21

common brand problems

Awareness of the problems and pitfalls that brands can encounter is an important step in maintaining a strong, healthy brand.

Problem 1. The cumulative result of gradually and incrementally decreasing product or service quality to reduce costs

Analysis. There is the old story about each new brand manager of a coffee brand improving brand profitability and his or her promotion potential by slightly reducing the ratio of premium Brazilian coffee beans to the less expensive African beans. Each time, consumer research indicates no discernable difference in taste or preference, but one day the company discovers that its coffee brand share has significantly eroded. Brand quality erosion may not be discernable in the short term, but over time it will negatively affect a brand’s market share. Focus cost-cutting on things that are truly invisible to your customers, and most important, manage brands for the long term.

Problem 2. The cumulative effect of raising product or service prices at a rate greater than inflation over time (inviting low-end market segments and competitors)

Analysis. This is the other side of a brand’s value equation: price. Consider what has happened in several industries in which companies have raised prices faster than inflation over time. Remember Marlboro’s Black Friday? Would Malt-o-Meal exist if cereal companies had not raised their prices as much as they had? Would discount card stores like Factory Card Outlet have grown from zero share of the greeting card market to over 20 percent within a few years if greeting card companies hadn’t raised card prices to well over two or three dollars in the same time period? Online universities are burgeoning not only due to technology advances, but also the rate at which college tuition and fee increases had, until recently, exceeded inflation and financial aid. Make sure your brand delivers a good value to the consumer. Even if price sensitivity studies show that you can raise prices more, consider the long-term consequences. If you “push the envelope” on price, you will invite two outcomes: 1) consumers leaving your category and 2) new competition.

Problem 3. Focusing on short-term profitability at the expense of long-term revenue growth

Analysis. This may be the underlying cause of the previous two problems. This problem is driven by the organization’s reward systems. If brand managers and general managers are compensated and promoted on delivering quarterly or annual financial results without a focus on longer-term business growth, this situation is sure to occur. This problem is most acute in publicly held companies that are pressured to deliver quarterly financial results. The solution is to create a balanced scorecard that integrates growth objectives into common and individual performance measures.

Problem 4. Reducing or eliminating brand advertising

Analysis. When it is time to “tighten the organizational belt,” advertising is always a likely source of savings. The budget is usually big enough to contribute significantly to cost savings, and it is often difficult to tell advertising’s return on investment. Finally, even if there is an ill effect, the brand won’t immediately suffer from an equity withdrawal (or so goes the all-too-common logic). But, actually, studies have shown there is a positive correlation between advertising spending and revenues, earnings, market share, and stock price. Tod Johnson of the NPD Group (which has studied customer purchase behavior since 1978) indicates that a decline in brand loyalty has two causes. One is erratic advertising, or advertising that does not keep pace with the competition. The other is cannibalization caused by brand extensions.¹ Set specific objectives for your advertising and track results against those objectives. Copy test all of your ads to make sure they are effective. And, finally, constantly and vigilantly sell the importance of advertising to key internal decision makers.

Problem 5. Applying branding and marketing decisions at the end of the product development process (“Now, what will we name this?”) vs. including brand management and marketing at the front end of product development activities

Analysis. You are probably working for a manufacturing company that really doesn’t understand brand management and marketing. The company designs, manufactures, and sells products and services. It doesn’t market brands, or if it does, the company leaves that function to the advertising or communications department or to the advertising agency. A brand is a source of a promise to the consumer. Everything a company does should support that promise. Start with the target consumer and the brand design (essence, promise, archetype, and personality) and then decide what the products and services will be. Design a marketing function or process that identifies and evaluates product concepts against customer needs and competitive alternatives prior to product development.

