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Tuesday, December 12, 2006

Brand PR failures: Rely tampons

Procter & Gamble’s toxic shock

In 1980, Procter & Gamble launched a super-absorbent tampon called Rely. However, the super-absorbency of the product was a result of a synthetic substance called carboxymethyl cellulose, which would sometimes leave a synthetic residue inside a woman’s body after the tampon had been removed. ‘From the moment super-absorbent tampons hit the market there were published accounts of vaginal ulcerations, lesions, and lacerations,’ writes Laurie Garrett in her 1994 book, The Coming Plague.

However, things became even more worrying later in the year with a sudden increase in cases of toxic shock syndrome in the state of Wisconsin.

Almost all the cases were menstruating females. Following further research by health authorities it emerged that most victims had been using the Rely tampon.

This was clearly very bad news, not only for the victims, but also for Procter & Gamble, the company which had virtually started the tampon category in 1936. Furthermore, Rely had been one of the most expensive products ever to develop, with more than 20 years of research and marketing efforts behind it.

From the start of the crisis, Procter & Gamble acted defensively. When the Centers for Disease Control (CDC) in Atlanta started to investigate the link between Rely and toxic shock syndrome, Procter & Gamble began their own investigation which (surprise surprise) found no link. When the CDC published their findings, the link was backed up with comprehensive figures.

But Procter & Gamble dismissed this research as ‘insufficient data in the hands of a bureaucracy.’ However, by this time the company had started to realize it was fighting a losing battle and began to co-operate and look for a compromise solution. Procter & Gamble suggested a warning label be added to the product. But when the results of the CDC study were confirmed by an independent research firm, Procter & Gamble had little choice but to suspend sales of the product.

The withdrawal of Rely from the market was estimated to cost US $75 million. However, although Procter & Gamble initially made matters worse by denying responsibility, the company was now embarked on a damage limitation exercise.

It worked jointly with the CDC to draft a consent agreement. The CDC allowed Procter & Gamble to deny any product defect or violation of federal law. In return Procter & Gamble promised to buy back any unused product and offered its scientific expertise to research the problem. The company also mounted a large-scale educational campaign.

In an article for the Canadian Journal of Communication, Drexel University’s Priscilla Murphy explored Procter & Gamble’s handling of the Rely tampon incident in relation to ‘games theory’. She argued that by the end, Procter & Gamble’s game plan had improved greatly:

The latter stages of Procter & Gamble’s strategy exemplify a wholly different approach to conflict. What had begun as a classic escalation game became a bargaining venture in which everyone’s desires were examined and coordinated so that each player could live with the agreement. When we are talking about bargaining games we are really looking at the ways in which both sides in a conflict gradually come to agree on a single version of events, a single perspective. What resulted was a stable equilibrium point that, though not ideal, represented the best outcome for each side given the pressures from the other side.

So although the incidents of toxic shock syndrome spelt the end of the Rely brand, Procter & Gamble itself suffered small lasting damage and continues to produce some of the world’s most popular tampon products.

Lessons from Rely

  • Co-operate don’t aggravate. If Procter & Gamble had co-operated with the health authorities from the start it would have been able to limit the negative media coverage.
  • Kill the brand, save the company. For companies with numerous brands it is often better to admit defeat early on and terminate a brand for the sake of the overall reputation of the company.

Monday, December 11, 2006

Brand PR failures: Snow Brand milk products

Poisoning a brand

Among the most dreaded situation for any food brand, an outbreak of food poisoning ranks pretty high. For Snow Brand, Japan’s premier dairy foods company, 2000 was the year when that nightmare came true, in the most disastrous way.

After consuming milk or related products made by Snow Brand, 14,800 people, mostly in western Japan, suddenly came down with food poisoning.

The problem was traced to bacteria on the production line of Snow Brand’s Osaka factory that processed low-fat milk. As soon as the news hit, the brand was in crisis. To make matters worse, the company broke every PR rule in the book and initially sought to downplay the incident. The overall impression Snow Brand gave was of being more concerned for the brand’s tarnished image than for the victims of the outbreak.

Perhaps the worst mistake the company made was the effort to limit the extent of the product recall it would have to make. The Osaka city public health centre had issued a recall order for two products, and strongly suggested that Snow Brand voluntarily recall other products. The company dug in its heels until the city officials pressed the point. Then Snow Brand reluctantly agreed to the recall, on the condition that the company could be seen to be doing it voluntarily. But this didn’t happen. In the event, the health authority publicized both the recall and the request.

In addition, Snow Brand is also believed to have withheld information about the exact nature of the incident. In what must have been a moment of desperation, Snow Brand initially claimed that the device where the contamination was found was used rarely. In fact it transpired it was used almost every day. The company also claimed that the area of contamination was ‘about the size of a small coin’ – but subsequent examination found it to be much bigger than that. The public perception – fuelled by the media coverage – was that the food poisoning was an inevitable result of a company suffocating itself with corporate arrogance.

