Rating Qualities

8
Applicable
Innovative

Brand Failures
The Truth About the 100 Biggest Branding Mistakes of All Time
Matt Haig | Kogan Page © 2004

Branding is a ubiquitous, but critical marketing function that can produce spectacular successes
and catastrophic blunders. Highly visible branding failures, such as the ill-fated "New Coke" or
Harley Davidson's silly attempt to peddle perfume, are first-order marketing blunders. Yet, while
branding is critical, one wonders if branding alone, as author Matt Haig asserts, is the main reason
Land Rover sales declined and General Motors stopped making Oldsmobiles. Other experts might
address such failures from a more expansive perspective, citing financial, competitive, managerial,
global and environmental factors. Haig notes that non-branding mistakes contribute to failure,
but focuses on branding as the prime cause. As a result, his brand-centered explanations can
seem strained, but he overcomes this concern with a long list of vignettes that effectively drive
home important points about the causes of branding failures. getAbstract suggests this book to
marketing, advertising, PR and customer service managers so they can learn from other people's
mistakes.

Take-Aways
• Branding is intended to prevent products or services from failing.
• Branding works best when it puts a human face on a corporation, thus enhancing customer
relationships.
• Brands have a natural lifespan, exist in an increasingly competitive environment and must be
occasionally refreshed.
• Successful branding now must encompass perception building, as well as traditional
marketing, advertising and public relations techniques.
• Advertising can support a new product but cannot build a brand alone.
• Consumers make buying decisions based on perceptions, not products' actual traits.
• Competition, market factors or distorted brand perceptions cause brand failure.

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 • Branding creates a bond with customers, so do not alter it casually.
• Myths about the branding process, based on corporate size, exceptional product qualities or the
value of advertising, do not necessarily produce successful products.
• Global corporations and start-ups alike can make the same costly branding mistakes, just ask
Coca-Cola, Unilever, Gerber or Kellogg's.

Summary

Marketing Hubris

Branding, the process of putting a human face on otherwise faceless products and corporations, is
a central marketing goal. Brands are built through advertising and sales, which propel company
values and increase market share and margins, which in turn build barriers to competition.
The flip side of branding, however, is marketing hubris, which impels marketers to rely on false
assumptions and myths under the mistaken hope that all brands live forever and are immune
from competition. Too often, an examination of brand failures shows that major products,
managed by both global and national corporations, died at the hands of their own marketing
departments.

Today, when products fail, consumers often blame the brand (that is, the entire corporation),
as opposed to the product itself. This reflects a change in consumer behavior. Since brands pre-
sell products by invoking certain emotions in consumers' hearts, negative or positive product
experiences can generate disproportionate emotional responses. This helps explain why branding
can be such a powerful tool. Brands fail for a number of reasons, including:

• Brand amnesia – Brands forget their original identity.

• Brand ego – Successful products reside within a brand. When consumers do not immediately
recognize a new product as part of that family, it does not benefit from brand association.
• Brand fatigue – Brands, like people, need to be renewed. Product improvements can extend
brand life.

“The company may believe it owns the brand, but it doesn't own the feelings that the
brand manages to generate.”

Many brand failures are also tied to false assumptions about brand's attributes. Myths include:

• Good products always succeed – Not true. Betamax tapes had higher picture resolution
than their inferior competitor VHS, but technology, licensing and convenience made VHS the
winner.
• Brands only launch successful new products – The brand name failures launched by
global corporations would fill a large graveyard. Some 80% of all new products fail after they
hit the market, and another 10% die within five years.

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 • Advertising can build a brand – Media clutter and consumer resistance make advertising
an expensive bet for launching a new product. Advertising can support a new product, not build
it.

Extending Your Brand

Brand extensions are a powerful tactic that works well in some industries. In food, for example,
nine out of ten new grocery products are brand extensions. One of the most successful brand
extensions in all of marketing history was the 1982 introduction of Diet Coke, now the third largest
product in the soft drink category.

