A brand can be defined as the term, name, symbol, design or other features that identifies the goods or services of a seller as distinct from those provided by other sellers. In the past, branding had been used to differentiate a person’s cattle from others people’s by use of a distinctive symbol that was burned into the skin of the animal using a hot iron stamp and this branding was adopted in business, advertising and marketing. An example of a modern brand is the Coca Cola which is owned by the Coca-Cola Company.
Brands are usually the most valuable assets of Corporations. The owners of the brands carefully manage their brands so as to create shareholder values. Brand valuation is one of the management techniques which ascribes money value to a specific brand and also allows the marketing investment to be properly managed in order to maximize the shareholder value. Corporations consistently invest in creating, nurturing and also maintaining their brands through financial investment, good reputation creation and investing managerial resources. Corporations also work hard in creating strong customer loyalty by promoting their unique brands.
An example is General Motors (GM) which is one of the biggest automotive corporations in the world. General Motors has developed some of the most treasured brands such as the Cadillac, Saturn, Chevrolet and Pontiac. For more than four decades, General Motors has been investing to create a widespread network of dealers, advertising campaigns and other activities to help in building customer loyalty to all its brands. Amazingly enough, instead of the corporation growing the brands, it went on to do the unthinkable which is kill its brands.
Even though brands are valuable to corporations, they can become strategic liabilities over a period of time under different situations. In such circumstances, corporations have to choose between reviving the brands and killing the brands so as to ensure that the other brand portfolio and corporate brands are not affected negatively.
Apple Computers had introduced an early product that was referred to s the Newton Computer which is an early version of the tablet computer. The Newton Computer quickly acquired a cult status but despite this cult status, the Apple Corporation went on to discontinue this product.
The Harley Davidson introduced a lighter version of it bikes to respond to the onslaught of the Kawasaki and the Honda bikes in the United States market. These lighter bikes got a great traction in the motorcycle market, however finally the Harley Davidson made a decision to stop producing such bikes.
The Coca-Cola Company acquired the high popular soft drink in India called the Thumbs-up. In spite of the huge following in India, Coca-Cola Company made a decision to kill that brand. There was a huge public remorse for the removal of the product in the market by the company and as such, the company was force to launch back the product in to the market and now, Thumbs-Up is one of the star brands in the Indian Coca-Cola’s brand portfolio.
As seen in the above examples, brand killing can vary along a wide range. At its very core, killing of brands refers to the removal of a certain brands from the market. Corporations may decide to remove the whole line of products that are within the product brand as the General Motors did when they killed the Saturn brand. Also, corporations may decide to pull back some variant of a product selectively as it was done on the lighter bikes of Harley Davidson.
Reasons for branding
Most corporations usually kill their brands so as to respond to the external or/and internal issues. Corporations have cycles of killing their brands so that they are able to stay current with times and also set themselves before the competition. Corporations also utilize the killing of brands as a marketing strategy to hide previous malpractices and this helps in shedding the negative connotations that can negatively affect the profitability of the corporation. This is due to the reason that once a certain brand acquires negative connotation, it can only result to reduced profitability and even possibly complete the corporate failure.
Differentiation from competitors
Corporations use brands to differentiate themselves from their competitors. Differentiation from the competitors is very crucial as it helps in attracting more customers and also as an effective means of drawing more desirable employees. This necessity to differentiate is more prevalent in the markets that are more saturated such as those in financial services industry.
Elimination of negative image
Companies come up with new brands for purposes of shedding negative image that may be formed in the past. In the year 2008, the image of AIG was greatly damaged due to the need of a federal bailout in the financial crisis. It was then bailed out for the reasons given by United States Treasury that, AIG was a very big firm for it to go down due to the size and the complex relationship with the financial counter parties. This bailout left AIG with a negative image and so as to remove this image, the financial advisors of advisors of AIG branded it into VALIC (Variable Annuity Life Insurance Company) and Sagepoint Financial so as to remove the negative image that had been associated with the previous AIG.
Assistance to the small businesses
The small businesses usually face some challenges that are from the large companies and as such they must strategically place their branding strategies. Instead of implementing a gradual change, the small businesses can be better served by branding their image for shorter time frame more so if the existing brand disrepute is low. The power of a first impression on the new customers made possible by the professionally created brand design will most often outweigh the poorly-designed or an outdated image of a brand to the existing customers.
Changing brand image for the large corporations can have negative repercussions due to the costs involved (updating the signs in the many locations, communication to the huge number of its employees, large amounts of the existing collateral, etc.) compared to the small businesses which able to enjoy mobility because they are able to implement changes more quickly.
For the reason that the small businesses are able to experience some significant growth even without necessarily having to professionally design their brand image, branding therefore becomes an important step for the businesses which is to be seriously considered when expanding to markets that are more aggressive and when facing the competitors that have brand images that are more established in the market.
Reasons for killing a brand
Most brands don not actually make money for the corporations. The earlier 80:20 rule has been said to be more exaggerated especially in the business of consumer packaged goods. Most of the companies generate between 80 to 90% of their brands. An example is the Nestle Company which marketed for more than 8,000 of its brands in a 190 countries the year 1996. Most of its profits at the time was generated from only about 200 brands which is about 2.5% of the company’s brand portfolio. Most of the companies lose their money or hardly break even on their brands that are less popular. A good example for this is The Unilever Company that had more than 1,600 brands in its brand portfolio in the year 1999. Only about 400 brands of the total brands were profitable for the company while the other 1,200 brands were generating losses or were hardly squeaking profits.
