A BRAND IS FOREVER ! FRAMEWORK FOR REVITALIZING DECLINING & DEAD BRANDS

DECLINE AND DEATH OF BRANDS

• Branding used to differentiate sellers• Customer based brand equity has been

developed• Death of a brand is preceded by slow and

debilitating decline over a prolonged period

Brand Equity – “ The differential effect that consumer knowledge about a brand has on the customer’s response to marketing activity ”

Famous Brands that declined over time :• Pan America• GM Oldsmobile

CAUSES OF BRAND DECLINE

PRODUCT LIFE CYCLE (PLC)

• Sales to define stages-to predict sales• Creates self-fulfilling prophecy-sales decline-no investment-

milk the brand

PRODUCT EVOLUTION CYCLE

• Offers additional insights into how a brand grows

• According to PEC in biological context The organism evolution monitored by 3 forces:1. Generative (genetics)2. Selective (the environment) 3. Mediative (intervention by others)

• PEC suggests that a brand can evolve, not predestined to die

PRODUCT EVOLUTION CYCLE

Monitored by 3 forces:

• Managerial and entrepreneurial activities (Generative force)

• The market environment (The selective force)

• Competitors’ actions and responses to marketing initiatives (Mediative force)

PRODUCT EVOLUTION CYCLE

Managerial actions (generative force) divided into 5 categories:

• Product quality

• Price increases

• Price cuts

• Brand neglect

• Inability to stay with target market

Brands often decline because of “leadership , management & employees making excuses rather than making integrity” – Ron Strauss

MANAGERIAL ACTIONS

Product quality:• compromise in product quality

• Cost cutting reasons

• Impacts brand loyalty in the long run

• Brand declines when couldn’t meet Customer expectations

Example - Cadillac

MANAGERIAL ACTIONSPrice increase:• Price raising without increase in benefits

• Consumers abandon the brand

MANAGERIAL ACTIONS

Price increase contd:Example -

Volkswagen rabbit Volkswagen golf

MANAGERIAL ACTIONSPrice cuts:• cut prices to increase sales

• Damages the brand identity

Example – Lacoste (General mills)• Lowered price to expand distribution

• Uses cheap material

• Lost the brand image

Brand neglect:• successful brand needs constant nurturing

• Core bands as cash cows, neglect investing

• Less attention to strong brand

MANAGERIAL ACTIONS

MANAGERIAL ACTIONSBrand neglect cont. :Example – Dewalt brand

“Managers get wrapped in the inertia of a brand and begin to miss changes in the market.”

MANAGERIAL ACTIONS

Brand neglect cont. :Example – ovaltine • Declined due to corporate neglect

• Suffered because it wasn’t a core brand of Sandoz

MANAGERIAL ACTIONS

Inability to stay with the target market:• Reaching out to new growing segment (e.g. youths)

• Alienate core customers

• Brand decline

MANAGERIAL ACTIONS

Inability to stay with the target market cont. :Example – Gap• Gave more attention to youths

• Core customers felt neglected

• Brand declined

MANAGERIAL ACTIONS

Inability to stay with the target market cont. :Example – St. john• Target market maturing, so is the brand

• Focuses more on younger audiences

• Replaced Kelly gray with Angelina Jolie

• Appealed to younger, less conservative audience

• Alienated core customers

• Brand declined

PRODUCT EVOLUTION CYCLE

Environmental factors (selective force) :• Markets-dynamic in nature• Major market transformation impacts various

companies• Changes in legal environment

• Example – cigarette brands• Affected by changes in legal environment• Strong regulation and negative publicity

Environmental factors (selective force) cont. :Example – R.J Reynolds camel• Accused of using cartoon character, Joe camel

• Communication tactics to attract children

• Negative publicity & lawsuit

• Lost brand image

Environmental factors (selective force) cont. :Example – Polaroid• Unique product offering• Gained prominence and retains brand awareness• Declined as market changed with digital imaging

becoming popular

A BRAND THAT FIGHTS WITH ENVIRONMENTAL CHANGES

Contd..• First model started selling in 1988• For 90yrs remained standard platform for

photography• Faced similar environmental challenges

Actions taken :• First company to introduce digital camera• Tackled with HP & SONY marketing strategy

Results :• Today maintains 16% market share

PRODUCT EVOLUTION CYCLE

Competitive actions (Mediative Force) :• Onslaught from competitors

• Mergers and acquisitions

• Innovative changes

• Technological advancement

• Cost cutting

Competitive actions (Mediative Force) :Example – puma & Adidas• Squeezed out by Nike and Reebok

Problems of Adidas :• Too European image• Ailing golf sales• Nike’s brand advertising through celebrity

Problems of Puma :• Lifestyle branding• Focuses on leisure pursuits rather than professional

sport products• Peer pressure from competitors’