Problem 6. Defining your brand too narrowly, especially as a product category (e.g., “greeting cards” vs. “caring shared”)

Analysis. One of the key advantages of a strong brand is its ability to be extended into new product and service categories. It is a growth engine for your organization. It helps you transcend specific product categories and formats that may become obsolete. Define your brand’s essence and promise in terms of what key benefits your brand delivers to consumers (independent of the specific product or service). Then continue to find new ways to deliver against that essence and promise. GE successfully broadened its frame of reference by moving from “General Electric: Better living through electricity” to “GE: We brings good things to life” and most recently to “GE: Imagination at Work.”

One of my most important successes as the “brand guy” at Hallmark was changing our leaders’ perceptions of Hallmark from a greeting card company/brand to a “caring shared” company/brand. This change in perception paved the way for us to launch gift candy, flowers, and other products to sustain our growth into the next decade. I did not want to see us make the same mistake that Smith-Corona made (defining itself in terms of its product, typewriters, vs. a consumer benefit, word processing).

Problem 7. Failure to extend the brand into new product categories when the core category is in decline

Analysis. “It is our core category. It is our cash cow. We must focus all of our resources on preserving it.” Sound familiar? It is one thing to prematurely walk away from your core category. It is yet another to myopically focus all of your organizational resources on a flat or declining category in the misguided hope that you may be able to revive it, especially if you are not trying to radically redefine or reengineer it. Try and try again, but also know when it is time to “quit” (that is, when it is time to do no more than maintain and “milk” the core category and reinvest the profits in new, more promising ventures). Often, realistic financial projections are the best wake-up call in these situations.

Problem 8. Overextending your brand into different categories and markets so as to completely blur the brand’s meaning and points of distinction

Analysis. You can always make more money in the short term by licensing your brand out for use on a variety of products or by extending your brand into a myriad of new categories. The long-term effect, however, is detrimental. People no longer will be able to tell what your brand stands for. It will lose its meaning and its point of difference. Extend your brand based on a clear understanding of its essence, promise, archetype, and personality. And make sure your consumers “get it.”

Problem 9. Frequently changing your brand’s positioning and message

Analysis. New brand managers and marketing executives often feel as though they need to make a name for themselves to continue the climb up the corporate ladder. Don’t succumb to this temptation by changing the advertising campaign or the brand slogan, especially if the current ones are working well or haven’t been in place long enough for you to assess their effectiveness. Consistent communication over time is what builds a brand. After all, Hallmark has used its “When You Care Enough to Send the Very Best” slogan since 1944; the Marlboro Man has been Marlboro’s icon since 1955; Absolut Vodka has featured its bottle’s shape in consumer communication since 1978. Since 1921, General Mills has used Betty Crocker as its face to the public. Her portait has changed in subltle ways eight times since then. If you do make changes, make them gradually in an integrated fashion, based on sound consumer research.

Problem 10. Creating brands or subbrands for internal or trade reasons, rather than to address distinct consumer needs

Analysis. There is nothing more inefficient or wasteful than creating a new brand or subbrand for a purpose other than meeting a different consumer need. Brands and subbrands exist to address different consumers and consumer-need segments. It is expensive to launch a new brand (and very expensive to maintain multiple brands that meet similar consumer needs; it also adds unnecessary complexity to your organization). Worst of all, it dilutes the position of your original brand. This problem often results from egos and organization structure. People head up divisions or business units that deliver specific products or services. They create a name and identity to put on business cards and to rally their employees around, without considering whether the products or services are similar to products or services other divisions create. (This tendency has resulted in Hewlett-Packard having multiple printer lines: DeskJet, OfficeJet, OfficeJet Pro, LaserJet, DesignJet, DeskWriter, and PhotoSmart. It is unlikely that consumers understand many of these distinctions. They are likely to think of them all as HP printers.)

Sometimes, companies create separate brands or subbrands for trade reasons—for instance, to offer something different for specialty stores vs. mass channels of distribution. (Hallmark created the Expressions from Hallmark brand to offer mass channel stores while specialty stores continued to carry the Hallmark brand. These two brands don’t meet different consumer needs, and I’m not sure consumers perceive differences between the two.) This problem can also result from mergers and acquisitions in which the brands are neither rationalized nor strategically managed after the enterprises are combined.