Some companies do not realize that they incur a large amount of hidden costs by placing many of their brands in a similar category. The companies end up suffering from a dis-economy of scale. It is therefore the reason that some of the corporations have ended up deleting not only the brands that generate losses, but also those that seem to decline, minimally profitable or weak. As a result, resources are freed for the companies and channeled to the profitable brands making the brands better and even more attractive to the customers. The companies are therefore able to serve their clients on the whole.
Corporations kill their brands under several circumstances. The following are some of the main reasons.
Financial contribution of the brands
One of the most common reasons as to why corporation result to killing their brand is the financial contribution of that brand in brand portfolio of the corporation. The process of building, maintaining and nurturing brands over a long period of time can be an extremely expensive affair and returns are expected from the process in the long run.
In the circumstances that these brands do not gain competitive standings in the market industry, fail to create a significant loyalty to the brand and when they fail to generate the expected revenues as compared to the expenses incurred, corporations have a very easy decision to make no matter what has been spent on the brand.
The branding contribution of the brand
Corporations would also result in killing their brands due to their extreme profitability as was seen in the case where Coca-Cola killed the Thumbs-Up brand in India. In such circumstances, the reasons are not due to the brand’s financial viability but the compatibility of that brand in the overall portfolio of the brand.
First, the brands may be an external addition to the original brand portfolio. When a corporation acquires a certain brand, it may have a different personality and image and as such the brand may not fie to the overall brand portfolio of the corporation that is acquiring it. When the identity of the brand portfolio or the corporate brand has shifted to some different identity and the brand cannot fit, then the compatibility of the brand portfolio and the brand itself ends up suffering. This is more common in the technology industry.
Despite the high popularity of the Newton Computer by the Apple Company, the product was perceived by the corporation as stuck in time. Due to the improvements in technology, the Apple Company had aggressively moved on to slicker and newer technology. Following this move, an association of the Apple’s corporate brand with the Newton Computers would result to negative impacts. Consequently, the Apple Company ended up killing up the brand even though it might have been lucrative in financial terms.
Secondly, the brand that is killed may have been viewed as a competitor to another brand in the market and the corporation may want to reduce cannibalization. For example, when the Coca-Cola Company got into the market of India, Thumbs-Up was the leader in the market for soft beverages. Given its market prowess, Coke went on to acquire the leading brand so as to gain strong grounds in the Indian market.
Nonetheless, if Coke was to gain the market shared, then it had keep just a single corporate brand. The Thumb-Up product was viewed as a direct competitor and therefore despite its popularity, the Coca-Cola Company had to kill the Thumbs-Up brands. Over a period of time, Coca-Cola attained a strong market presence and as such it launched the Thumbs-Up products which got a positive reception by the customers.
The way to kill a brand
Most corporations are faced by the challenge of knowing how well they can kill a brand without them going through major setbacks. Brands are systems which have their communities and made up of the loyal customers with their meaning for the different customers in many the many scenarios. Moreover, when corporations come up with decisions to kill brands, they must ensure that they do not send their customers away but should transition these customers into the different brand that they come up with. As such, irrespective of the reasons the corporation has for killing its brands, the corporation should carefully tread this strategic action. The following are two strategies for corporations to kill brands while at the same time retaining its customers.
Transition through promotional selling
The most crucial part of brand killing is making sure that the firm does not lose its customers in the process. Following this, transitioning the customers to the other brands in that brand portfolio is very important. Promotional selling is one of the strategies used to achieve such a transition. Each time a corporation has to kill its brand, the process of transition should be initiated long before the actual removal of the brand takes place so that the customers are prepared to accept and start using the other brands.
An example is when the General Motors made a decision to kill some of its car brands. The company went on to offer to its customers a lucrative discount of buying the last of its cars. As these brands were being removed from portfolio anyway, the concern for the General Motors was clearing the inventory even if it meant selling at low prices.
At the end, because these customers went through a positive experience with the General Motors Company of having to buy the cars at the lower prices, in the times when those cars will need replacement, these customers will most probably go back the General Motors brand. This strategy as such, could result to a win-win situation for both the customers and the brand.
The transition through use of extended service
This is a strategy that is different from the promotional selling as it an active collaboration with the customers. Each time the company wants to kill a brand, a collaborative discussion with the customer base is initiated so as to make sure that the customers stay within the family of the brand by either providing exchanges to the other brands in the brand portfolio or extending service facilities to the customers that may go on even long after the brand has been killed by the corporation.
The main objective of this strategy is to ensure that the customers are retained. However instead of using the price strategy, it utilizes the implementation of services strategy. The brands extend some attractive schemes of exchange that convinces the customers to stay attached to the brand. These schemes involve the exchange for the other brands that are in the same portfolio. A more tactful strategy would also include extending service contracts which could be more lucrative for customers and which would go on even after this brand has died. Such a strategy would be very helpful in ensuring that corporations can effectively retain its customers.
Conclusion
Killing brands is a difficult task to do for most corporations. This is because brand killing has the potential of diluting the equity of overall brand portfolio. It also poses a major threat of causing alienation of the loyal customers of the killed brand. Nevertheless, brands after some time can become a major liability to a corporation and the most strategic action to take at that particular time is to protect the brand portfolio by killing the brand that has become a liability. The move to kill such a brand should be carried in a manner that is strategic to avoid some consequences that could hurt the brand portfolio. The top managements of the corporation should ensure that this strategic action is carried out in a competent manner.
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