A brand is forever ! A framework for RevitalizingDeclining andDead brands

S. ThomasC. Kohli

Important Definitions

Brand Equity:- The differential effect that consumer knowledge about a brand has on the customer’s response to marketing activity. Brand Decline:- Failure of a brand due to many factors like change in technology , lack of brand awareness etc. It is a Reversible process. Brand Death:- Becomes imaginary , have significant brand equity in terms of high brand awareness and a strong brand image. Brand Revival:- Reviving is not a feasible, as it needs a more attractive strategy than launching a new brand .Less costly , more risky than new brand.

CAUSES OF BRAND DECLINE

Product Life Cycle

SALES

Uses sales - define stages of PLC - to predict sales Self fulfilling prophecy : sales decline – no more investment – milks the brand

Product Evolutionary Cycle• It is monitored by 3 forces

Generative forces – Managerial Actions Selective forces – Market EnvironmentMediative forces – Competitive Actions & Responses to Marketing Initiatives

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

Managerial Actions

• Brands often decline because of “leadership, management & employees making excuses rather than acting with integrity” -Ron Strauss of Brandzone

• Managerial actions (generative force) divided into 5 categories: 1. Product quality 2. Price increase 3. Price cuts 4. Brand neglect 5. Inability to stay with target market

1. Product quality Compromise in product quality for Cost cutting reasons. Impacts brand loyalty in the long run. Brand declines when could not meet Customer expectations.

Example: Cadillac’s steady decline over two decades.

2. Price increase Increasing Prices without increase in Benefits. Later consumers will start to abandon brand.

After volkswagen failed with its Rabbit model(left) in US, it replaced it with a newer model, the Golf(right). However, they were unable to control costs.

3. Price cuts Cutting Prices to increase Sales Damages the Brand identity

Until 1980’s, Lacoste was a popular brand in US. When sales began to decline they lowered prices and expanded distribution. To maintain low prices , the company had to in turn use cheap material which proved to be a disaster and the brand’s image ended

4. Brand neglect Even successful Brands also needs constant nurturing. Looking at core Brands as cash cows and neglect investment. Managers get wrapped up in the inertia of a brand and begin to miss changes in market

4. Brand neglect

Example: Ovaltine

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

Declined due to Corporate negligence

5. Inability to stay with target market

When the target moves away from the brand, the brand can move into decline

By shifting its focus mid-way to a more promising younger audience, the brands runs the risk of alienating its core customer base

Example: In 1990’s GAP decided to do more to reach out to teenagers and young adults . But in the process alienated its core customers

Example: St. John’s decided to replace its Iconic model Kelly Gray with more Rebellious model Angelina Jolie as Brand ambassador. Unfortunately consumers started to turn away from the brand.

Environmental factors Markets-dynamic in nature Major market transformation impacts various companies Changes in legal environment

Example: Cigarette brands are affected by changes in legal environment. The industry is facing increasing number of regulations and Negative Publicity

Environmental factors Example: Polaroid Unique product offering Gained prominence and retains brand awareness Declined as market changed with digital imaging becoming popular

Competitive actions

A brand faces relentless onslaught from its competitors.Becomes problematic if competitor has Deep pockets.Innovative changes, Technological advancement and Cost cutting.

The Epic Battle Of all Times

Example:Dell Compaq

Offered a Direct-to- Customer distribution system Created savings using above system and Lowered its prices

Compaq could not tackle such innovative changes Suffered losses in market and merged with HP

DECONSTRUCTURING BRAND DECLINE

Revisit the Brand Equity concept

Three key elements of brand equity : 1. Differential effect 2. Brand knowledge 3. Customer response

Based on two methods :

1. Value priced (Good quality at low price) “Brands must offer something different; they cant just be another flavour of vanilla” -public relation manager of volkswagen

Example: Techron (chevron)

2. Superior quality , physical attributes

Differential effect

Brand Knowledge Consists of two components:

1. Brand Awareness: Failing which leads to serious and long term problem and find themselves in Catch-22 situation. Highly aided and top of mind recall should be done.

Example: PAN AM

Brand Knowledge2. Brand Image: Maintain a strong, favourable and unique brand association. Look for changes in consumer perceptions.

Example: Levi’s and DenimThe Levi’s brand was synonym with High quality Denim Jeans and couldn’t run with new style adoption as a result Sales declined and forced to sell at 35% less

Customer response Indicators measuring customers response: Sales figure, Purchase intentions and Brand loyalty measures Brand switching behaviour triggered by : Price increase , Entry of new competitor and Negative news about the brand

Steps to be taken :1. All 3 aspects of brand equity to be followed 2. Brand knowledge & differential effect should be addressed

REVITALIZING BRAND 1. Brand equity most valuable asset

2. Lesser known brands can be valuable

3. New brands costs lot of money

4. Revitalizing existing brand is worthful

GUIDELINES FOR REVIVAL OF A BRAND

1. Is the brand worth reviving ? 2. Take a long term perspective. 3. Carefully reposition the brand , invest in it , educate the market. 4. Correct mismanagement of the brand.

Is the brand worth reviving ? Criteria for revitalization :

1. Significant residual value 2. Examine all three aspects of brand equity 3. The revival cost must be comparable to the cost of new product 4. Measuring the level of awareness Brands with : singular focus well defined differentiation high premium

Take a long term perspective.

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

PURSUE A CAREFULLY DEFINED TARGET MARKET : Risk of shrinking over time , Risk of alienating the core customers and Appeal to divergent tasks with the same brand

Example :Levi’s Launched Dockers (business casual clothing) and Dockers became well known, after that Levi's removed its name

Created ByRahul Kalra, NSIT

During an internship by Prof. Sameer Mathur, IIM Lucknowwww.IIMInternship.com