Date post: | 12-Aug-2015 |
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Marketing |
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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