To gain a flavour of the media coverage, it is worth looking at how the Japan Times reported the news that even more products were being recalled (this article appeared on the front page):

Japan’s Snow Brand milk recalls more products as scandal widens The tainted milk scandal at Japan’s biggest dairy goods maker Snow Brand Milk Products Co escalated last Thursday as the company recalled products made by a plant not previously linked directly to the incident.

A company spokeswoman said some 125,000 packages of milk and dairy products made by a plant in central Japan were found to contain powdered skimmed milk that had been produced at a northern Japan facility plagued by a bacteria scare.

The recall comes after more than 14,800 people, mostly in the Osaka area in western Japan, fell ill in late June after drinking Snow Brand milk in one of Japan’s most widespread food poisoning outbreaks. The company said it had not received any complaints relating to the yoghurt, flavoured milk and other dairy products targeted by the latest recall, adding that 95,000 of the packages would no longer be on store shelves because they had passed their permissible sale date.

The northern Japan plant at the centre of the scandal was shut by Snow Brand on Sunday and ordered to remain closed indefinitely by local health authorities, after a toxin from staphylococcus aureus bacteria was found in preserved samples of the plant’s powdered skimmed milk made in April.

A spokesman said on Wednesday the bacteria may have entered the milk as a result of a three-hour power failure on March 31 which left raw milk standing in high temperatures.

Some of that milk made its way into products at a plant in Osaka that was the source of the mass food-poisoning. Snow Brand’s shares were hit hard by the scandal, falling nearly 40 per cent. They have since recovered modestly and on Thursday ended up 0.23 per cent on the day at 427 yen.

Last Wednesday, the company said it posted a parent net loss of 11.2 billion yen for the April–July period due to the scandal, which forced it to temporarily close all 21 of its milk-producing plants in Japan.

As a result of the incident, sales for the company took a nosedive and Snow Brand’s president, Tetsuro Ishikawa, closed eight of his factories. Before the food poisoning, Snow Brand had a market share of 45 percent. This dropped to under 10 percent and the brand has still to recover back to its pre-2000 levels. The incident also took a personal toll for Tetsuro Ishikawa, who had to be admitted to hospital as a result of stress. Later he resigned and apologised to the media.

Lessons from Snow Brand

  • Respond quickly. Snow Brand’s initial response to the crisis was too slow as the company was reluctant to issue a full product recall and to communicate with the press.
  • Don’t sound selfish. When Snow Brand eventually did talk to the media, it focused on the financial consequences for the company, rather than the suffering of its food-poisoned customers.
  • Be prepared. The company was ill-prepared when it made public statements and did not have all the information.

Other famous brand idea failures


Bright orange boxes aren’t enough

Many of the brands in this section have failed because they were too far away from what the consumer wanted, but sometimes products fail because they aren’t different enough from other popular products. This is certainly the case of Radion washing powder. Along with Pear’s Soap, Radion was one of the many Unilever brands for the chop when the Anglo-Dutch conglomerate announced it would be narrowing its scope on 400 ‘power’ brands. Launched 10 years before the February 2000 announcement, Radion had struggled to capture just over 2 per cent of the UK detergent market. One of the reasons for this, as with most brand failures, is that the public’s perception of the brand was far from clear.

Although the product’s vibrant design (Radion came in shocking orange packets) meant that the brand was easily identifiable on supermarket shelves, consumers were less than sure why they should buy it. It wasn’t the cheapest, it wasn’t considered the best quality, it wasn’t the oldest or the original. It was simply the brand with the brightest packaging. And that, in the end, is rarely enough.

Unilever’s final decision was to amalgamate Radion into its brand, and it continues under the banner Surf Fun Fresh.

Lesson from Radion

  • Be different. Brands need to have a strong point of difference from their competition. After all, this is the very point of branding in the first place. Garish packaging was not enough to win over consumers.

Clairol’s ‘Touch of Yoghurt’ shampoo

Launched in 1979, Clairol’s yoghurt-based shampoo failed to attract customers largely because nobody liked the idea of washing their hair with yoghurt. Of those who did buy the product, there were even some cases of people mistakenly eating it, and getting very ill as a result. The ‘Touch of Yoghurt’ concept is made even more remarkable by the introduction three years earlier by Clairol of a similar shampoo called the ‘Look of Buttermilk.’

This product had instantly bombed in test markets where consumers were left asking: what exactly is the ‘look of buttermilk’ and why should I want it?

Pepsi AM

In the late 1980s, Pepsi spotted a previously unexploited consumer: the breakfast cola drinker. Although Pepsi hadn’t conducted much comprehensive market research into this area, the company realized that many young adults were drinking caffeinated cola rather than coffee for breakfast. They therefore came up with Pepsi AM, a drink ‘with all the sugar and twice the caffeine.’

