Marketers sometimes make the mistake of forgetting how important the care, support and constant review of their product or service offering(s) is to their Brand’s success. The market place is littered with Brands that were not given this respect and as a result lost market share and business to new or existing Brands that had the improvements consumers were looking for.
A Brand’s success should always be measured against its competition and critical reviews should be held periodically to ensure that the Brand is maintaining its performance in the market place. The iPhone success is a classic case of what can happen to a Brand and a category when a Brand does not innovate. Blackberry was the dominant mobile phone for years until Apple introduced the iPhone. Overnight it made Blackberry the “Has- been” product.
Successful products or services are constantly re-inventing or ensuring that their offerings are important and relevant to their customers. Sometimes just a change to product packaging can give the impression that a product is new or improved even though the product has not changed. Established Brands that have a winning formula or service usually go to great lengths to make sure that this quality remains constant- they don’t tamper with success.
Recently we have seen in the Retail sector what a badly handled take-over in the Supermarket business can do to an established Brand. The Sobeys buy out of Safeway in Western Canada three years ago was supposed to add substantial revenue to the second largest Supermarket chain in Canada. Instead, the buy-out has become a nightmare for Sobeys, as Safeway’s customers are leaving the stores and Sobeys is incurring tremendous losses. The original Safeway Brand with its very loyal customer base is now seen as badly run stores offering poor product selection, understocked shelves, a low quality produce section and indifferent staff service.
It appears that Sobeys tried to fast track their take-over using the “Target Canada “ approach. They tried to integrate their systems and marketing approach too quickly without understanding the Safeway customers and what they liked about shopping at Safeway. The company had built a friendly loyal customer base even though their product pricing was usually higher than their competitors. People shopped there because they got good service, had amply stocked shelves and an outstanding fresh produce section. They also had a good loyalty program, which Sobeys cancelled.
Sobeys changed the Safeway Brand by changing the store offerings and the services provided to its customers.
The Result- Customers over time realized that the new Safeway was not what they were used to. They got fed up with understocked shelves, poor quality produce and poor service. They have either stopped or reduced their visits and purchases at the stores.
The Retail Supermarket business is one of the most competitive industries. Its price driven with low margins and it depends on the loyalty of its customers. Growth usually comes from stealing the competitors’ customers and right now, Safeway is losing its customers and racking up huge losses.
The Safeway Example of not understanding what a Brand stands for and why people patronize the Brand coupled with not delivering the offerings that they have come to expect has had a major impact on the company. Many companies face this issue when they take over established Brands. Apart from the financial opportunities in expanding a company’s portfolio, they need to research what that Brand or company stands for and be very careful how they affect and deliver on that “Expectation”, or they run the risk of losing their customers.