“Market research has its place when carefully conducted, but it should never be taken as
gospel truth.”

But brand extensions have a darker flip side: extensions make product quality paramount and
intensify competition. Extensions run the risk of cannibalizing the core brand. The downside is
best illustrated in the beer category where more than 30 brands are now available compared to
only three major brews just 25 years ago. Yet, while the number of beer brands has increased
tenfold in 25 years, the number of beer drinkers has not significantly expanded.

Failures in brand extensions also show how even marketers fall prey to common brand myths.
Such failures – which created confusion and disconnection in consumers' minds – include Gerber
offering a variety of baby food to older adults; Colgate selling prepared food; Cosmopolitan
magazine marketing yogurt; Unilever deodorant starting a chain of video arcade-barbershops;
LifeSavers candy trying to peddle soft drinks; Bic pen selling disposable woman's underwear and
food maker Heinz launching a cleaning fluid.

“Brand identities were designed to not only help these products stand out, but also to
reassure a public anxious about the whole concept of factory-produced goods.”

In the vast majority of brand extension failures, the new products ventured outside their product
class where they lost the accompanying benefits of being perceived as quality leaders. When that
happened, the products floundered for position while their audience evaporated. So while the
corporate marketers became hypnotized by their own names and attached them to new products,
consumers never saw the connection and walked away.

“After all, branding is not about products, it is about perception.”

While variety may be the spice of life, too many varieties produce mass consumer confusion.
Proctor & Gamble suffered in the 1980s when it offered 52 versions of Crest toothpaste. Miller
Brewing made the same mistake in the 1990s by offering 11 variations of its beer, all essentially
variations of each other, not really offshoots of the core brand. As a result, beer drinkers had a
choice in the reduced calorie category of Miller Reserve Lite, Miller Lite Ice, Miller Lite, Miller

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 High Life Lite and Miller Genuine Draft Lite. Consumers understandably were puzzled and lost
focus. When that happened, they turned to other beer brands.

Public Perceptions

Brands also fail when the trust between customer and corporation is broken. This can happen
when customer or media relations are poor. But it most often occurs during crises when media
attention focuses on a specific corporate problem or accident. Some well-known examples drive
these lessons home.

In the case of U.S. history's worst oil tanker spill, Exxon did not respond to state, federal and
media inquiries about the Exxon Valdez accident and the clean-up measures the firm was
taking. From the captain of the ill-fated tanker up to the corporate chairman, Exxon delivered
misinformation and showed indifference to the local community and to its global customers who
were concerned about the accident's environmental damage.

“If you spot a hole in the market, it does not mean that you should fill it.”

The power of the Internet also helps shape public relations policy. When McDonalds sued two
British members of London Greenpeace about false claims in a pamphlet, the trial and seemingly
endless negative publicity turned into a Pyrrhic victory for McDonalds. In the case, later known
as "McLibel," McDonalds' attorneys embarked on what became the longest trial in British history
(313 days). The verdict ran to 1,000 pages. The resulting media attention, including use of the
Internet to provide an informal international communications platform, strained McDonald's
reputation. While McDonald's eventually won the case and received damages, it lost the media
war.

Globalization, Not Homogenization

Corporations that operate globally invariably encounter frictions at the local level due to language,
customs or cultural differences that can derail even the most thoughtfully designed marketing
plans. The corporate patterns of launching the same product in many countries, often using the
same messages, compounds cultural problems.

“For a substitute product to work, it must be better than the original in the mind of the
consumer.”

Understanding cultural differences requires interpreting the brand in the host culture. That's
how Kellogg's got into trouble when it launched its mainstay product, Corn Flakes, in India. The
problem started when studies found that most Indians have hot vegetables for breakfast, not cold
cereal. This meant Kellogg's not only had to introduce a new product, but it also had to establish
cold cereal as a viable new breakfast staple. After slow initial sales, Kellogg's was forced to modify
its cereal flavors, product line and prices. Researchers concluded that while Kellogg's had altered

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 many Indian consumers' breakfast habits, its products' high prices blocked them from becoming
mass consumption items in India.

