The Homa Files

Takeaway: In light of recent economic conditions, consumers are arguably more focused on value than ever before. This, combined with the increasing power of national retailers, now limits consumer products and services companies’ ability to deliver differentiated benefits to customers.

Faced with these new competitive pressures, brand managers must form new strategies for connecting with their customers to reinforce the value of their brand.
 
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Excerpt from FastCompany, “Logos Get Lost in the Supermarket, Here’s Why” by Jamey Botter, March 11, 2010.
 
Logorama, the movie comprised entirely of animated logos, recently won the Oscar for best animated short film and is an excellent representation of the technicolor tapestry of branding that our world has become.

What would the world be like if there were no more brands to differentiate products, inspire us, or give us a good feeling about a company or product we’ve never tried before? I’m one who thinks it would be bad for brands to meld together into a homogenized mess, and I see that starting to happen in places. At the rate things are going, someday soon all brands will look like Walmart’s Great Value label.

Why is this happening? It’s partly because value is in great demand now, with unemployment still in double digits throughout parts of the country. It’s also because retailers are putting pressure on manufacturers to differentiate their brands inside their stores, so that a brand doesn’t look and act the same in one store chain as it does in another. If brands fold to this pressure, they become diluted and change what they really stand for. This erodes brand equity with consumers and eventually, retailers decide they don’t need certain brands anymore and can easily outsource the product cheaper themselves to increase their margins. So now those manufacturers are out, and jobs are lost. And so is the brand.

Private label brands grew at twice the rate of national brands over the last decade. Retailers like Walmart, Target and Costco are narrowing consumer selections everyday. Walmart recently took out Glad and Hefty storage bags to give more space to its Great Value brand. Walmart brought Hefty back, only after the company agreed to manufacture its Great Value bags.

That sort of manipulation will continue to happen unless brand managers, strategists, designers and manufacturers stand up to big-box retailers and reinforce the naturally differentiating attributes of their brands. They must build their brands so the retailer depends on them and the manufacturer, like the good old days.

Over the last 100 years, brands have played an important role in our society. The danger of private labels taking over the national branding landscape is the loss of meaning and value in the brands we love, prefer and recognize. Not only do our favorite brands help us distinguish product attributes, they inspire and motivate us, and give us a sense of individualism and choice.

If price is the only thing we as consumers are driven by, then sure, just make all the brands the same, Big Brother. But understand that what starts at retail can mushroom to other industries. Soon, we could all end up buying gas from one brand of gas station. Bank at one brand of bank. Wear clothes from one clothing company because they’re all alike anyway.

Edit by BHC
 
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Full Article:
http://www.fastcompany.com/1579214/when-private-labels-take-over-the-world
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Key Takeaway: As more facts become public, will the controversy around Tiger Woods’ recent accident damage his long-term marketability? More likely than not, the answer to that question will be a resounding no.

Woods’ ability to position himself in such a different way than all other golfers (and all other athletes, for that matter) will help keep him atop the appeal list for both fans and sponsors.

Furthermore, the fan that loves Tiger tends to be more forgiving than most. So you better believe the next time Tiger is being given a green jacket, all of Augusta will be cheering him on.

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Excerpted from Brandweek, “Tiger Woods’ Image Likely Unharmed by Accident” by Kenneth Hein, November 30, 2009

Smashed up, semi-conscious and bleeding may be how Tiger Woods was discovered three days ago. However, his reputation as a top brand endorser should remain relatively unscathed, according to sports marketing experts.

Allegations of infidelity and other stories that are currently swirling will not greatly affect his abilities as an endorser, said David Schwab, vp, Octagon Sports Marketing’s First Call and managing director of athletes and personalities. “If it’s only a spat and the story is what we’ve seen, then it doesn’t affect him,” Schwab said. “He is unique in terms of his global appeal, size and long-term ability. He’s not like a prime-time actor competing with 30 other competitors. He doesn’t compete with anyone.”

Woods’ target demographic, namely middle- to upper-class males, “tend to be a lot more forgiving,” said Larry McCartney, associate professor of sports marketing at Seton Hall University’s Center for Sport Management. “There are obviously rumors flying around all over the place at the moment, but he’s pretty much bulletproof.”

