FC1/BM/Group1 Brand Failures

Brand Failures 2011

Name Phone E-mail Signature

Aakanksha Aggarwal 9811360886 aakankshaggarwal@gmail.com

Deepa Patra 9718442268 deepa_patra17@yahoo.co.in

Rahul K. Sharma 8882196767 rahul.kr.sharma786@gmail.com

Shanky Saha 9953182669 shanky3008686@gmail.com

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Brand Failures 2011

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A name, term, design, symbol, or any other feature that identifies one seller's good or service as distinct from those of other sellers. The legal term for brand is trademark. A brand may identify one item, a family of items, or all items of that seller. If used for the firm as a whole, the preferred term is trade name.

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A brand is a product, service or concept that is publicly distinguished from other products, services or concepts so that it can be easily communicated and usually marketed.

Product and brand failures occur on an ongoing basis to varying degrees within most product based organizations. The primary goal is to learn from product and brand failures so that future product development, design, strategy and implementation will be more successful.

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Introduction

Brands

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Benefits of Studying Failures

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Gaining a better understanding of product failures is important to help prevent future failures. Studying the history of product failures may generate some insight into the reasons for those failures and create a list of factors that may increase the opportunity for success.

Studying product failures allows those in the planning and implementation process to learn from the mistakes of other product and brand failures. Each product failure can be investigated from the perspective of what, if anything, might have been done differently to produce and market a

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successful product rather than one that failed.

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A product is a failure when its presence in the market leads to:

The withdrawal of the product from the market for any reason.

The inability of a product to realize the required market share to sustain its presence in the market.

The inability of a product to achieve the anticipated lifecycle as defined by the organization due to any reason

The ultimate failure of a product to achieve profitability.

Common Reasons for Product Failures:

High-level executive push of an idea that does not fit the targeted market.

Over estimated market size.

Incorrectly positioned market.

Ineffective promotion, including packaging message, which may have

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used misleading or confusing marketing message about the product, its features or its use.

Not understanding the target market segment and the branding process that would provide the most value for the segment.

Incorrectly priced – too high and too low.

Excessive research and product development costs.

Poor timing of distribution.

Misleading market research that did not accurately reflect the actual customer’s behavior for the targeted segment.

Conducted market research and ignored those findings.

Key channel partners were not involved, informed, or both.

Lower than anticipated margins.

Something happens to break the bond between the customer and the

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brand.

Continued…

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Six Deadly Sins of Branding:

Brand Memory Loss For old brands memory becomes an increasing issue. When a brand forgets what it is supposed to stand for, it runs into trouble. One of the most obvious situations where brand memory loss occurs is when a long-standing brand tries to create a radical new identity. For example, when Coca cola tried to replace its original formula with New Coke.

Brand Egotism Brands sometimes develop a tendency for over-estimating their own importance and their own capability. This is evident when a brand believes it can support a market single-handedly, as Polaroid did with the instant photography market. It is also apparent when a brand enters a new market for which it is ill suited, such as Harley-Davidson trying to sell perfume.

Brand Deception Some brands see the whole marketing process as an act of covering up the reality of their product. In extreme cases, the trend towards brand fiction can lead to a downright lie. In an age where markets are increasingly connected via the Internet and other technologies, consumers can no longer be deceived.

Brand Fatigue Some companies get bored with their own brands. This can be seen happening to products, which have been on the shelves for many years, collecting dust. When brand fatigue sets in creativity suffers, and so do sales.

Brand Paranoia This is the opposite of brand ego and is most likely to occur when a brand faces increased competition. Typical symptoms include:

ü A tendency to file lawsuits against rival companies.

ü A willingness to reinvent the brand every six months.

ü A longing to imitate competitors.

Brand Irrelevance When a market radically evolves, the brands associated with its risk becoming irrelevant and obsolete. Brand managers must strive to maintain relevance by staying ahead of the category, as Kodak is trying to do with digital photography.

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Onida Candy: RIP(1999 – 2002)

Candy is a sad brand story. This unique brand is a classic case of entire marketing mix gone awfully wrong. A good idea killed by poor marketing strategy. Or is it a failure because the brand was ahead of its times?

Candy is the 14-inch Color TV launched in 1999 with much hype. In the early 90's the Indian brands were ruling the roast with no serious external competition. Then came the rush of Global brands to the Indian market. The market began to get crowded and technology no longer was the key differentiator. Candy was a serious effort from Onida to invent a new segment in the crowded undifferentiated TV market.

Candy was truly a Color TV, in the market where all TVs were either black or grey. Candy came in variants of four colours. The concept was good. Have a TV, which is colorful and target young customers.