Unfortunately, Pepsi had failed to appreciate that although some people drank Pepsi for breakfast, there was no specific demand for a new sub-brand centred around that usage. ‘If a consumer doesn’t know he [or she] has a need, it’s hard to offer a solution,’ says brand expert and marketing author Robert McMath. ‘Sometimes a company can manufacture a need – but it’s expensive that way.’

Nobody knew they wanted Pepsi AM, so nobody bought it. Furthermore, many marketing experts have successfully argued that because its name dictated when the product should be consumed, the market size was restricted to specific-occasion usage. Another bad idea, another flop.

Maxwell House ready-to-drink coffee

General Foods launched cartons of Maxwell House ready-to-drink coffee in 1990. The cartons, which appeared in the refrigerated sections of supermarkets, declared the product represented ‘a convenient new way to enjoy the rich taste of Maxwell House Coffee.’ The packaging stated that the coffee was brewed with ‘crystal clear water,’ and promised that the ‘fresh brewed flavour and aroma are locked in this exclusive foil-lined fresh-pack.’ The cartons also had a convenient screw-on plug to aid ease of use. The only trouble was the product couldn’t be microwaved in its original container.

Therefore the key incentive to buy ready-to-drink coffee – convenience – was taken away. As no-one fancied drinking cold coffee, the product failed.

Campbell’s Souper Combo

Another attempt at making life more convenient was soup manufacturer Campbell’s ‘Souper Combo’ idea, consisting of a combination frozen soup and sandwich. Designed for people with microwaves at the office or ‘latchkey kids’ cooking for themselves on their own at home, the product apparently fared well in tests.

The company spent millions on generating awareness for the ‘Souper Combo’ sub-brand, and the initial sales results were quite encouraging. However, it soon became clear that these were from people making one-off purchases, trying the product out of sheer curiosity. Consumers realized that despite the claims of increased convenience, it was actually quicker and easier to open a can of soup and make your own sandwich than prepare a Souper Combo. They therefore didn’t buy the product again.

Thirsty Cat! And Thirsty Dog!

Bottled water for pets

The worst of all bad ideas must surely be the Thirsty Cat! and Thirsty Dog! brands of bottled water designed for pampered pets. Although the water came in such ‘thirst-quenching’ flavours as Crispy Beef and Tangy Fish, pets and their owners remained unimpressed.

Sunday, December 10, 2006

Other famous brand extension failures

Country Time Cider

Country Time Lemonade Drink was launched in 1976 by Kraft foods as a powder mix, and soon became the top-selling lemonade product sold through US grocery and convenience stores. It successfully extended its line with Country Time Pink Lemonade, which was introduced in 1977. However, when the decision was made to extend the well-known Country Time brand to apple cider, the brand experienced its first failure. Although the brand managers may have thought the brand was chiefly associated with ‘good old-fashioned taste’ (a Country Time slogan) – an attribute which could be applied equally well to cider – the reality was that the brand simply meant ‘lemonade’ to most customers.

Ben-Gay Aspirin

Ben-Gay is another well-known US brand. It is an analgesic cream used for the relief of minor arthritic pain, muscle aches and back pain. Again, its first brand extension – Ultra Strength Ben-Gay – was a success, as it was essentially the same product, only intensified. When trying to think of another logical extension, the company came up with Ben-Gay Aspirin. After all, Ben-Gay could use its existing distribution network and the brand could still be associated with pain relief. Well, that is what the company thought. The only trouble was Ben-Gay was so strongly associated with the burning cream that it was unable to make the transition. Nobody liked the idea of swallowing a Ben-Gay product. As a result, the Ben-Gay Aspirin failed.

Capital Radio restaurants

In November 1996, London station Capital Radio acquired the My Kinda Town themed restaurant company. Rather than keep the My Kinda Town name, the company decided to set up a Capital Radio themed restaurant. As with Planet Hollywood and the Fashion Café, these restaurants were never able to generate enough return custom. Although Capital Radio could boast millions of listeners, very few could see a logical connection between the station and food – because, of course, there wasn’t one.

Smith and Wesson mountain bikes

In the United States, gun manufacturer Smith and Wesson is a well-known brand. When it decided to capitalize on this wide recognition by launching a range of Smith and Wesson mountain bikes, the company clearly failed to grasp the golden rule of brand extensions. Namely, that the extension must link with the core brand. There needs to be some kind of correlation between the original product (in this case guns) and the extension. Guns and bikes may both be made out of metal, but other than that it is hard to perceive a connection.

Cosmopolitan yoghurt

Yes, that’s right. Cosmopolitan – the world’s biggest selling women’s magazine – launched its own brand of yoghurt. However, although this extension failed (the yoghurts were off the shelves within 18 months), Cosmopolitan has had success with other crossovers. For instance, Cosmopolitan is now the UK’s second-biggest bed linen brand. The connection in this instance is obvious.