The only danger for Woods involves any offers that are currently on the table. “Right now if I’m a brand manager negotiating to do a global campaign, do I pull out because maybe it could get worse?” said Sturner. Still, “long term will it hurt? No. Look at Kobe Bryant right now. Look at the other stars that have had worse incidents that have dampened their reputations [and rebounded]. It’s about what happens on the golf course. That will make or break his marketing appeal.”

Edit by JMZ

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Full Article:
http://www.brandweek.com/bw/content_display/news-and-features/direct/e3i4c19162f98c24488bb3e623d9707c6ff

TakeAway: “When we say a thing or an event is real, we honor it. But when a thing is made up – regardless of how true it seems – we turn up our noses.”

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Excerpted from HBSP : Authenticity – What Consumers Really Want by James H. Gilmore and B. Joseph Pine II

Human beings have always been obsessed with the real and abjured the fake, the phony and the contrived.

In the mid-20th century, Jean-Paul Sartre extended this idea to personality, describing people so confused about their real selves that they lived “inauthentic” lives in self-deceived “bad faith.”

Consumers crave authenticity. If you don’t render authenticity, they will find someone who will, since this need for authenticity is intricately tied to self-image. No one wants to associate with a  “poser.”

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Authenticity evolves from experiences and transformations.

Experiences are memorable “inherently personal” events, like when the barista at Starbucks remembers how you like your cappuccino and makes it to order for you.

Transformations help customers change some aspect of themselves. Such offerings – for example, fitness centers or Weight Watchers – let consumers be the sort of people they want to be and feel good about themselves. With each purchase, customers close the gap between reality and aspiration.

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The are five “genres” of authenticity:

1. Natural authenticity – An authentic offering must feel natural, raw, of-the-earth, rustic, stripped-down and if possible sustainable, like organic food. For example, coffee beans and natural soaps are commodities, yet Starbucks and the Rocky Mountain Soap Company both render naturally authentic offerings.

2. Original authenticity – An original offering can be new (such as Apple’s iPod), but it can also be old (Coca-Cola) if it stresses its heritage as the first of its kind (“the real thing”).

3. Exceptional authenticity – Any offering can be exceptional, if it is done well, and with feeling. For example, consider the extraordinary services provided by Ritz-Carlton and Southwest Airlines. This doesn’t mean obsequiousness: The salespeople at Apartment Number 9, a Chicago clothing store, will tell you if the puce blazer you’re trying on makes you look fat. They sell not just clothes but also brutal honesty. Make your offering exceptional by stressing uniqueness, adopting a “craft” aesthetic (“good things take time to make”) or being “foreign” relative to the target market.

4. Referential authenticity – A referential offering evokes an “iconic” time, person, group or place. Imagine a Chinese tea ceremony or a visit to a sauna in Finland. If your referential offering is fake, make sure it is a good fake, like the art-filled Bellagio Hotel in Las Vegas, which evokes Bellagio, Italy.

5. Influential authenticity – To have influence, an offering must surpass utility to imply or provoke change. Think of green services, such as “eco-tourism,” or “three-word offerings,” such as “dolphin-safe tuna” or “free-range chickens.”

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In Hamlet, Laertes is leaving Elsinore for France when Polonius accosts him. The old man, worried how his son will conduct himself abroad, recites a litany of admonishments that culminates in wisdom both trite and strikingly wise: “This above all,” says Polonius, “to thine own self be true.” In doing that, he continues, “Thou canst not then be false to any man.”