Candy was conceptualized based on certain customer insights. The young customers wanted to watch TV on loud volume, which often created irritation with the grown ups. Hence, why not have a TV, which has a wireless headsets ensuring privacy to the audience. The managers thought that the attractive colors on the cabinet and the cordless headset would act as a differentiator. Candy came in four colors: Berry Blue , Mint Green , Lemon Yellow and Cherry Red.

I feel that the brand managers were too ambitious about Candy. The brand was priced well above the existing 14-inch televisions. Candy was launched at a 40 % premium over the other brands with the thought that customers would be willing to

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pay a premium for the differentiators that Candy offered. But the brand failed.

In fact during 1999- 2001, the brand was selling like hot cakes but later the sales slipped. Ultimately Candy was no longer there in the market. What went wrong?

As mentioned above, Price was obviously the villain. The small TV market was the most price sensitive one and customers were not willing to pay 40 % premium for color alone. The brand failed to convince the TG on the value proposition of the brand.

There was a segmentation issue as well, which played as a spoilt sport. Candy was not focused on the TG because somewhere the brand wanted to attract the replacement market (New TV for Old) rather than positioning itself as a second TV. This put additional volume pressure on the brand, which was at best a niche brand.

Because of the blurred segmentation, positioning also suffered. Instead of positioning as a youthful vibrant brand aimed at the youth, Candy was struggling to find the right positioning. It was trying to compete with the large TVs instead of creating a new segment. More over, reports suggest that the four colors were not enough to create a vibrant brand. Some customers felt that the colors are too dull to pay a premium for.

In 2001, Candy came out with a variant Candy Duet, which had two colors. The brand made a big mistake by introducing a 20-inch variant further diluting the brand.

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Candy when it was launched was touted as the Apple (brand) of televisions. It was expected to do what Apple did to the computer industry. The brand was to take aesthetics as the main attribute and revolutionize the market. But it neither had the aesthetics of Apple nor had the staying power. Candy is a case of poor marketing execution of a good product concept and an idea that could have carved a place in the market on its own. Onida had big plans for the brand. It planned to take Candy to the level of a multimedia brand but could not sustain the initial success. It failed to understand the value proposition of its consumers nor was it able to create a meaningful and sustainable differentiation. Somewhere in 2002-2003, the brand was quietly laid to rest.

Ambassador: Marketing Myopia

Ambassador can be called as the first Indian car. Although the car has a

British legacy, it is considered as definitive Indian car. Ambassador was born in 1958. The car owes its design and technology to a British car model - Morris Oxford which was built by Morris Motor Co at Oxford UK. Hindustan Motors launched the Indianised version of Morris Oxford as Ambassador in 1958.

From 1958 to 1980's Ambassador ruled the Indian market. In fact there were only two cars in the Indian market - Premier Padmini and Ambassador. The license raj, lack of capital and the unfriendly Indian economic policies ensured that no automobile manufacturers entered the Indian market.

1983 saw the emergence of a new era in the Indian car market. Maruti Udyog Ltd launched the Maruti 800. Soon Ambassador lost its leadership position to Maruti. The family segment, which is the largest segment in the car market, embraced Maruti. Ambassador was reduced to a marginal player within no time.

But Ambassador had some advantages over 800, which made it dearer to certain segments. It was the only Indian car with a diesel option. During those times, there was a significant difference in the prices between diesel and petrol. The second advantage was the space and sturdiness of Ambassador. These two factors enabled the brand to become popular among big families and more importantly among the taxi and tour operators.

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Ambassador was perceived to be a sturdy car ideal for Indian roads. The brand also had a positive perception of being less expensive to maintain. These two were only perceptions. As a matter of fact, Ambassadors were expensive to maintain and even though the car looked sturdy and well built, the car lacked quality and refinement. Rattling sounds and rusting were common complaints.

But consumers bought the car because of the significant economy of diesel cars, which made consumers, compromise on other parameters.

Another significant customer for Ambassador was the Government. Over 16 % of the brand sales came from the Government. Ambassador was the first choice for most bureaucrats. Ambassador used to be the Prime Minister's car till 2002. That status was lost when the then PM, Mr Atal Bihari Vajpai replaced Ambassador with a BMW Limo.

Soon the officials also lost interest in the brand. With the emergence of new and better models from other automakers, there was a significant drop in the orders from the Government.

The fall of Ambassador from a leadership position to a marginal player is a classic case of marketing myopia. For four decades, the brand has been taking its customers for granted. There are many reasons that can be attributed to this brand's failure. The fundamental issue was with the product and price.