Result:• Adidas' market share dropped from

60% to 3%

• Puma also saw severe market drop

Example : Kmart & Walmart

Walmart marketing plan:• Cost cutting science

• “Everyday low price” strategy

Result :• Walmart store increases from 330

in 1980 store to 1114 stores 1985• Kmart forced to merge with Sears

Roebuck

Example : Dell & Compaq

Dell marketing plan :• Direct to customer distribution

system

• Smart use of internet

Results : • Compaq suffered loses

• Merges with HP

Example : Netflix & Blockbuster

Netflix marketing plan :• video delivery via postal mail

• No more need fro trips to stores

Results :• Blockbuster was forced to close

300 stores

DECONSTRUCTURING BRAND DECLINE

To deconstruct brand decline , revisit brand equity concept

Three key elements of brand equity :• Differential effect

• Brand knowledge

• Customer response

Differential effect :Based on two methods – • Value priced (Good quality at low price) “Brands must offer something different; they can’t just be anotherflavour of vanilla’’ – public relation manager of volkswagen

Example – Techron (chevron)

• Superior quality , physical attributes

Brand Knowledge : consists of two components• Brand awareness Failing leads to :• Serious , long term problem

• Catch-22 situation

• High aided recall & high top-of-mind recall

Example – Pan Am• Failed top-of-mind recall

• Succeeded in aided recall

Brand image :Strong , favourable and unique brand association.

Example – Levi & DenimProblems faced – • Couldn’t run with the new style adoption of denim jeans• Consumers sought fashion beyond utilitarian clothing

Result –• Sales decline• Sold signature brand at 35% less

Customer response :Indicators measuring customers response –• Sales figure• Purchase intentions• Brand loyalty measures

Brand switching behaviour triggered by –• Price increase• Entry of new competitor• Negative news about the brand

Steps to be taken –• All 3 aspects of brand equity to be followed• Brand knowledge & differential effect should be addressed

REVITALIZING BRAND

• Brand’s equity most valuable asset

• Lesser known brands can be valuable

• New brands costs lot of money

• Revitalizing existing brand is worthful

GUIDELINES FOR REVIVAL OF A BRAND

• Is the brand worth reviving ?

• Take a long term perspective

• Carefully reposition the brand , invest in it , & educate the market

• Correct mismanagement of the brand

IS THE BRAND WORTH REVIVING ?

Criteria for revitalization :• Significant residual value• Examine all three aspects of brand equity• The revival cost must be comparable to the cost of new

product• Measuring the level of awareness• Brands with : singular focus well defined differentiation high premium

TAKING A LONG TERM PERSPECTIVE• Long-term perspective is imperative• Vision followed by well through out strategy &

execution Example – Netflix vs. BlockbusterBlockbuster marketing strategy to tackle Netflix :• Opened physical store to benefit total access

online program• Returning back a rented movie in return for a free

movie rentalResults :• Rental revenue increased from 4.9% to 10.4%• Subscribers increased by 1 million

Example :“ research was the primary tool used to revive the dewalt brand ” - brand manager of dewalt

CAREFULLY REPOSITION THE BRAND,INVEST IN IT & EDUCATE THE MARKET• proper positioning• Differentiation

Example – Oldsmobile• Playing catch up with the competition• Strong brand differentiation is not followed

Result :• GM lost the Oldsmobile brand

Brand Repositioning :• GM repositioned the brand by introducing Cadillac

CORRECT MISMANAGEMENT OF THE BRAND• Failure to understand the reasons behind brand decline• Inability to introduce new strategy

Ways to address themes behind brand decline :Rebuild quality :• Brand killed by poor quality• Quality must be improved with cost

Example – Harley Davidson• Improved quality• Extended product line• Cost cutting strategy

Result – sales increased

Example cont.… : Hyundai• Significant investment in quality• 100,000 mile service warranty

Results :• Hyundai rated above Mercedes Benz in 2006

REBUILD QUALITY

RESIST TEMPTATION TO “MILK” THE BRAND

Aggressive form of milking entails :• Cutting prices steadily• Reflection of brand weakened position

Example : Apple• Losing awareness• Invested in MP3 technology , IPOD• Came to forefront once more

Example : Levi’s• Selling lower quality jeans hurts the image• Needs to invest in styling the product

PURSUE A CAREFULLY DEFINED TARGET MARKET

• Risk of shrinking over time• Risk of alienating the core customers• Appeal to divergent tasks with the same brand

Example – Levi’s• Launched Dockers (business casual clothing)• Dockers became well known, Levi's removed

its name

Example – St. john• Might introduce “youth by St. John” to target

youths• Once known, name can be withdrawn

So what do we learn : • Revitalization is a worthwhile exercise

• Doesn’t costs much

LET THE REVITALIZATION BEGIN !!

These slides were created by :Akash Ranjan PradhanNIT RourkelaAs part of an internship under the guidance ofProf.Sameer Mathur IIM LucknowWWW.IIMInternship.com