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According to consultancy InterBrand …

 .  Top Ten Global Brands in 2009  . 
(and their estimated Brand Asset Value)

1. Coca-Cola 68,734 ($m)
2. IBM 60,211 ($m)
3. Microsoft 56,647 ($m)
4. GE 47,777 ($m)
5. Nokia 34,864 ($m)
6. McDonald’s 32,275 ($m)
7. Google 31,980 ($m)
8. Toyota 31,330 ($m)
9. Intel 30,636 ($m)
10. Disney 28,447 ($m)

For more, see …

Article:
http://www.interbrand.com/best_global_brands_intro.aspx?langid=1000

Full Report:
http://www.interbrand.com/images/studies/-1_BGB2009_Magazine_Final.pdf

Cool poster with Logos:
http://www.interbrand.com/BGB09/BGB2_POSTER_FRONT.pdf

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Excerpted from New York Times, “Brand Names Live After Stores Close”, by Amy Zipkin, April 14, 2009

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In the last year, a string of retailers have gone into bankruptcy — Sharper Image, Linens ’n Things, Circuit City and Fortunoff among them. But while the stores have disappeared, their names live on.

And the companies that have breathed new life into these brand names are, paradoxically, some of the same ones that had led the stores through their dying days — the liquidators.

Liquidators have bought the rights to use the names of Sharper Image, Linens ’n Things and Bombay, the onetime furniture retailer. The liquidators — who prefer to be known as asset recovery specialists — have also expressed an interest in buying the Circuit City and Fortunoff names.

Already, new merchandise with the Sharper Image name is available at retailers like Macy’s, J. C. Penney and Bed, Bath & Beyond. A new Web site for the Linens ’n Things brand, lnt.com, is up and running. In addition to the bedding and bath products the chain was known for, the site also carries toys, pet products and baby accouterments.

Liquidators spent about $175 million to acquire the Sharper Image, Linens ’n Things and Bombay names and predict a billion dollars a year in sales for Sharper Image and Linens ’n Things in each of the next five years.

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The value of brand names is being redefined, as “the liquidators are taking the definition of assets and extending them to the brands themselves.” 

The liquidators say they see themselves as brand licensing experts who will receive royalties for the products without the need to pay rent or a sales staff. “It’s not a capital-intensive business. It’s a royalty-driven business. It’s like an annuity.”

Those familiar with intellectual property rights say there is no guarantee that a revived brand will be successful after a retailer has gone under. The brands will compete with others that do not have troubled histories.  Still, with the recession continuing, merchandise with a familiar name may prove attractive to consumers.

Edit by DAF

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Full article:
http://www.nytimes.com/2009/04/14/business/14liquidate.html?ref=business&pagewanted=print

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Excerpted from New York Times, “Warm and Fuzzy Makes a Comeback”, by Stuart Elliott, April 7, 2009

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As the recession continues taking its toll, marketers are trying to tap into fond memories to help sell what few products shoppers are still buying. The time-machine tactics are primarily evoking four decades — the 1950s through the 1980s.

For instance, on April 20 a beverage unit of PepsiCo will begin an eight-week campaign for “throwback” versions of two soft drinks, Pepsi-Cola and Mountain Dew. The packages and formulas, along with advertising and promotions, will evoke the ’60s and ’70s.

The hope is that warm, fuzzy feelings about the past will help make people feel better about the present and future.

“In a time of anxiety, people are seeking out brands they’re comfortable with and they can trust.”

Those taking part in the trend acknowledge a potential pitfall of nostalgic pitches: They could lead consumers to believe a brand or product is outdated and therefore not for them.

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Hard times have frequently inspired fond looks in the rear-view mirror. There was a nostalgia boom during World War II, as evidenced by movies like “Meet Me in St. Louis” and songs like “Long Ago and Far Away.”

In the ’60s, the American Tobacco Company, now part of Reynolds American, introduced a filtered version of one of its first national cigarette brands, Sweet Caporal.

In the economic turbulence of the ’70s, there was a fad for nostalgia for the ’50s. The ’60s made a comeback in the ’80s and the ’70s were revived in the ’90s.

Edit by DAF

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Full article:
http://www.nytimes.com/2009/04/07/business/media/07adco.html?ref=media&pagewanted=print

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Excerpted from WSJ, “Miller Reprises an Old Theme” By David Kesmodel, Mar 20, 2009

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Beer giant MillerCoors, seeking to revive its flagging Miller Lite after a string of marketing missteps, is spending more than $100 million on a new campaign that features redesigned cans and bottles and new ads centered on the brand’s familiar theme: “Tastes Great.”