Namely, sex. There are also plans for Cosmopolitan cafés, which may also fit within Cosmopolitan’s ‘sex and the city’ identity. ‘I’m not surprised Cosmo yoghurts failed,’ says Jane Wentworth, a senior consultant with the brand consultancy Wolff Olins. ‘Any brand extension has to be credible for the mother brand. Companies use brand extensions to reach new audiences and to make the most of their promotional spend – but the important thing is not to tarnish the original brand.’

Lynx barbershop

Lever Fabergé, the Unilever division that owns the Lynx brand of male deodorant, opened its first Lynx hairdressing salon in 2000. ‘Time and time again, when you ask young chaps in research about Lynx it is the personality of the brand rather than the fact that it is a deodorant that comes out,’ said Lynx barbershop project leader, justifying the extension. Promoted as ‘bloke heaven’ the salons were a post-modern cross between an old-fashioned barber shop and a video games arcade (arcade games and MTV screens were installed to prevent boredom setting in while customers had their hair cut).

The salons also carried a full range of Lynx products and branded merchandise. After 14 months, the salons were closed.

‘Brand extensions are not simply a sideline for us – we set aggressive targets for all our initiatives,’ a Unilever spokesman told the Guardian newspaper. ‘The barbershops generated a lot of publicity, but failed to meet the targets.’

Colgate Kitchen Entrees

In what must be one of the most bizarre brand extensions ever Colgate decided to use its name on a range of food products called Colgate’s Kitchen Entrees. Needless to say, the range did not take off and never left US soil. The idea must have been that consumers would eat their Colgate meal, then brush their teeth with Colgate toothpaste. The trouble was that for most people the name Colgate does not exactly get their taste buds tingling. Colgate also made a rather less-than-successful move into bath soaps. This not only failed to draw customer attention, but also reduced its sales of toothpaste.

LifeSavers Soda

Invented in 1912, LifeSavers are one of the favourite brands of sweet in the United States. Concentrating on different flavours of ‘hard roll candies’, the firm produces nearly 3 million rolls every day. Their popularity is also evidenced by the fact that more than 88 million miniature rolls of LifeSavers are given out each year to trick-or-treaters on Halloween. However, when the company produced a fizzy drink called LifeSavers Soda, the product failed even though it had fared well in taste tests. According to one brand critic ‘the Lifesavers name gave consumers the impression they would be drinking liquid candy.’

Pond’s toothpaste

Pond’s, the popular brand of face cream, didn’t prove to be quite so popular when it applied its name to toothpaste. In a blind test environment, people were not able to differentiate Pond’s toothpaste from that of Colgate.

However, when the Pond’s name and imagery were attached to the toothpaste, no-one was interested. Although Pond’s had successfully extended its brand before (into soap products, for instance), these extensions had all been linked by a similar fragrance. ‘The main attribute of a toothpaste is taste, this mismatch between taste and fragrance created a dissonance in the minds of consumers,’ says Dr M J Xavier, professor of marketing at the Indian Institute of Marketing. ‘To most people Ponds was something to do with fragrance and freshness and used for external application only.’

Frito-Lay Lemonade

Frito-Lay is the leading brand of salty snacks in the United States. And what do people want to accompany a salty snack? A soft, thirst-quenching drink.

So what could be a better idea than Frito-Lay Lemonade? Although it may have been seen like a logical brand extension Frito-Lay Lemonade bombed. After all, Frito-Lay was a brand which made people thirsty, and therefore is the exact opposite of lemonade. From the consumer’s perspective the fruity, sweet drink had little connection to other Frito-lay products.

In the old days, brands knew their place. Harley Davidson stuck to motorcycles, Coca-Cola stuck to soft drinks, and Colgate stuck to cleaning our teeth. Now, of course, everything is all mixed up. If modern life wasn’t already confusing enough, brands are trying to complicate matters further by creating multiple identities. Sometimes this works. For instance, the Caterpillar clothing range has proved a phenomenal success. Usually, however, brands struggle when they move into unrelated categories. Brand schizophrenia not only aggregates and bewilders consumers, it also devalues the core brand.

Saturday, December 09, 2006

Brand extension failures: Xerox Data Systems

More than copiers?

Xerox is one of the branding success stories of the 20th century. As with many other similar successes, the company didn’t just create a product, it invented a whole new category. Indeed, such is Xerox’s achievement that its brand name has become a part of everyday speech. In the United States, xerox is a verb, used when people are copying paper.

Chester Carlson was the man who started it all. In 1928, he invented plainpaper copying, a process he referred to as ‘xerography’ (a term based on the Greek words for ‘dry’ and ‘writing’). But it wasn’t until 1947 that ‘xerography’ became a business, as well as a technological, venture. That was when the New York-based Haloid Company met with Carlson and acquired the licence to develop a xerographic machine. One year later the words ‘Xerox’ and ‘xerography’ had been patented.

