Is FOREVER !

A

Revitalizing Declining and Dead Brands

KEYWORDS

BRAND DECLINEBRAND DEATHBRAND DEMISEBRAND EQUITY: The differential effect that the consumer knowledge about a brand has on the customer’s response to marketing activity.

SITUATION

DEATH or DECLINE of a BRAND

Examples

PAN AmPromoted as “The World’s Most Experienced Airline”.

Point of Crisis : airliner bombed over Lockerbie and CRASHED.

Result : Negative publicity associated with crash led to its decline and subsequent death.

This CASE addresses the Major THREE Questions:

What leads to the dead or

DECLINE of a

BRAND? How can DECLINE of a

BRAND DECONSTRUCTE

D? How can a

DEAD BRAND REVITALISED ?

?

THREE MAJOR ISSUES:

DEATH or

DECLINE of

a BRANDDECONSTRUCTI

NG BRAND DECLINE

REVITALISING DEAD BRANDS

CAUSES of

DEATH or DECLINE of a BRAND

Uses sales to define the stages of life cycle, which in turn are used to predict sales.

Self sustaining prophecy : when sales decline management decides that a brand no longer needs investment and begins to milk the brand.

Product Life Cycle (PLC)

Product Evolutionary Cycle (PEC)

Affected by THREE FACTORS :

1.GENERATIVE FACTORS (managerial actions) Product quality Price increases Price cut Brand neglect Inability to stay with the target audience

2. SELECTIVE FACTORS ( environmental factors)

3. MEDIATIVE FACTORS (competitive actions)

Product QualitySituation : Compromise in product quality.

Reason : Cost cutting reasons.

Short term Visualization : Does not impact brand loyalty in the short run, managers mistakenly conclude its success.

Result: The brand starts to decline when consumers’ experiences with the brand do not live up to their expectations.

Example : Cadillac’s steady decline.

Price IncreaseSituation : Raise prices without corresponding increase in benefits

Reason : To control costs

Result : consumers abandon the brand.

Example :Volkswagen’s failure

Example :Volkswagen’s failure

-Replaced unsuccessful Rabbit model with newer model, the Golf-Unable to control costs -Kept increasing prices-Drove itself out of entry level segment

Price CutsSituation : A company cuts prices in desperation.

Reason: To increase sales

Result : Damages the brand

Example: Lacosta ‘s Price cuts

-Lowered prices to limit the declining sales-The company had to use cheaper material-Quality of the products deteriorated -The brand’s image ended up

Example: Lacostae‘s Price cuts

Brand NeglectSituation : Inaction creeps in when brand becomes popular.

Reason: Successful brands need constant nurturing.

Result : Core brands treated as cash cows without further investment.

Example : DeWalt

Example : DeWalt

-Managers neglected chances in market.-Core brand treated as cash cows-No investment in the brand- Brand started milking

Inability to stay with the Target Market

Situation: Target market moves away from the brand.

Reason : Brand neglects its core customer base while attracting youth (the major segment of the consumer markets)

Result: core customers alienated, brand loses its loyal consumers.

Example : St. John

-Known for Signature Knit and Traditional styling-Target market matured- Dilemma : age with the target market OR shift to more promising younger audience-Alienated its core audience-Unsuccessful in attracting youth-Brand declined

Environmental Factors

Situation: Markets are dynamic in nature and can undergo major transformations

Reason :Influenced by larger environment in which they operate

Result : Impact on the various companies in industry and their brands

Example : R.J. Reynolds’ Camel, Polaroid, Kodak

Example : R.J. Reynolds’ Cigarettes

-Affected by changes in legal environment.-Increasing number of regulations-Strong negative publicity-Accused of using cartoon characters to attract children-Dented the brand’s image-Forced to sell back it’s promotions- Impacted its sales

Example : Polaroid’s Decline

-Unique product offering, gained prominence-High brand awareness-Environment Changed and digital imaging became popular-Lost it’s appeal of instant results- no longer unique in an age of digital cameras. -Brand declined

Example : Kodak

-Standard platform for photography-Introduction of digital cameras in the market was a major challenge for Kodak-Realized the implications of environment factors-First to introduce digital camera in the commercial market-Lead the way in digital technology-Avoided possible death in changing environment.

Situation :A well established brand can also face relentless onslaught from its competitors.

Reason : Newer competitors can leverage novel technologies to challenge well established leaders, which are bound by legacy.

Examples : Puma and Adidas, Kmart and Wal- Mart ,Blockbuster and Netflix, Dell and Compaq.

Competitive Actions

Example : Kmart versus Wal- Mart

-Kmart anchored itself as a low priced merchant-Wal-Mart proved a formidable challenger-Wal- Mart made cost cutting and brutally efficient operations.-Wal- Mart introduced the theme of “Everyday LowPrices”-Kmart- Unable to complete Wal- Mart-Kmart forced to merge with Sears Roebuck for survival

Deconstructing

Decline

Brand death is preceded by a slow and debilitating decline over a prolonged period.

Therefore to avoid a damaging outcome, it is important to deconstruct the decline in terms of reliable precursors to sales.

BRAND DECLINE CAN BE IDENTIFIED through the following THREE ELEMENTS OF BRAND EQUITY

1. Decline in BRAND KNOWLEGDE2. Blurring of DIFFERENTIAL EFFECT3. Lackluster CUSTOMER RESPONSE

Differential EffectObjective : WHY choose the BRAND out of the wide variety of alternative available?

