instead of customer requirements.Brands fail because they fail to maintain the quality, trust and loyalty that must be at the heart of every brand. Brand evaluation is vital to the success of the brand. It enables brand owners to see where the brand’s strengths and weaknesses lie and what forces are driving these, which in turn points to the nature and level of investment needed to fulfill the brand’s potential. Measuring brand performance is an integral part of brand management. A thorough evaluation looks not only at the financial value of the brand but also at the brand equity – the intangible elements of a brand that distinguish it in the mind of the consumer. Brand evaluation is used -For balance sheet purposes -For mergers and acquisitions -Joint-venture negotiations (eg, to prevent overpayment) -Investor relations -Licensing and Franchising To evaluate the brand, the software for designing a brand score card can also be used. BIBLIOGRAPHY Hill, S, Lederer, C and Lane Keller, K (2001) The Infinite Asset: Managing brands to build new value, Harvard Business School Press, Boston, MA Lacey, R (1988) Ford: The men and the machine, Little, Brown and Company, Boston, MA and Toronto Trout, J (2001) Big Brands, Big Trouble: Lessons learned the hard way, John Wiley & Sons, New York http://www.marketingpower.com http://www.brandchannel.com http://www.allaboutbranding.com http://www.wikipedia.com
Duboff, Robert and Spaeth, Jim. Market Research Matters: Tools and Techniques for Aligning Your Business; John Wiley & Sons, Inc. 2000. Kim, Peter. “Does Advertising Work: A Review of the Evidence.” The Journal of Consumer Marketing, 9, 4 (1992): 5-19. http://www.parkerlepla.com http://www.yourmarketpoint.com Brand Failure by Matt Haig