Market View: Build brands, don’t kill them

There is so much discussion these days about brands. Some business magazines have written about the end of brands as we know them. Others claim brands are one of the most important assets a company has. If you ask most food executives what is their most important marketing activity, it is usually brand building. Yet, when you look at the activities they call brand building it is often brand killing.

The soliloquies by executives at team meetings about serving the consumer and adding value for the consumer are inspiring, but the decisions by these same executives are often quite the opposite. The push for immediate sales, cost cutting and profits often mean the consumer is neglected or ignored. Myopic executives fail to recognize the relationship between the consumer’s trust in brands and increased sales. Destroying a brand to save the company is irresponsible.

Let me acknowledge that many food executives understand and agree with me but because of corporate pressures they have no other choice. Also, I believe no executive in his or her right mind one day announces he can solve the company’s current problems by destroying its brands.

In fact, because no one admits it, the signs of brand killing are very subtle. The lethal decisions are often couched in terms of doing the right thing for the company and even doing the right thing for the brand. There are however, some clues that may indicate whether your company is on the path of brand killing.

• Clue 1: Constantly cutting the advertising budget. This is so easy to do, the financial impact so immediate and the costs are so concealed it is often the first choice to improve profits at the cost of the brand. This does not mean a company can’t regularly change or reduce its advertising spending. However, if the ad budget is routinely cut especially with the rationale being we need to save money, you may be unwittingly killing the brand.
  
  Manufacturers need to constantly tell consumers the reasons why they should spend extra dollars for the benefits of the brand. New benefits need be announced and old benefits need to be re-emphasized. Advertising is the foundation of the relationship between the consumer and the brand.
  
  
• Clue 2: Consistently spending more on trade than on the consumer. The problem arises when food executives mistake sales to trade partners with sales to consumers. Brand killers often think and act as if once the products are shipped from the factory the battle is over. Consumers still must come into a store and pick one brand over another. That is where the real battle begins.
  
  The myopic marketer sees the trade programs as creating immediate sales results that could never be achieved by spending the same amount on consumers. Give it to the trade and get sales now is the promise. Unfortunately, it is a false promise. Just pushing a product into the channel doesn’t move it through the channel. In many cases the retailer could care less if a product sells, and if it doesn’t he will just return it to the manufacturer. This may be why about 25 percent of products turn less than one unit per month in grocery stores.
  
  For a brand to be successful, a consumer must take it off the shelf, take it home and use it. Trade spending is important, but you never see reports called “retailer loyalty.” Consumer loyalty is what leads to repeat sales.
  
  
• Clue 3: Consistently spending more on price promotions than advertising. Price promotions should be a part of any complete marketing program, but they should not replace traditional brand-building activities such as the presentation of the unique selling proposition. In many cases the very consumer who is attracted to your brand by a price promotion is just as likely to be lured away by a competitor’s price promotion. The long-term profit comes from finding consumers who love your brand and need not be enticed to buy only with promotions. One might argue the consumer acquired on a price promotion is the least desirable consumer to have.
  
  If your brand strength is based primarily on consumers waiting for a price promotion to stock up, you have reached the beginning of the end. It begins a downward spiral where the regular customers wait for a sale. However, profit margins are lower during sales, little money is available for long-term brand building, and because sales after the promotion are always lower, there is no money available then either.
  
  
• Clue 4: De-emphasizing consumer research and contact. Cutting the consumer research budget is even easier than cutting the advertising budget because it is even less visible. Information learned from consumer research may take years to convert into new benefits or products. Many research departments have been relegated to finding new line extensions, and many premier food companies have almost given up basic research. This is a huge loss to brand development.

Brands are created in the minds of the consumer, and when food executives forget that they frequently begin a series of decisions that leads to the death of the brand. Brands have been a wonderful link between our great food companies and the consumers. We must treasure that relationship.

Don’t kill the goose that laid the golden egg. Build brands; don’t destroy them in the name of profits.

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John L. Stanton is a professor of food marketing at St. Joseph's University, Philadelphia. He can be contacted at 610-660-1607; e-mail at jstanton@sju.edu.