Approach: 1. “Value Priced” Approach – Brand can pursue

the customers conveying them that it offers good quality at low or competitive price.

2. Second Approach : Providing superior quality, physical attributes or intangible benefits for the well- differentiation of brand.

Example:

- Chevron pursued many consumers by emphasizing its trademark additive, Techron – which reduced accumulation of deposits in fuel injectors.

- While all brands of gasoline have detergents in it while Chevron seized on it as a source of differentiation.

Brand KnowledgeImportant as it conveys the various

attributes of a brand to its customers

Brand Awareness:-Special attention to top of mind recall as it is a better indicator of Brand’s Health.

Lack of Awareness-Falling brand awareness could be a serious long term problem -Share drop result in Catch-22 Situation.

Reason: Managers are lulled into complacency by past success and continued high awareness levels which prompt them to cut back on advertising

Result : Brand Struggles

Brand Image :-Brand image for Strong, Favorable and unique brand associations.-Companies need to monitor brand image to look out for impending brand decline.

Example : Levi’s Jeans-Lost it’s image leadership as jeans market moved forward.-Consumers sought to fashion expression beyond utilitarian clothing.-Levi’s failed to follow this shift and started declining

Consumer Response:Measures: 1. Purchase intensions2. Brand Loyalty

Brand Switching : Observed in non- durable products.

Caused due to-1.Increase in the price of the brand2.New competitor in the market3. Negative news about the Brand.

Result: Weakening of consumer- brand bond.

Solution: To avoid a damaging outcome, it is important to deconstruct the decline in terms of reliable precursors to sales.

Revitalizing

Why Revitalize a Dead BRAND?

- Rebuilding brand on its old legacy- To cope up with the changing Market Behavior- Financially feasible in comparison to launching a new brand- Old brands have significant brand equity in terms of high brand awareness and strong brand image.

Is the Brand Worth reviving?

Approach:- Significant Residual value associated with the Brand.-Analyzing the three elements of Brand Equity - Differential Effect - Brand Knowledge - Customer Response-Comparing the revival cost with the cost of cost of replacing the brand with a new one.-Measuring levels of Brand Awareness and Image.

Conclusion: A brand that commanded premium, had a singular focus with a well defined differentiation.

IS WORTH REVIVING!

Take long term perspective

-Reviving a brand is a long term initiative

Approach:- Revitalization requires well-thought-out strategy . - addressing causes of decline

- understanding brand’s promise- maintaining it’s relevance

-Market Research to assess and track Brand Knowledge.

Example : Blockbuster under the attack of Netflix - rental market changed to increasingly rely on internet - Blockbuster introduced Total Access Online -subscribers were given the option of either mailing back rented movie or drop at a local store for a free movie rental. - Program saw favorable results.

Reposition the Brand, invest in it & educate the marketApproach :- Right positioning and emphasizing them consistently-Conveying what makes the brand unique.

Example : Cadillac’s successful revival by GM - Provided experience as good as it’s rivals at lower prices - redesigned models for global market - GM learned from it’s Oldsmobile experience - invested heavily to strengthened the brand - Focused on long term strategy to rebuild brand’s image

Correct Mismanagement of the Brand

Failure: -To clearly understand brand decline- Change strategies that previously weaken the brand- Commit to necessary steps to reverse trend or decline

Solution/correction:-Rebuild quality- Resist temptation to “MILK” the brand- Pursue a carefully defined target audience.

Rebuild QualityWhy ? Poor quality leads to abandoning of brand and declining sales.

Approach : -Financial investment in quality -Backed with additional services to overcome negative consumer perceptions

Example : Hyundai-Significant financial investment in quality- Backed up by 10,000 mile service warranty- Result : Rated above Mercedes Benz in 2006.

Resist Temptation to “MILK” the Brand

Aggressive form of “MILKING” entails-Cutting Prices- Reflects Brands weak position

Management needs to invest in the brand for it’s REVIVAL

Example : Apple - lost top mind awareness after struggle in PC

market-Invested heavily in MP3 player technology- launched iPod- Resonated with the customers’- Brand came to the forefront again.

Pursue a Carefully defined targeted

audienceObjective : -Honing on carefully defined target audience a challenging task

Problem: -Target markets may mature or shrink over time.- Face a difficult choice: Moving with dwindling target market OR Abruptly switch to another target market, alienating the core customer base.

Solution :Example: Levi’s (in 1980s when it was still a successful brand)

- Used it’s brand name to launch Dockers and enter a market( business casual clothing)

-Used the brand as a bridge to support introduction of a new line

- Continued to cater its older audience - When Dockers became well-known ,Levi’s

removed it’s name - Dockers became a stand-alone brand

SUMMARY-Highlighting examples of brand decline

- investigate leading causes of brand decline- Identify signs that are precursors to impending decline- Suggest guidelines to revitalize brands

- Using a brand equity framework , most brands with high levels of awareness or positive brand image are candidates for REVIVAL.

-Dishi Arora

Created By Dishi Arora, IIT

Guwahati, during an Marketing

internship by

Prof. Sameer Mathur, IIM

Lucknow, (see

www.IIMInternship.com )