Problem 11. Launching subbrands that inadvertently reposition the parent brand in a negative light

Analysis. What does Miller Lite say about Miller High Life? What do Bayer aspirin-free products say about Bayer aspirin? What do Fat-Free Fig Newtons say about Fig Newtons? Make sure you know what you are doing when you create a new subbrand; be sure to test its impact on the parent brand.

Problem 12. Well-known, high-profile brands are often targeted by special interest groups who want to make public statements about their causes

Analysis. High-profile brands are prone to being knocked off their pedestals by environmental, human rights, and equal rights activists and other groups that are anti–big business. Nike, Wal-Mart, McDonald’s, as well as the Boy Scouts of America have all struggled with this issue. Nike has had to deal with opposition to its campus sponsorships and concerns about its alleged use of third-world “sweatshops.” Wal-Mart is seen as all-powerful, and is often accused of putting long-standing local mom-and-pop stores out of business through monopolistic practices. People are concerned about Wal-Mart’s alleged use of third-world “sweatshops,” too. McDonald’s faced a number of revelations from the book Fast Food Nation: The Dark Side of the All-American Meal, and the high-profile documentary Supersize Me. The Boy Scouts of America is a target because of its squeaky-clean, wholesome image, and its incresingly highlighted position on homosexuality.

Lessons: If your brand is well known, (a) identify possible exposures (through internal muckraking) and rectify them, and (b) develop public relations and crisis management plans to address the exposures.

Problem 13. Treating brand management primarily as “logo cops”

Analysis. Often the current power structure within an organization will try to put a new brand management function in this box, either out of ignorance or as a way to minimize or negate a power shift. As I hope you have discovered by now, the brand management function has responsibilities far beyond brand identity management. It is multifaceted, affecting all of marketing and much of the rest of the enterprise. For this reason, make sure that the brand management function exists at a high level in the organization structure. It is also important that the organization’s senior executives understand and support this scope of responsibility.

Problem 14. Viewing brand equity management as a communications exercise, but ignoring it in other business processes and points of contact with the consumer

Analysis. Too often, organizations relegate brand management to a specific department (e.g., advertising, marketing) or agency. Brand management is an organization-wide process, especially when the brand is a corporate brand. The brand promise must be delivered at each point of contact with the consumer, including customer service lines and retail sales associates. For the brand promise to be clear to your consumers, it must be well understood by everyone in your organization, from the CEO to the receptionist. It must be manifest not only in consumer communication, but also when and wherever the brand name and logo are used. Increasingly, organizations are designing the total enterprise in support of the brand promise, including putting mechanisms in place to develop a brand building culture.

Problem 15. Not delivering against the communicated brand promise

Analysis. Again, this is a symptom of viewing brand management as a communications exercise. A 1997 advertising campaign, “United Airlines Rising,” backfired on the company. While the airline was trying to communicate that its service was rising to meet consumers’ expectations, the flight attendants were involved in a labor dispute and threatening CHAOS (Creating Havoc Around Our System). The customer relations department was so unresponsive to complaints that it prompted a disgruntled customer to create the website www.untied.com, featuring complaints from United Airlines passengers.

The lesson here: The communicated promise must be delivered in product, service, and the total customer experience. Internal brand strategy education and communication may be necessary to ensure that all employees are helping the brand deliver its promise. Tying employee compensation to delivery against the brand promise also will help ensure the promise is delivered.

Problem 16. Not linking brand planning to the business’s strategic planning process

Analysis. A brand plan is useless if it is not an integral part of the organization’s business planning process. And if you aspire to be a market-driven organization, the brand plan should drive or at least provide signifiant input to the business planning process. Redesign your processes to ensure the two are integrally linked.

