Market View

Market View: Three Clues You're Killing Your Brand

The signs of brand killing are subtle -- often a slow, gradual erosion than a quick and obvious blow.

By John Stanton, Contributing Editor

If you ask most food executives what their most important marketing activity is, it is usually brand building. Yet so many well-meaning food executives do exactly the opposite. They actually kill their brands.

Their soliloquies at team meetings about serving the consumer and adding value for the consumer are inspiring, but their decisions are often just the antithesis. The push for immediate sales, cost cutting and profits often means that the consumer is neglected or ignored. Myopic executives don’t see the relationship between the consumer’s preference and increased sales and profits. Destroying a brand to save the company is foolhardy.

For example, how does constantly dropping the volume of major brands (taking weight out) enhance the consumer experience or grow loyalty to the brand? No need to identify these companies as it is so common.

Now keep in mind that no executive announces that they can solve the company’s problems by destroying their brands. No one would admit it. The signs of brand killing are subtle. The deathblow to a brand is often a slow, gradual one rather than a quick and obvious blow. The lethal decisions are often couched in terms of doing the right thing for the company.

There are however, some clues that may indicate if your company is on a path of brand killing. As you read the clues, don’t interpret that if any one of these things has occurred it is the death knell for your brands. In fact, any one of the clues may be a sound marketing tactic demanded for the specific occasion. The clues are based on continuous behavior rather than one-time events. Obviously, the more clues present in your organization the more likely you are on a path of brand killing.

Clue 1: De-emphasizing consumer research and innovation

Cutting the consumer research budget is easy to do. It produces immediate bottom-line results, and the negative effects won’t be felt for years. But of all the budgets that have the longest payoff to the company, it must be consumer research. Information learned from consumer research may take years to convert into new benefits or products. This same unspent money could be shown as profit this year rather than profit in a few years.

The impact of this activity is growing more important every day as changes to the market are taking place faster. Top executives with the power to cut or retain budgets are facing a world that is very different from the one they “cut their teeth” on. Changes have made previously held assumptions dead wrong today. The dilemma we have is that most of what we have learned and most of what we have done in the past may not make us successful in the future.

Some companies are substituting buying innovative companies for their own R&D. According to a recent Harvard Business Review report, the failure rate for products that result from mergers and acquisitions sits between 70 and 90 percent, whereas new products developed in-house has a much higher success rate, according to new research.

Clue 2: Constantly cutting the advertising budget

Advertising is one way to tell the consumer how good your brand is and how it fits their needs perfectly. This does not mean that a company can’t regularly change or reduce its advertising spending. However, if the ad budget is routinely cut especially with the sole rationale being to save money, you may be killing the brand.

Manufacturers of brands 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 brought to the attention of the consumer as they are overwhelmed with other messages.

The problem with ad budget cutting is that you frequently don’t see the damage immediately and you can be misled into believing that little harm has been done. Cutting the ad budget repeatedly is like taking a small chunk out of the foundation of a house year after year. When the first chunk is removed, there is little impact on the house. Even as the foundation disintegrates with each new chunk that is removed, there still are little outward signs of damage. Then one day one more very small chunk is removed and the house crumbles. It wasn’t the last chunk that caused the collapse, it was the years of small chunks.

Clue 3: Consistently spending more on trade than 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 your brand over others. 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, no one communicates with the consumer. The retailer or wholesaler has no incentive to move it as they usually make profit via promotional payments when they receive the shipment. They could care less if it sells, and if it doesn’t they 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. Not that trade spending is unimportant. But I think that robbing Peter to pay Paul year after year is the way to ruin a brand.

Brands have been a wonderful link between our great food companies and 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.