The campaign … is aimed at grabbing market share from leader Anheuser-Busch InBev and its top-selling Bud Light brand. While the new ads don’t attack Bud Light by name, they are clearly designed to persuade consumers that Miller Lite is the better-tasting brew …

Miller Lite, which introduced Americans to light beer in the 1970s, mostly has posted sales declines in recent years, and its performance has worsened under its new owner, a joint venture of SABMiller and Molson Coors Brewing … One problem is that Miller Lite has bounced from one ad strategy to another in recent years. “The brand has lacked a clear identity for so long … They just haven’t been able to find its voice” …

Now, MillerCoors, borrowing a page from Coors Light, says it will convey a consistent and straightforward message about the Miller Lite brand. That message will be built around taste … In a new twist on the “Tastes Great” theme, MillerCoors is rolling out ads that herald its “triple hops” brewing process, in which hops — the flowers that give beer its distinctive bitterness and aroma — are added to the beer at three different stages. The company says this gives the beer its flavor, “balance” and proper level of foam.

Miller Lite’s new “taste protector” cans will likewise tout the process. The cans have a lining on the inside to keep the beer from touching the aluminum, which can cause a metallic taste. The company also will promote new bottles with different labels as well as a “taste protector cap” designed to preserve the taste of the beer …

Highlighting the brand’s brewing process, however, carries the risk of backfiring with consumers, who are increasingly knowledgeable about beer ingredients. Light lagers like Miller Lite, have a low hops content, especially compared with many of the small-batch “craft” beers that are enjoying the industry’s highest growth rates.

“By overtly marketing their multiaddition hopping process, the consumer would presumably expect Miller Lite to be an overtly hoppy beer; it’s not” … MillerCoors also might find it hard to boost Miler Lite sales at the same time Coors Light sales are growing …

Miller Lite dominated the light-beer wars of the 1980s with its famed “Tastes Great, Less Filling” pitch. Miller Lite is now the No. 2-selling light beer in the U.S. after Bud Light, whose sales volume rose less than 1% last year … Coors Light, the nation’s No. 3 light beer, has been enjoying healthier sales growth than either Bud Light or Miller Lite.

MillerCoors won’t disclose how much it plans to spend on the new ad campaign this year, but Mr. England said it would be “well north of $100 million” …

Edit by SAC

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Full Article:
http://online.wsj.com/article/SB123750883420290503.html

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“Excerpted from WSJ, “Mr. Clean Takes Car Wash Gig” By Ellen Byron, February 5, 2009

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Now Procter & Gamble Co. wants to wash your car. The giant manufacturer of household staples including Pampers diapers, Crest toothpaste and Gillette razors is forging a new business model: franchising car washes.

To jump-start plans for a nationwide chain of Mr. Clean Car Wash franchises, P&G in December acquired the franchise assets of Atlanta-based Carnett’s Car Wash, which has 14 locations.

“We need to look for new opportunities to allow us to grow,” says Bruce Brown P&G’s chief technology officer. “That isn’t limited to things within our current business model.”

P&G is under mounting pressure to find new sources of revenue growth, particularly as more cash-strapped shoppers think twice about buying its premium-priced products. Wall Street is increasingly skeptical that the mammoth company can garner meaningful gains in its slow-growing product categories and a tough economy.

Procter & Gamble has been quietly experimenting with service businesses in recent years. Since 2007, it has operated two Mr. Clean Car Washes  … Professional car washing, which rings up about $35 billion in sales a year in the U.S. won out as the company’s first major franchise push. “We want to blow this out to a national network of car washes,” Mr. Brown says.