Problem 17. Licensing the brand name out to whomever will pay for it

Analysis. Although licensing will generate additional revenues and profits in the short term, it is an unwise practice in the long term. You should use brand licensing to:

• Extend the brand into new categories

• Expand the meaning of the brand

• Reinforce key brand associations

• Build your brand as a badge

• Bring your brand to life in new ways

Lesson: Avoid licensing your brand just for short-term gain where it doesn’t make sense. Where the licensing department resides in your organization and what its objectives are will have a large impact on how well licensing is used to build (vs. bleed) the brand.

Problem 18. Trying to be the best at something, especially core category benefits, rather than owning something different

Analysis. Being the best is not a point of difference if being good is “good enough” for consumers. In industries that have focused on customer satisfaction (such as the automobile industry), standards have risen to the point where all options satisfactorily meet customer needs. In those industries, brands must find new points of difference if they are to maintain consumer loyalty. To truly succeed, brands need to be unique in highly relevant and compelling ways.

Problem 19. Trying to own what have become cost-of-entry benefits—and not owning any differentiating benefits

Analysis. It is not sufficient to claim leadership of a benefit that consumers expect of all brands in the category. For example, an airline can’t win in the marketplace by trying to own “safety.” A very high level of safety is a given in that industry. An airline might win, however, by exclusively guaranteeing on-time departures and arrivals (if that were possible) or by offering first-class service throughout the plane.

Interestingly, from airline industry laddering studies, we find that consumers want a few key things from airlines: safety, the desired routing, desired departure and arrival times, and, given these things, the lowest price. It is not surprising that most airlines serve only peanuts, pretzels, or other snacks (and are largely undifferentiated in any substantive ways), but a few highly successful airlines have emerged based on further differentiation: Southwest Airlines (offering an inexpensive but highly reliable trip with a casual, fun atmosphere) and JetBlue (featuring a fleet of brand-new planes with roomy leather seats and free individual television viewing—twenty-four channels—at each seat). Brands must promise and deliver on unique value propositions.

Problem 20. Focusing too much on product attributes and not enough on brand benefits in consumer communication

Analysis. You will have to decide the right combination of attributes, benefits, consequences, and basic human values your brand claims to possess or address. Typically, the farther up the need hierarchy your brand climbs, the more emotionally compelling it is to customers and the more difficult it is for competitors to make similar claims (or to emulate what your brand delivers).

Problem 21. Trying to make too many points in your brand communication rather than focusing on the one or two most compelling points of difference

Analysis. Regarding brand communication: More is not better. The effectiveness of brand communication diminishes in direct proportion to the number of points you attempt to make in your communication. I see this problem most often in companies with a very junior marketing staff or in companies where marketing is practiced by nonmarketers (e.g., engineers, doctors, lawyers). Ask these two questions of each marketing piece you produce:

1. Does it quickly and clearly communicate the most compelling reasons to choose our brand over the competitive alternatives?

2. Is it convincing?

Problem 22. Following challengers because it’s easier and produces more immediate results, rather than creating new ways to meet consumer needs

Analysis. If you are the market leader, this is an easy trap to fall into. If you are ahead, just match the competition to stay ahead—that way they can never catch up. That is a fairly common sailboat-racing tactic. The problem with this strategy is that you begin to play by your competitor’s rules. It is easier to win at your own game than at someone else’s. It may be a more natural reaction to match competitive moves, but as you are doing that, you are distracted from doing what you do best—playing your own game. And, remember, other competitors that are playing by different rules may not be far behind.

Problem 23. Not applying the latest product and service innovations to your flagship brand because it is getting too old and stodgy (a self-fulfilling prophecy)

Analysis. It is a tragedy to walk away from a brand you have invested in—and that might be an investment of millions of dollars, over time. It is better to reposition, revitalize, and extend an aging brand than to ignore it. You should carefully monitor consumer opinion to ensure the brand is perceived as relevant and vital. Also, track the brand’s consumers to make sure they are not a shrinking or aging group. Often, new subbrands can make the parent brand more relevant to new consumer segments.

