As marketers we all know the many issues with regards to damaging or even killing Brands. The usual suspects are always mentioned whenever the discussion comes up about what undermined a specific Brand – lack of clear identity, relevance to the target, mixed communication messages, product differentiation, distribution problems and a host of other basic marketing elements are usually named as the reason for the product or service failure to succeed.
However, there is another major factor that causes a Brand to lose its appeal and relevance to its target market and that is the constant use of promotional / tactical activity to build and maintain the Brand. When Brands decide to switch their marketing activities to deploy mainly promotional / discount programs, they run the risk of undermining the intrinsic value of their Brand to obtain short term sales as they try to maintain market share.
A classic example on this type of tactical approach to keeping a Brand relevant to its market is the story of the North American television business. Many of you have probably forgotten that up to the mid 80’s, North American Brands dominated the TV Industry. RCA invented colour TV- Great Brands like Zenith, Magnavox and Sylvania basically owned the market. These Brands were seen as high quality, technological world leaders with a network of dealers coast to coast. They were able to obtain premium prices for their products. Then the Japanese arrived. They had great products and were attractively priced. For a few years, the North American Brands maintained their Brand Advertising with the usual tactical activity, but as the Japanese Brands started to take market share, the North American Brands decided to become more tactical price focused reducing their Brand support programs. Instead of keeping their Brand story up front and centre, they all moved to fight the Japanese by switching their marketing year by year to mainly promotional price programs. While the North American Brands were following this strategy, the Japanese were placing Brand programs establishing their products.
I saw this first hand as I handled RCA’s advertising in Canada over a number of years as we moved the advertising from primarily Branding to primarily promotional pricing. Branding became almost invisible. As a result of this activity, our customers started believing that RCA then the # 1 Brand in Canada had become a lower priced ‘run of the mill’ product. RCA Brand tracking studies showed that key product attributes such as quality, technology, and styling were no longer top-of-mind with them, while at the same time they saw Japanese TV’s having these features (we all know the end of this story ). The North American Brands lost the business, disappeared or were bought out and the business is now Japanese or Korean.
The lesson learned here is that Branding is an integral part of a product’s identity and you tamper with it at your peril! RCA and the other North American Brands decided to fight the competition by discounting their Brands instead of investing in new product development and ongoing Brand support programs. They made a short-term decision on a price promotional effort, which became their long-term policy and they paid the price by losing their Brand cachet and business.
Promotional / tactical activities are important in driving business and they have their place in an overall marketing program. They should not be used as a replacement for an ongoing Brand program. Once a Brand’s reputation has been damaged by constant promotional discounts, it is very difficult to bring it back. Customers see the Brand in a different light and respond to the messages being communicated.
Marketers have to walk a fine line between the need for driving sales and the need to protect and enhance the Brand’s identity. Every product or service is different, but those two factors are always there and it is a challenge as there is no specific formula to be employed in making these decisions. I suggest that you use Brand tracking research to periodically check on the status and perception of your Brand and incorporate it with your sales and marketing plans. If your sales are on plan, but your Brand perception is going down, you need to look at your activities. Treat your Brand as your key asset and use a balanced approach to both Branding and tactical activity in your marketing programs. This approach usually works in the long term.
This article was written by Richard Groves, VP of Crakerjak and former SVP of Leo Burnett Canada.