If we look at the product, Ambassador never changed with the times. The brand made many cosmetic changes from 1958-2000 and three upgrades were made and named as Mark II, Mark III and Mark IV. There was no significant value addition between these upgrades. The look and the built quality remained the same. A major change happened when the brand introduced a 1800 Isuzu engine. The Ambassador with Isuzu again lifted the sales of the brand. But the euphoria was short lived.

The apathy of HM to offer product changes in tune with the times made the brand stale. Second factor that failed for Ambassador was the price. HM never bothered to rationalize the price of the brand. Even now Ambassador costs more than Rs.480,000. At that price one could afford a more luxurious Indigo sedan.

According to reports, the HM plant had achieved full depreciation in 2000. But the company did not think of passing on the reduced cost to the consumer. Had the company rationalized the price of Ambassadors in 2000, the brand could have survived the competition.

The nail in the coffin came with the launch of Indica. Indica took away the taxi car market from Ambassador. Again the diesel loving individual consumers had a better affordable modern car as compared to the ageing Ambassador.

In order to lift the sagging sales of the brand, HM launched a radically designed Ambassador variant, Avigo in 2004. Although the styling was radical, the customer response was lukewarm.

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Indian consumers are now spoilt with choices. The competition is immense and the quality of cars has also gone up. Consumers now have new set of purchase considerations like quality, brand, drivability, luxury, cost of maintenance, etc.

In the value proposition domain, Ambassador is never in the radar of the consumers. The narrowing price difference between petrol and diesel also eroded the value of investing in an old dated Ambassador.

The company also has never invested in the brand. Without investing in either brand or product, HM had sealed the fate of the brand.

The question that arises is could a brand like Ambassador maintain its position Indian market despite all the competition? In the brand management perspective, its suicidal not to continuously invest in a brand. Often heritage brands wait till it becomes dated. Once the brand becomes dated, its virtually impossible to rejuvenate the brand. The task is to prevent the brand from becoming dated. For that the brand has to go to the consumer for ideas. Changes in product or promotions can sustain the brand even in the light of emerging competition. Brands like Lux , lifebuoy, Surf has been successful because of continuous investment in branding and product development.

Ambassador should have learned from Maruti 800. The brand lasted longer because it made changes along with the changing consumer values. Also, the brand rationalized its price in the light of emerging competition, which made Maruti 800 relevant even in the current market.

I am not saying that Ambassador had the potential to become an iconic brand like Volkswagen Beetle. But the brand could have been relevant to Indian market as a basic family car. It is a herculean task to bring Ambassador back to life. A price below the price of Indica is the only option for the brand to keep its fortunes alive.

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Tamariind: RIP (2001 – 2002)

Tamariind was a brand, which died inside the TV tube. It existed in the Indian market for a year only. It was the readymade brand from the textile major, S Kumar's Ltd. The company wanted to tap the emerging readymade segment. It was targeting the middle and upper-middle class segment.

The brand had a dream launch. It had roped in Hrithik Roahan, who at that time was a phenomenon. Riding on the pulling power of Hrithik Roshan, Tamariind had a huge brand recall during the launch. In fact the ads were so effective that large retail chains were stocking this brand within a few days of launch.

However, the euphoria did not last long. For some strange reasons, the brand was dead in no time. In 2002, the brand was out of the retail shelves.

The brand was positioned as fashion wear. The famed London based designer John Paul Vivian designed the clothes. The brand carried the tagline, "The Flavour You Wear". It was designed to be a fun, fashionable and trendy brand.

It also brought in the concept of Total Wardrobe Solutions by providing all types of clothing to its target consumers.

Initially the company planned to use the brand name Cinnamon for its readymade venture. But a retail chain having the same brand name moved to court and restrained S Kumars from using Cinnamon. That caused the company to come up with the new brand name -Tamariind.

So, here is a brand, which had a trendy name, a big star, an international designer and a reputed company. How does such a brand fail, that too so quickly?

There are three major factors, which were causes for the brand's failure - price, distribution and differentiation.

Price was a critical issue in this case. Tamariind was steeply priced and this repelled many potential customers. Those who bought the brand could not be convinced about the quality, which did not justify the steep price.

The brand also tried to focus more on exclusive outlets, which again severely restricted its reach among the audience.

Tamariind spent around Rs.12 crore on the launch promotions but could not sustain or convert the initial hype into sales. The brand ambassador, Hrithik also faced so many flops after the initial success which in turn affected the brand negatively.

Other than the brand ambassador, Tamariind had nothing to talk about. The product did not have a meaningful differentiation that could justify its high price. When a brand is aiming at the premium class, the product should have some meaningful qualities that will justify the premium. A mere presence of a celebrity will not create a sustainable value for the product.

P.S. Tamariind has two "i" s and is not a spelling mistake.