1949 saw the launch of the first ever Xerox machine, called simply Model A. A few years later the Haloid company had changed its name to Haloid Xerox and in 1959 it introduced the product which was to put Xerox on the map. The Xerox 914 was the first automatic plain-paper copier and, as such, attracted considerable media attention. Indeed, within months of its launch Fortune magazine was writing enthusiastically about this machine, which could make over seven copies a minute, and referred to it as ‘the most successful product ever marketed in America.’

Word spread about this amazing product, and very soon it was becoming an office essential. The company, rechristened the Xerox Corporation in 1961, was now listed on the New York Stock Exchange. By 1968, company sales rose to the US $1 billion mark. In 1969, Xerox became a majority shareholder of the European operation, Rank Xerox, and so the Xerox name was now a truly global brand.

The following year, the company strengthened its reputation as a technological innovator by setting up the Xerox Palo Alto Research Center, abbreviated as Xerox PARC. However, the research centre was also a testimony to Xerox’s broader ambitions. From 1970, the company expressed its desire to stretch beyond copying into the field of computer technology and data processing. In 1975 this desire became a reality with the launch of a computer product, Xerox Data Systems, which had been researched at Xerox PARC. It failed disastrously and Xerox lost US $85 million. Four years later though, the company was still determined to extend its brand beyond the copier market, this time with an early version of a fax machine called a Telecopier.

Another disastrous failure.

The problem wasn’t that Xerox’s brand name was too weak. On the contrary, the problem was that Xerox was a very strong brand name, but one associated almost exclusively with copier machines. Xerox wasn’t just a company that made photocopiers – it was photocopiers. It didn’t matter if the machine was made by Canon or Kodak, people still referred to it as a Xerox machine. Indeed, this was an impression enforced through Xerox’s own marketing efforts. Through much of the 1970s and 1980s Xerox ads used to pose the question: ‘How to tell the real Xerox from a Xerox copy?’ The implication was that if it wasn’t Xerox, it wasn’t the real thing. While this strategy helped to sell copiers, it meant that it was tied to that product category. After all, no one brand can claim to be the only genuine article in more than one category.

For years, Xerox had competed on the superior quality of its copier products. Then, when the company’s rivals had caught up, it competed on the superior quality of its brand. And as soon as a company makes the transition from a simple product manufacturer, to a global brand, it has to live with the consequences. It can’t just create a strong perception and then undermine that perception by embarking on other categories. As Al Ries memorably put it, ‘the difference between brands is not in the products, but in the product names. Or rather the perception of the names.’

However, Xerox didn’t give up. Instead, it tried to tackle the problem head on. For instance, in a magazine ad for Xerox Computer Services, the strap line read: ‘This is not about copiers.’ But of course, this only confirmed the impression that Xerox was about copiers.

During the 1980s, Xerox tried to reposition itself as a provider of all technology-based office products. At the start of the decade, the company launched a personal computer, or (as Xerox preferred to term it) an ‘information processor’. Again, there was nothing fundamentally wrong with the product, at least for the time. But again, the product failed. Similar failures occurred when Xerox tried to launch office networks such as the XTEN network and the Ethernet office network, which were designed to compete with IBM’s Satellite Business network. Both the Xerox networks failed to make an impression.

Despite its best efforts to be associated with office technology, the public remained stubbornly unwilling to think of Xerox in any terms other than office copier technology. Although the company had invested fortunes in creating office information systems, this was an area steadfastly linked to another technology brand – IBM.

So why, then, did Xerox persist in trying to reposition its brand during the 1980s? Part of the answer may lie in the company’s admiration for Japanese models of business. It had close links with Fuji, and had a unique insight into the Japanese management style. In Japan, brand extension was, and indeed remains, the norm, especially for technology companies. For instance, there are few areas of home entertainment where the Sony brand doesn’t dominate.

Yamaha is another example of successful brand extension. Although the company started producing pianos in the 19th century, it has not been tied down to musical instruments. After 60 years of piano-making, the Japanese company moved into various other product categories with very little difficulty. Think Yamaha and what do you think? Pianos? Organs? Motorbikes?

It is most likely that you think of all three. Other Western companies have also been influenced by the Japanese approach to branding. Take Virgin, for example. Richard Branson has been famous for criticizing brands such as Mars, which refuse to attach the name to other types of products.

What I call ‘Mars Syndrome’ infects every marketing department and advertising agency in the country. They think that brands only relate to products and that there is a limited amount of stretch that is possible.

They seem to have forgotten that no-one has a problem playing a Yamaha piano, having ridden a Yamaha motorbike that day, or listening to a Mitsubishi stereo in a Mitsubishi car, driving past a Mitsubishi bank.