The car-washing business has a handful of competitive advantages … It lacks a dominant national chain, aging baby boomers are reluctant to wash cars themselves and more water-strapped communities are pushing professional car cleaning as a conservation measure …

Procter’s previous attempts at entering the service industry have failed. In 2000, P&G operated a laundry service called Juvian Fabric Care, which it sold in 2003. Other efforts at company-owned stores, including one called Culinary Sol, also fell short …

P&G marketers are also eager to see if Mr. Clean Car Washes dotting roadways will help boost the image and exposure of the overall brand … Unlike most franchise start-ups, which require enormous marketing investment, Mr. Clean Car Washes come with a 51-year-old brand name, which P&G hopes will lure potential franchisees …

P&G, which scrutinizes shoppers down to the seconds it takes to notice a bottle on a store shelf, says it will offer franchisees detailed information about car-wash locations, consumer targeting and advertising response rates …

Edit by SAC

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Full Article:
http://online.wsj.com/article/SB123379252641549893.html

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Excerpted from the New York Times, “Sharper Image Stores Are Dead, but the Brand Goes On”, by Eric Taub, January 18, 2009

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The Sharper Image, which filed for bankruptcy protection last February and closed all its stores, was purchased by private investors for $49 million in May. Since then, the company has reconstituted itself (minus the stores) to become a “global lifestyle brand licensor.”

Rather than operate its own Web site, catalog and shops, the company will license products and sell them through third-party retailers. It has struck deals with HoMedics, a manufacturer of health and grooming products, luggage maker EnE and others to produce new products.

The company is also trying a new approach for these difficult times: affordability.

The problem for the original company was that its stores had plenty of lookers but, because of its high prices, not enough buyers.

“Sharper Image was an aspirational brand. While people wanted the products, not enough could afford them. Now we can be in Best Buy, Bed Bath & Beyond and midtiered department stores,” an executive noted.

The new company, which has fewer than 10 employees, kept five of its original product licensees. It currently has the Sharper Image name on 40 furniture and accessory products sold in OfficeMax stores. Its big push will come at the end of this year, when it releases “hundreds” of new, less-expensive products in partnership with 12 unnamed partners.

Edit by DAF

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Full article:
http://www.nytimes.com/2009/01/19/technology/companies/19sharper.html?ref=technology&pagewanted=print

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Excerpted from BusinessWeek, “Brands: Moving Overseas to Move Upmarket” by Jack Ewing, September 18, 2008

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You could call them David Hasselhoff brands. The onetime star of the TV series Knight Rider resuscitated his showbiz career in the late 1980s with a hit single in Germany, becoming a symbol of unlikely overseas reinvention. Long before Hasselhoff, smart marketers knew that brands could acquire new personalities when they crossed borders.

Products have to move upscale when they travel in order to justify the higher costs of exporting. But thanks to the Internet and cheap air travel, word gets around if a company overdoes the upgrade. Gap, known for cheap chic in the U.S., failed as a premium brand in Germany. AmBev’s Stella Artois, a distinctly working class brew in Britain, has struggled to achieve the same premium image in the U.S. as Heineken. “If the differences in positioning are too big, you risk destroying the brand,” says Andreas Bauer, a partner at Roland Berger Strategy Consultants who specializes in consumer goods.

The master of overseas reinvention may be Yum! Brands.  The company owns Pizza Hut, KFC, Taco Bell, and several other venerable brands, all of which are surging overseas. KFC is closing stores in the U.S. but has been building them in China at the rate of almost one a day—148 through June, for a total of more than 2,700.

In China and other overseas markets, Pizza Hut is fashionable and booming.  When Cui Tao, a 24-year-old resident, was looking for that special place to take his girlfriend on Valentine’s Day, the choice was obvious: Pizza Hut. They had to wait an hour for a table, and the meal cost more than a quarter of his monthly income, but it was worth it.

Part of the secret, company execs say, is to offer a mix of standards with local favorites. So KFC in China sells not only its trademark fried chicken but also breakfast rice porridge. Pizza Hut in India offers a tandoori topping. “The fast-food and casual dining markets in the U.S. are crowded,” says Graham Allan, president of Yum! international operations. But in places like Brazil or even France, he says, “we still have massive room to grow.” 