Problem 24. No central control of the brand portfolio (so that each brand team is free to apply the best differentiating features of one brand to each of the others in the portfolio)

Analysis. Certain attributes, features, and benefits should be off-limits to certain brands within your portfolio. When the business is organized and run by product category or channel of trade (as opposed to brand), there is more pressure to apply the best ideas to all brands regardless of each brand’s positioning or intended point of difference. If the business is organized by brand and most people understand brand concepts, this is less likely to happen.

P&G might offer several different brands of detergent, but each has a distinct point of difference. One might make clothes whiter, one might work best in cold water, one might take out tough stains, one might be gentle on the clothes, yet another might be hypoallergenic, etc. Since P&G manages by brand, the company really understands that points of difference are central to a brand’s success, whereas somewhere else (for example, in a company organized around product development or run by engineers), people might feel more pressured to add the best features they come up with to all their products.

A highly placed brand management group or council should have the authority to ensure that brand teams, product development teams, business units, divisions, and subsidiaries don’t blur the lines between your organization’s brands. This council should guard against a “silo” or short-term approach to the business.

Problem 25. No brand identity system and standards

Analysis. A brand should be presented consistently across all applications: name, logo, personality, visual style, icons, etc. Ensure consistency with a comprehensive brand identity system and standards that are well understood and easy to use. Standards manuals are a minimum requirement. With today’s digital technology, consider using an intranet or cloud-based site with a downloadable manual as a PDF file. Think of your brand as a person. Does it present itself consistently in all situations or does it seem to have “multiple personalities”?

Problem 26. Defining your target consumer too broadly (for instance, women age 18 to 65)

Analysis. By definition, a brand cannot be all things to all people. A brand promises relevant differentiated benefits to a target consumer. Increasingly, companies are focusing on brand usage over penetration. That is, they are getting a larger portion of a smaller group’s business by offering more products and services that deliver against the brand promise. This helps to build loyalty, but in lieu of trying to attract additional consumers to the brand. It is a well-known fact that it costs seven times more to gain a new consumer that it does to get a current consumer to make an incremental purchase. Corporate parent brands can achieve increased targeting through well-targeted subbrands.

Problem 27. Not really understanding consumer needs and motivations

Analysis. This is the “kiss of death” for a brand. A brand only exists to uniquely meet consumer needs. An important part of any business is being able to stay in touch with consumers, to understand what they need and why they are buying the business’s products and services. Your research should include ongoing market research (of consumers and competitors) and ongoing brand equity monitoring. In-depth qualitative research will give you a better understanding of consumer needs and motivations. Use ethnography (putting yourself in consumers’ shoes by observing their brand shopping and usage patterns in real-life situations) and projective techniques (“If the brand were an animal/car/person, what animal/car/person would it be?”), among other types of research. Very successful companies, such as Harley-Davidson, experience the brand right along with their consumers.

Problem 28. Unsuccessfully extending the brand up to a premium segment or down to a value segment

Analysis. While some companies have successfully used brand extension to grow (for example, Honda slowly extended from lawn-mower engines to Honda Accords, while creating the Acura brand for its highest-end cars), it can be very tricky to execute successfully. Know what impact price segment extensions will have on your core brand. Conduct extensive consumer research before and throughout the process. There are many subbrand and message subtleties that may be required to support such a move. Price affects quality perceptions and is an important brand positioning cue.

Problem 29. Choosing generic (nonproprietary) brand names

Analysis. Although it might be tempting to choose a name that describes your product or service, it’s a mistake. The name can soon become confused with that of every other brand that takes a similar approach, or, worse yet, it can link the brand to an outdated product or technology. Consider brands with “sys” or “tech” in their names. Is it easy to tell them apart? In retrospect, how about the wisdom of the “Cellular One” name now that PCS and other technologies have emerged? Own a name that is suggestive of a timeless consumer benefit or one that is “coined” and whose meaning you can define through consumer communication. An example of the first approach is DieHard (for long-lasting batteries); examples of coined names are Kodak or Xerox.