However, among Western companies Xerox remains more typical than Virgin. Unlike Xerox, Virgin doesn’t risk brand dilution. As John Murphy, chairman of the international branding consultancy Interbrand once observed:

‘Unless they poison someone or start applying the brand to inappropriate products such as pension funds or photocopiers, I doubt whether the Virgin brand will ever be diluted.’

In 1996 Murphy had to eat his words when Virgin did start to move into pension funds. However, there is little sign that Virgin is about to compete with Xerox in the photocopier market. Even Richard Branson might have a problem reversing the intrinsic association the Xerox name has with the product it invented.

The simple fact is that most large brands are associated with one product or service offering. With Coca-Cola, it’s cola. With Levi’s, it’s blue jeans. With McDonald’s, it’s fast food. And with Xerox, it’s copiers. Xerox was never going to be a Virgin or a Yamaha, but it still kept trying. Recognizing this fact, brand expert Jack Trout, president of Trout and Partners, advised Xerox to concentrate on what it did best. Trout realized that Xerox could remain within the copier market and still be at the forefront of technology. The solution? Laser technology. As Trout has since written about the experience:

There I was, facing a room full of technical and marketing people who were dutifully executing the office automation strategy that had been in force for years. I was the designated outside messenger bringing the bad news that all their past efforts were in vain and they should focus on the lowly laser printer instead of their glorious office machines. This was not a popular message.

Indeed, Trout soon realized that Xerox believed the future lay in another direction:

To this day, 15 years later, I have a vivid memory of an interchange that ended this meeting. After listening to my impassioned plea about laser printing, an engineer in the back of the room stood up and said that laser printing was ‘old hat’. Xerox had seen the future and it was about to be ‘ion deposition’. I asked what that was. The reply was that it was a little hard to explain to a layperson, but it was going to be fast and cheap. My response went something like this, ‘When that happens, we can move to ionography, but for now let’s jump on the laser and lasography.'

So what happened? According to Trout, ‘the room went icy cold, the sale was lost, and another prediction was pursued that never happened.’

Indeed, the strategy which followed that disastrous meeting cost Xerox billions. Although the company now seems to accept its fate as a ‘copier brand’, it spent years exploring other, profitless avenues. As a result, competitors such as Canon and IBM have made serious inroads into the copier market, with their high-speed machines. However, providing Xerox can keep its focus on copiers and direct its technological ambitions towards this narrow, but still lucrative market, it could still dominate in the future.

Lessons from Xerox

  • It’s vital to know who you are. Xerox’s major mistake lay in trying to transform itself into an IBM-style ‘information business’. The rest of the world kept on viewing Xerox as a company which made photocopying machines.
  • Nobody knows the future. George Orwell’s novel 1984 tells us more about the period it was written in than the year 1984. Likewise, future business and technological predictions rarely come true. For instance, no-one predicted the rise of SMS text messaging on mobile phones. Xerox spent too much time and energy looking into a future which didn’t exist.
  • Brands are bigger than products. ‘The most valuable asset of the US $19.5 billion Xerox Corporation is the Xerox name itself,’ says Al Ries. That name, however, is exclusively and historically associated with copier machines. It doesn’t matter that Xerox PARC has come up with some of the most significant technological developments in computing, such as the invention of the mouse. All that matters is the association of the brand name in the consumer’s mind.

Friday, December 08, 2006

Brand extension failures: Miller

The ever-expanding brand

In the 1970s Miller Brewing Company faced something of an image problem.

For years it had been positioning its core brand, Miller High Life, as ‘the champagne of beers’. Jazz musicians had been used in advertising campaigns to endorse the beer and to consolidate its sophisticated image, but the results were increasingly disappointing.

When Business Week profiled the company in November 1976, it explained the problem with Miller’s marketing strategy. ‘Sold for years as the champagne of beers, High Life was attracting a disproportionate share of women and upper-income consumers who were not big beer drinkers [. . .] A lot of people drank the beer, but none drank it in quantity.’

In order to differentiate itself from its macho rivals, Budweiser and Coors, Miller had feminized its core brand in a bid for wider share of the market. However, the company was starting to learn what Marlboro had realized the decade before when it replaced images of female smokers with the iconic Marlboro Man. The lesson was this: in reaching out to new customers, a brand risks alienating its core market. But help was at hand. Philip Morris, the owners of the Marlboro brand, had purchased Miller at the start of the decade. The company now realized what it had to do.

Just as the Marlboro Man had been an exaggerated image of masculinity, so the new advertising for Miller High Life was designed to out-macho its rivals. Out went the sophisticated jazz musicians, and in came testosteronefuelled oil workers glugging back the beer like there was no tomorrow above the no-nonsense slogan, ‘Now Comes Miller Time.’ As the testosterone levels rose, so too did sales, with High Life becoming the second most popular beer by 1977. However, by that time, Miller had another success story on its hands in the form of Miller Lite.

