Killing Brands Successfully - Motive Behind the Crime

CoolAvenues Newswire | July 26,2014 05:20 pm IST

Vital Few and Trivial Many:-
In a paper that seeks to explain why one should kill something that has taken years to build, it is fitting that one talks about the much-used but mis-named Pareto Principle. The Pareto Principle tells us that 20 percent of something is always responsible for 80 percent of the results.

This is a fairly apt way to describe the situation with many multi-brand companies today. Diversifying across segments and product lines, companies had launched and re-launched brands, both old and new, to safeguard against risk.
 

However, since the 1990s, more and more companies are realizing that their innumerable brands, far from adding value to their business, are nothing more than dead wood. The famous 80% is contributing to less than 20% of the bottom-line. What is a company to do? Merely grin and bear it? Or attempt to make those brands redundant? How does a company get rid of such brands without losing, or worse, antagonizing loyal customers? And what should the company do with the profits thus generated?
 

Motive Behind the Crime

 

Visualize, if you will, a hard, white golf ball, which is the product, or service, while the translucent, multi-colored sphere of gas the size of a large balloon surrounding that golf ball is the brand. The brand is a flexible, changeable personality which influences a consumer's decision to buy a specific brand while the underlying use is often based on the character of the golf ball.


So when we talk about the killing of a brand, we need to distinguish between merely terminating a product line, and eliminating a brand complete with all its baggage. Again, there is a difference between withdrawing a brand from a local or regional market, and killing it off once and for all! A pertinent point is whether or not letting a brand mature either by systematically keeping it short of much needed investment, or failing to rejuvenate the brand, which can be termed as brand deletion. But one can surmise that this situation occurs more out of compulsion than any methodical brand rationalization process, which is actually the subject under discussion.
 

At the risk of sounding very naïve, one must clarify as to why a brand needs to be disposed of at all. After all, isn't this the same brand one agonized and strategized over? However, at the end of the day there is a business to consider and very often brands, which seem to embody the best of marketing practices are simply not sustainable any more. One has to prioritize brand redundancy by deleting loss-making and marginally profitable brands, and thus purging hidden costs.
 

As neatly categorized by Martin Roll, founder and CEO of VentureRepublic, there are five reasons behind the speedy erasure of certain brands.
 

1) It costs too much to revitalize / rejuvenate compared to its ROI
The key differentiating factor between a decision to rejuvenate a brand and to kill it lies in the fact that the exit costs are much lesser than current costs. Financial resources are always at a premium, and therefore, eliminating an unprofitable brand or selling it to someone else or allowing to it to simply die a natural death are the best options available.
 

2) The brand has got such negative connotations that it is one long uphill battle to fight back to normal
This is applicable to both brands as well as products. Similarly, cigarettes are increasingly being targeted by legislation and therefore killing any but the most profitable brands makes ample sense. Philip Morris recently re-branded itself as Altria mainly to disassociate itself from the parent brand and protect other brands such as Kraft.
 

3) The brand portfolio has become too large / too widespread [such that] individual brands might have suffered
As Dutch behemoth Unilever realized in 1999, they had over 1600 brands of which only 400 contributed to 90% of its profits. The rest of the 1,200 brands made losses or, at best, marginal profits, and sooner or later would start dragging the others down by their sheer weight.


This was the major reason behind the brand-deletion programme launched by Unilever.
 

4) Similarly, new brands in the company portfolio serve needs better than the brand in question
Companies often have brands, which inadvertently start focusing on the same segment, thereby encroaching on each other's turf. Where there is a clear leader, the also-ran brand is better off dead. In the Indian context, there were moves afoot in HLL to remove the brand Rexona from the deodorants category where Axe is clearly mopping up the competition.
 

5) The organization does not understand / believe in the brand (right or wrong) so back-up is slim
When an organization does not believe in a brand, and therefore, does not back it, it automatically marks it for early extinction, albeit naturally.
 

The Modus Operandi
The deletion of brands is a tricky process with many pitfalls and false steps. The above-mentioned example of Ivory and Camay seems like a sound case for killing Camay as a brand, yet in retrospect that would have been a major disaster.
 

Companies often shy away from brand rationalization, as they fear loss of customers. The possible loss of market share is a huge deterrent for brand deletion. Also, there are hardly any blueprints for a systematic brand-deletion process. Legally too, the risk of losing the right over a brand may come back to haunt companies as was seen in the case of Proctor & Gamble and its toilet paper brands White Cloud and Charmin.
 

A committee of senior brand managers and company directors must sit in on the entire brand rationalization programme, while also involving product mangers and regional teams to avoid losing local focus.
 

How many is too many?
The first most important step to be undertaken for brand rationalization program is whether a company has more brands than is good for its own peace of mind. Nirmalya Kumar, in his original paper on killing brands, had outlined 10 questions for checking for an abundance of brands. While Kumar has framed these as yes/no questions to be answered with the help of back-of-the-envelop calculations, we believe that data warehousing of brand information including sales, revenues, expenses, costs, market share, etc., should be used.
 

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