Problem 30. Not keeping up with the industry on product or service innovation

Analysis. The marketplace is too competitive for you not to constantly reinvent your business. No matter how much of a market share advantage or leadership legacy you have, you should not rest on your laurels. Maintain a large pool of resources to invest in new ideas. Award the resources based on projected incremental sales and return on investment. Even pursue new business approaches that could make your current core business obsolete. If you don’t, someone else will. Think about the impact of digital photography (invented at Kodak) and smartphones on Kodak’s chemical-based photography business. Consider Encyclopedia Britannica’s entry into interactive software (which sells for a fraction of the cost of its traditional hardcover bound volumes, whose final edition was published in 2010).

Problem 31. Spending too much money on trade deals and sales promotion at the expense of brand building

Analysis. Brands shift some leverage back to the manufacturer from the retailer. (This is one relationship the manufacturer can own with the consumer.) Brands also combat category commoditization and the resulting downward pressure on price. Is your sales organization bigger and more powerful than your brand management and marketing organization? Do you know how much you are spending on trade deals and price promotions? Is it more than you are spending on brand building? It is difficult, but essential, to move from a sales “push” to a marketing “pull” organization if you are to maintain a competitive differential and a price premium.

Problem 32. A lack of internal mindshare, supervision, and management for the brand when no person or department has responsibility for it

Analysis. After having read this book, you should know that the complexity of the brand management task makes it very difficult to develop a powerful brand in the absence of a brand management mindset and function. Fortunately, fewer and fewer organizations experience this problem these days. At a minimum, most companies have assigned a brand manager or a brand management department.

Problem 33. Allowing decisions that adversely affect the brand to be made outside of the brand management context

Analysis. When making decisions—decisions that may range from mergers and acquisitions, product extensions, and cost-cutting to outsourcing critical customer services, producing private label products to fill production capacity, and offering price discounts to meet quarterly revenue goals—always consider the decision’s impact on the brand. Corporate executives, general managers, engineers, production managers, salespeople, and others frequently don’t consider the impact on brand strategy or equity in such decision making. This highlights the importance of the CEO assuming the role of chief brand champion. It also underlines the importance of having a strong brand management function and creating a brand building organization.

Problem 34. Senior managers who do not understand what the brand stands for

Analysis. This could well be the most pervasive and detrimental problem of all. The consumer will never be able to understand what the brand stands for, and what its points of difference are, if your management team doesn’t. It would behoove you to gain the CEO’s support to involve the management team in a process of defining what the brand stands for, including its target consumer, essence, promise, personality, and marketplace positioning. A particularly important part of that exercise is to gain insight and consensus on the brand’s most compelling point of difference. Managing the transformation of your entire management team into well-informed brand champions may be difficult, but the investment of time and effort will be well worth it.

Problem 35. Quarter-over-quarter revenue and profit pressures that gradually cause the brand to become overextended

Analysis. Constant pressures from Wall Street to increase revenues and profits cause a myriad of problems (see also problems 1, 2, 3, 4, 8, 17, and 31). One of the biggest problems is putting pressure on the brand to extend into more and more market segments in order to broaden its appeal and to provide additional revenue growth. This eventually comes at the expense of the meaning of the brand itself. Witness Volvo. It had a very clear point of difference—family safety—until it created the 850 GLT, which was intended to extend the brand into younger and older markets where the car buyers are childless. Volvo promoted this car as a fun car to drive—not necessarily a safe car for the family. From that point on, Volvo’s success has been underwhelming. (See the Volvo case study in Chapter 6.) The degree to which Volvo is successful with vehicles that do not reinforce its safety message is the degree to which its primary point of difference in the marketplace becomes diluted. If a company must grow to keep Wall Street happy (as all public companies must do), then it should carefully consider its approach. One of two approaches is recommended:

1. Introduce new products and services that deliver against the brand’s essence and promise (a family-safe ride in Volvo’s case).

2. Bite the marketing bullet and launch new brands.