Miraculously, Miller managed to introduce this low-calorie beer without tarnishing its macho image. The ads, featuring leading sports figures and the strap-line ‘everything you always wanted in a beer – and less’, were very successful, and by 1983 Miller Lite was second only to Budweiser in the beer rankings. Less miraculously, it soon became apparent that the rising popularity of Miller Lite was offset by the declining popularity of High Life. While the introduction of the light beer in 1974 had led to increased overall sales in the short term, in the long term it was costing the company its original brand. Having peaked in 1979 with sales of over 20 million barrels, High Life was now in terminal decline.

What Miller should have learnt from this experience was that the success of one Miller brand was at the cost of another. As marketing expert Jack Trout famously put it, ‘in the mind, it’s one idea to a brand.’ But Miller continued to extend its brand in further directions, and with similar results. In 1986, the company launched a cold-filtered beer called Miller Genuine Draft.

Again, the beer was a success. Again, the other Miller brands suffered. By 1991, sales of Miller Lite were starting to decline. The incentive to launch new brands was still strong, though. After all, every new Miller beer which had emerged on the market increased sales for the company in the short term. And short-term trends were always going to be easier to spot than those which happen slowly, over years and decades.

Rather than create completely new brands, the company kept on launching sub-brands under the Miller name. So whereas their 1970s counterparts were only offered Miller High Life, Miller drinkers in the 1990s had considerably more choice. Walking into a bar or supermarket, they not only had to choose between Miller, Coors and Budweiser, but between various brands within the Miller range itself.

There was still Miller High Life (hanging on by a thread) and Miller Lite, but also Miller Lite Ice, Miller High Life Lite, Miller Genuine Draft, Miller Genuine Draft Lite, Miller Reserve, Miller Reserve Lite, Miller Reserve Amber Ale and the very short-lived Miller Clear. The trouble was not so much that there were too many Miller brands (although that was indeed a problem) but that they were variations of each other, rather than a variation of one core brand. (Incidentally, this theory explains why Diet Coke succeeded where New Coke failed. Whereas the former had supplemented the original brand, the latter had eradicated it completely.)

In 1996 Miller decided to address this situation, adding yet another brand to the mix, Miller Regular. The company had looked at the success of its rivals’ regular beers and wanted a piece of the action. In other words, they wanted a beer which would come to represent everything Miller stood for, which by that point was rather a lot.

The only problem was that with so many Miller brands already out there, launching another one (even with a US $50 million marketing budget) was always going to be a challenge, especially when it had such an unassuming name. With an apparently limitless array of Millers to choose from, most people assumed that Miller Regular had always been there. As a result, the brand failed to make an impact and Miller eventually decided to withdraw it altogether.

The problem of identity, however, still remained. Whereas drinkers could go into a bar and say to the bartender, ‘I’ll have a Budweiser,’ causing little confusion, if they said, ‘I’ll have a Miller,’ the bartender would inevitably ask, ‘Which Miller?’

As Jack Trout wrote in his excellent and influential book, The New Positioning, ‘the more variations you attach to the brand, the more the mind loses focus.’ Miller hadn’t just alienated its core customers, it had completely baffled them. Whereas in the 1970s Miller had achieved its success by tightening its focus, by the time the company had reached the new millennium it had broadened itself beyond recognition.

While Miller’s long-standing rival, Budweiser, has now taken its regular brand identity to new levels of simplicity (reflected in the one-word strap line, ‘True’), Miller still suffers from a lack of coherence. So, although the beer itself may taste great, the brand has definitely become watered down.

Lessons from Miller

  • Don’t extend your brand too far. ‘Leverage is good, too much leverage is bad,’ says brand guru Tom Peters. He is joined in this opinion by Al Ries and Jack Trout, for whom ‘The Law of Line Extension’ is one of ‘The 22 Immutable Laws of Marketing.’ This law states, ‘if you want to besuccessful today, you have to narrow the focus in order to build a position in the prospect’s mind.’
  • Have a core brand. While Ries and Trout are right to highlight the potential problems of line extension, it is important to differentiate between those companies that can get away with it, and those that can’t. Brand extensions aren’t bad in themselves. For instance, nobody in his or her right mind would call Diet Coke a bad branding decision. Even Miller’s chief competitors have played the extension game. In some respects, Budweiser is as guilty as Miller at broadening its line (consider Bud Light, Bud Dry and Bud Ice, for example), but unlike Miller, it has a core brand, Budweiser itself. Miller, on the other hand, has merely become the sum of its many parts. By the time the company tried to rectify the situation, with the launch of Miller Regular in 1996, it had left it too late.
  • Learn from your mistakes. Miller was clearly too focused on the success of each new brand it created to understand the negative impact these new brands were having on its existing beers.
  • Change your brand name. Although Miller was launching new brands, it kept hold of the ‘Miller’ name. If the company had created completely new names for each range, there would have been less consumer confusion.