Edit by NRV
Full article:
http://www.businessweek.com/magazine/content/08_39/b4101060110428.htm 

Excerpted from BrandWeek, “Why Starbucks Has Ground To A Halt” by Robert Passikoff, Nov 10, 2008

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Maybe you haven’t read Moby-Dick, but you’ve surely read about a character named Starbucks. It’s not a happy tale…most of its brand awareness is based not on the perfect brew, but on ill-considered breakfast sandwiches, falling stock prices, store shutterings and various attempts to boost sagging profits. Of course, Starbucks has by no means disappeared…but the Starbucks brand is facing the danger of obsolescence…

The reason for the troubles is that management ignored all the things that made customers loyal to the brand…How could the brand masters in Seattle have let this happen?…Starbucks stores were popular—and packed. So, out went those cool, comfy couches (how better to make way for lines of loyal customers?).

And of course, the service had to get faster, so why take time to grind all those annoying coffee beans? Hand-pulled shots also held up the clock, so they went bye-bye, too…the grinders stopped grinding, the shops lost that nice coffee smell…Vanished along with it was the reward of the custom experience…

In an internal company memo leaked in 2007…Howard Schultz himself admitted the streamlining that enabled the chain to grow to 13,000 units had “watered down” the brand. “Stores no longer have the soul of the past,” Schultz wrote…

Starbucks … had walked away from a successful brand position and a differentiating recreational experience and toward a door marked “Lifestyle Brand”…

Neither categories nor consumers are constant. Reasons for customers’ loyalty change, as do customers themselves. Starbucks failed to remember than the interaction that takes place between customers and categories is not static, but sophisticated and evolutionary. Not only did Starbucks help to create its category, it was responsible for educating the public about using it. Yet as…customers grew more sophisticated, the category morphed…Competition increased. Soon, a Starbucks-comparable mocha latte could be had most anywhere in the United States.

What had once been a treat is now an expectation. That’s exactly why, now, people won’t think twice about walking in for a really swell morning brew—at McDonald’s.

Edit by SAC

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Customer satisfaction drives customer loyalty and customer loyalty drives profits.  Starbucks attempts to increase revenue simultaneously had a negative impact on customer satisfaction.  The result? Starbucks profit was down 97% for the most recent quarter vs. 2007 and began closing stores in 2008.  The chain has recently introduced rewards programs to promote customer loyalty and combat this decline. 

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Full Article:
http://www.brandweek.com/bw/content_display/current-issue/e3i431ca797a370fbb20c4f3afe57081788?imw=Y

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Excerpted from BrandChannel “German Engineering Drives Global Brand Success” by Barry Silverstein, November 24, 2008

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Of Interbrand’s Top 100 Global Brands in 2008, ten were German brands…Germany itself was ranked the best overall “country brand” in the 2008 Anholt-GfK Roper Nation Brands Index, which measures the world’s perception of each nation as if it were a public brand….The United States, the world’s leading branding powerhouse, ranked seventh…

So what is it about German brands…that is so special? Two words might be all the explanation that’s required: discipline and quality.

German companies are highly disciplined in their approach to creating, introducing and selling brands. They have the ability to consistently produce exceptional-quality products that are of lasting value…Makers of German brands are less interested in competing on price and more on making products of superior quality…

Germany’s brand exports have a long, celebrated history of excellence, regardless of industry segment. The country’s automobile brands are the ones consumers most closely associate with the country’s branding acumen…

There is ample evidence that Germany’s branding power extends beyond automobiles. NIVEA…was voted the most trusted skin care brand in 15 countries… Adidas…is an 80-year-old company that today is a global leader in sports footwear, apparel and accessories…SAP is the world’s largest business software company…

Other well-known global brands, from Bayer to Becks to Boss to Braun are a testament to the fact that Germany is, and will continue to be, a prolific producer of some of the world’s finest products. It’s Germany’s disciplined approach to quality that inspires consumer loyalty to German brands.

Edit by SAC

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Whether it is beer or automobiles German brands are perceived to deliver a superior level of quality.  The real strength of German brands however is the consistency in which the brands have deliver on this promise of quality.  Establishing credibility through consistency is essential not only for country brands, but for brands in general.

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Full Article:
http://brandchannel.com/start1.asp?fa_id=451

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Excerpted from Knowledge @ Emory “The Mystery and Motivation of Valuing Brands in M&A“, November 13, 2008

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in 2000 Cadbury Schweppes bought the Snapple brand of drinks, justifying the purchase to its board by saying that Snapple would be a wonderful addition to its product line and could be sold through its established distribution channels. Cadbury could successfully launch this small-town brand into the big time.