Misjudging cultural considerations in India also proved problematic for Mercedes-Benz,

Lufthansa, Dominos, Citibank, MTV, Whirlpool and Coca-Cola, all of which suffered marketing
setbacks when they failed to investigate the downside of marketing to India's large, but culturally
diverse, middle class. Brands must take cultural differences into account, including language,
taste, religion, literacy levels and customer perceptions.

“Although brand extension may increase sales in the short term, it can devalue the
identity of the brand in the long term.”

Cultural differences can also exist between a corporation and its customer base. When Fender
guitars sold out to CBS in 1965, it looked like a viable match. CBS, then one of the largest
players in the music business, owned record companies and broadcasting outlets. But within a
decade, Fender began to suffer declining sales. It turned out that CBS had no real empathy or
understanding of what made Fender guitars attractive. As became known later, CBS also had
reduced Fender's research, design, development, and production capabilities. The problem was
corrected after CBS divested all of its non-broadcasting operations, including Fender, which
regained its prominence after new owners refocused on its original strength and craftsmanship,
and improved relationships with musicians and guitar aficionados.

Human Capital

While brands are often considered a function of advertising, public opinion and the underlying
product or service, brands are essentially the people who manage or produce the goods. When
people lapse into poor or criminal behavior while representing a brand, they do irreparable harm.
Recent cases involving Martha Stewart, Rosie O'Donnell and various corporate executives who
looted their companies for personal benefit create a direct link – deserved or not – between their
actions and the brand. Sometimes it can be as simple as an ill-directed comment. When the CEO
of a jewelry company publicly called his products "crap," he effectively destroyed the brand. In the
public's mind, for better or worse, the more senior the executive, the greater the link between that
individual and the company.

“Just as the Internet is now part of life, so it must be a part of branding.”

In today's interlocking corporate world, the domino theory has new meaning, as shown by the
relationship between Enron, the ill-fated energy company, and its auditor, Arthur Andersen. The
Enron case is now regarded as one of the largest financial frauds in U.S. history complete with
fake profits, business operations and audit statements. When the fraud unraveled, Enron pulled
Andersen into the quagmire as its official auditor. Anderson fell once the public knew that its

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 personnel shredded key documents and disseminated conflicting stories about its relationship
with Enron.

Reincarnation through Re-branding

Products, like people, do not grow old gracefully. Thus, some 3,000 companies annually abandon
their heritage and reputation, and change their names. But name changes and other forms of re-
branding do not always succeed because corporations often make changes that customers dislike.

When the British postal system, the state-owned Post Office Group, decided to change its name
to reflect its new call centers and non-mail related capabilities, it hired an outside consultant who
– after extensive research – came up with the name "Consignia." That name, executives said,
combined the positive connotations of "consign" with the sense of a royal symbol, an "insignia."
While its creators lauded and defended the name, the stamp-buying public was not impressed.
Consignia's chairman later admitted he did not like the name either, and announced that another
name change is likely within a few years.

Since its popularity began to rise during mid-1990s, the Internet has become the locus for more
brand failures than any other medium. As a result, many marketing professionals have re-thought
its marketing role. While it was once considered an expanded form of advertising, which recorded
"eyeballs" and "impressions," marketers now consider the Internet a medium for creating repeat
customer business and deepening client relationships. Once that basis of trust is established, cross
marketing and other personalized selling opportunities can emerge.

About the Author

Matt Haig is an independent consultant who advises corporations on branding and marketing.
He is the author of Mobile Marketing: The Message Revolution. He also wrote E-PR: The
Essential Guide to Public Relations on the Internet, E-Business Essentials, E-Mail Essentials, The
E-Marketing Handbook, The B2B E-Commerce Handbook and If You're So Brilliant, How Come
You Don't Have An E-Strategy?

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