AJPark

Today most products are bought, not sold.  Branding presells the product or service to the user.  Branding is an efficient way of selling.  This means that good products can fail because of bad branding.  So while branding heightens the rewards it also heightens the risks.

Brands need to establish an emotional tie with customers.  Once that bond is created, it must be nurtured and handled with care.  Put a foot wrong and the bond may be broken: the brand then fails in the eyes of the consumer.

It used to be that when a company noticed a decline in sales, the conclusion reached was the product was at fault.  Today companies don’t blame the product they blame the brand.  After all, wasn’t branding created to ensure products succeeded?

By looking at why some brands have failed, some lessons can be learned.

Lesson one – idea failures
Many brands fail because they are simply bad ideas that haven’t been properly researched. 

Creating products that consumers do not want won’t survive, even with a clever brand strategy.

The problem is that what companies consider sublime, customers consider ridiculous. Bottled mineral water for animals is an example.  Brilliant idea says the company.  A joke says the customer.

Products need to be tested in every environment or context in which they will be used so claims made about performance or superiority are based on fact.  Unilever learned this lesson in the mid 1990s when it launched PERSIL POWER.  Consumers were excited about the products advertised ability to fight the toughest stains. When the product hit the market it proved so powerful that under certain conditions it didn’t only destroy stains, it destroyed clothes as well. 

As soon as stories started to emerge that clothes were falling apart, a competitor of Unilever ploughed resources in an accusation laded media campaign which not only damaged PERSIL POWER but had implications for Unilever as well.

Lesson two – extension failures
When a company has saturated a market with one product, it has two choices for growth.  Enter a new market or introduce a new product. 

Many businesses adopt the second choice.  Using a brand that also has recognition can be appealing.  The extension results in immediate consumer recognition.  Successful brand extensions can occur.  DIET COKE was a global hit.  Richard Branson has successfully extended his VIRGIN brand into a diverse range of products and services.

Not all brands are able to stretch to other product lines or services.  But many companies do not believe this.  Harley Davidson found this out when they put their brand on perfume and aftershave.  Their biker customers were not impressed.  The brand stood for ‘strong, masculine and rugged’ not girly stuff like ‘how you smell’!

For brands that inspire strong loyalty, the temptation to test that loyalty to its limits by stretching the brand into other product categories will be strong.  However this can be a dangerous path to take.  Brand extensions may increase sales in the short-term, but can devalue the identity of the brand in the long-term if an extension goes awry. 

Lesson three – culture failures
Many companies have confused the era of globalisation with the era of homogenisation.  Success with one brand in one market does not mean success in another market.  Cultural differences can affect the chances of successfully launching a brand in another country.  Brands must cater to the specific tastes of each market they enter.

Hallmark greeting cards are hugely popular in the United Kingdom and the United States.  The advantage of buying a Hallmark card is that you don’t have to think of what to say, the message is already written. 

But when introduced into France, no one bought Hallmark cards.  The French prefer to write their own messages.  Besides, the sugary sentiment expressed in the prewritten message did not appeal.

Lesson four – PR failures
If a brand is well-known, any crisis can be expected to make the headlines.  The RIBENA debacle is a case on point.

A brand can survive a crisis if it is handled responsibly and sensitively.  Customers will forgive if they sense the company facing the crisis is telling the truth and has adopted an open communications approach.

When an Exxon oil tanker ran aground in 1989 and spilled great quantities of oil, the company’s response was inadequate.  It was seen by customers as too little and too late.  Not only did the company fail to contain the spill quickly but the company refused to communicate openly with the press about how the accident happened and why the captain was not at the helm.

The outcome was disastrous.  Not only did Exxon face a US$7 billion spill cost which included the largest punitive fine ever handed down for corporate responsibility, it also fell from its rank as the largest oil company in the world to the third largest. 

Lesson five – rebranding failures
Brands that have been around a while can suffer a midlife crisis.  Drastic measures to stay young and relevant may be taken. 

Typical methods may include a change of brand, change of overall look and even a change of brand philosophy.  Sometimes a rebrand works, sometimes it doesn’t.  Companies that don’t think carefully about rebranding can risk undermining the fundamental value and strengths of the brand.  It is important to ensure that any rebranding is in sync with your business rationale and aims.

Before rebranding, talk to your customers.  After all it is your brand that has created the emotional bond with your customers.  You may own the brand but you don’t own the feelings that your brand produces with your customers.

When the Post Office Group in the United Kingdom changed its name to CONSIGNIA it suffered public backlash.  Public opinion was the whole rebranding exercise was pointless.  While trying to be modern, many felt it missed the mark.  CONSIGNIA had no connection with mail or the services of the Post Office.  The brand also suffered because of the fact it coincided with a poor period of corporate performance.

Another reason to rebrand is to have a global identity.  In the United Kingdom, Mars rebranded OPAL FRUIT to STARBURST and MARATHON to SNICKERS so they had the same brands in every country they traded in.  This made commercial sense.

Learn from the mistakes others make
Brands fail for all sorts of reasons.  It is possible to learn from the mistakes of others so your business avoids failure.  The branding process is a guarantee to brand success.  But while the risk of failure can never be removed, it is possible to identify where the main threats lie.

An edited version of this article was published in NZRetail September 2007

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  Corinne Blumsky

  Partner