Quaker Oats, a previous owner of the Snapple brand, had given the same reasons for wanting to buy the brand—and yet, Quaker had failed to build the Snapple brand to any measure of its aspirations.

Brand valuation takes on a special significance in M&A, when both acquirer and target contribute inherent qualities that fuel brand value. “For example, Procter & Gamble (P&G) acquired Gillette and about 49% of the acquisition was attributed to the Gillette brand.”

Emory researchers. … set out to study the contributing traits of both the target firms and acquiring firms to explain the value given to a brand…They were able to determine the capabilities of both the acquirer and the target and how those, in turn, influence brand value…

Study results show that both acquirer and target marketing capabilities, as well as brand portfolio diversity have positive effects on a target firm’s brand value. Both parties’ capabilities are critical. 

Regarding brand portfolios: “If there’s redundancy in your portfolio, then your valuation is likely to be lower…if you’re acquiring a brand that allows you to get into a whole new market, then your valuation would be much higher.”

“Target firms need to recognize the significance of a firm’s marketing capabilities as well as its brand portfolio diversity…Targets with strong marketing capabilities can negotiate higher prices for their brands because the target’s marketing capabilities provide assurance to the acquirer firms in terms of the future performance of its brand portfolios. Targets with diverse brand portfolios can charge higher prices for their brands because diverse portfolios provide strategic options for the acquirer”…

Edit by SAC

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Full article:
http://knowledge.wharton.upenn.edu/article.cfm?articleid=2091
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Excerpted from Brandchannel, “Brand Darwinism: When & Why Brands Falter & Die” By Barry Silverstein, Dec 22, 2008
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Much like living organisms, brands have a lifecycle…While some brands stand the test of time, others fade away soon after they come to market. What happens when it’s time for brands to die, and why?

A primary reason for brand fragility is the very nature of the brand world. Consider this: in 2006, over 20,000 new products were introduced just in the food and beverage category…While many new products may be extensions of an existing brand, imagine the number of new brand names embedded in that statistic… Fewer than 10% of all new products and services produce enough return on a company’s investment to survive past the third year…

Despite these enormous challenges, there are timeless brands that not only survive but thrive for decades. These brands remain relevant to consumers, and they consistently capture enough market share to prosper, even in tough economic times. But what about the brands that falter?

Some companies intentionally kill off older or weaker brands as part of their brand strategy. Ice cream maker Ben & Jerry’s is a case in point…the company regularly discontinues ice cream flavors in an effort to keep their stable of brands fresh and relevant…Ben & Jerry’s may treat the brand lifecycle with irreverence, but marketing managers at other companies who are forced to kill off a brand are likely not amused. After all, they invest considerable corporate resources in the brand launch. And their budgets—or maybe even their jobs—could become vulnerable when a brand dies…

The same kinds of painful decisions will soon by made by recently bailed-out American automobile manufacturers. The Big Three currently market over 100 different car and truck models through 15 different brands in the US…The problem for G.M. and other companies that must eliminate popular, long-standing brands is complex. While consumers may intellectually understand that brands don’t last forever, they get emotionally attached to them…

Another major reason brands die is the continuous upheaval that occurs in the brand world…when business conditions change. One of the most notorious contributors to brand mortality is business mergers and acquisitions…Each time a merger or acquisition occurs, a brand with a history, a significant market presence and a loyal following may disappear…

Whether it is declining sales, poor economic conditions or corporate mergers, brands will continue to die off, and some consumers will grieve their loss.

A recent he latest branding wrinkle is the marketing opportunity dead brands represent. In 2008, for example, Kellogg reintroduced a cookie brand called Hydrox, a competitor to Oreo that was discontinued in 2003…Kellogg may have decided it was less expensive to revive an old cookie brand with name recognition than launch one anew.

Apparently, reintroducing dead brands is a legitimate business…So don’t be surprised if, when a brand dies, you see it come to life again someday.

Edit by SAC

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Full Article:
http://www.brandchannel.com/start1.asp?fa_id=455

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