Brand idea failures: La Femme

Where are the pink ladies?

In the 1950s, US car manufacturers discovered a new target customer, the female car buyer. Up until that point, cars had been viewed as a male preserve. However, an increase in prosperity combined with the levelling of the sexes that occurred in the years following World War II managed to change all that. Women wouldn’t want any old car though. Oh no. They’d want a car that appealed to their feminine interests. They’d want flowers. They’d want a girly name. They’d want accessories. But most of all, they’d want pink.

At least, that is what car manufacturers Chrysler believed after researching this apparently strange and exotic creature. The end result was La Femme, part of the Dodge division and the first car designed specifically for women. The car was pink and white, and the seats were decorated with a tapestry style cloth depicting a pattern of pink rosebuds on a pink background. The carpeting was dark burgundy colour. In the publicity material La Femme was said to be ‘designed for Her Royal Highness – the American Woman.’

In 1955 Dodge sent the following letter, expressing the company’s enthusiasm for La Femme, to all Dodge Dealers across the United States:


The enclosed folder will introduce you to the La Femme, by Dodge, the first car ever exclusively designed for the woman motorist.

At the Chicago Auto Show, the La Femme received exceptionally enthusiastic response and it is enjoying similar response at special shows and exhibits in other parts of the country.

Exterior color scheme of the car is Heather Rose over Sapphire White, and there is a gold La Femme nameplate on each front fender, replacing the Royal Lancer nameplate. The interior consists of specially designed Heather Rose Jacquard Fabrics and Heather Rose Cordagrain bolster and trim. The materials used, of course, possess the usual qualities of durability, beauty, economy, and ease of cleaning.

The crowning touches which personalize the La Femme are its special feminine accessories. Two compartments located on the backs of the front seats are upholstered in Heather Rose Cordagrain. The compartment on the driver’s side contains a stylish rain cape, fisherman’s style rain hat and umbrella which carry out the Jacquard motif. The other compartment holds a stunning shoulder bag in soft rose leather. It is fitted with compact, lighter, lipstick and cigarette case.

Available only in the Custom Royal Lancer model, the La Femme can now be ordered for March delivery. Naturally, a model of this type will initially be built in limited quantities and will be handled on first come, first served basis. Complete price information can be obtained from a Confidential Price Bulletin, which you will be receiving within the next few days.

I hope you will endeavor to see the La Femme at your earliest opportunity. I believe you will agree that this unusual car has great appeal to women, and that it gives Dodge dealers a ‘drawing card’ enjoyed by no other dealer group.

Very truly yours, L F Desmond, General Sales Manager Dodge Division The experiment was a complete failure. The dealers that decided to order La Femme found that the cars sat unsold in the showroom.

Unperturbed, Dodge tried again the following year. But still it had no takers. Women found the crude attempts to attract their attention rather patronizing. This was, after all, appealing to a classic male ideal of femininity, rather than how the 1950s woman actually saw herself. There simply weren’t enough women who wanted a pink and purple car with matching lipstick holders and combs.

Lesson from La Femme

  • Don’t patronize your customers. It didn’t work in the 1950s, and it certainly doesn’t work now.

Thursday, December 07, 2006

Brand idea failures: Oranjolt

The drink that lost its cool

Rasna Limited is one of the leading soft drinks companies in India, and made its name in the concentrate market. However, when it has tried to stray from its specialized niche, it hasn’t had much success. When Rasna experimented with a fizzy fruit drink called Oranjolt, the brand bombed even before it could take off. Oranjolt was a fruit drink in which carbonation was used as a preservative. ‘It was never meant to be a fizzy drink,’ says Rasna’s founder Piraz Khambatta. He explained that given the threat of foreign competition it was important to try out new things. ‘If you don’t try new initiatives, you are stuck,’ he says. So why did it fail? Because it was out of sync with retail practices.

To last, Oranjolt needed to be refrigerated. The problem was that Indian retailers tend to switch off their shop refrigerators at night. As a result, Oranjolt faced quality problems. The product has a shelf life of three to four weeks where other soft drinks were assured a shelf life of over five months. Servicing outlets was also a problem. ‘We didn’t have a distribution structure that could allow us to replace the product every three to four weeks,’ admits Khambatta. Even Coke and Pepsi make replacements only once in three months. Oranjolt was therefore launched in select outlets and could not expand rapidly.

That was the only effort by Rasna Limited to try its hand beyond its breadand- butter segment where it still enjoys over 80 per cent of the concentrated soft drink market share. ‘Now we are trying to reinvent the category and expand it,’ says Khambatta. ‘And we want to be one up over our competition on all parameters.’

Lesson from Oranjolt

  • Cover all bases. Rasna failed to anticipate the quality problems it faced as a result of retail practices.

Wednesday, December 06, 2006

Rebranding failures: Tommy Hilfiger

The power of the logo

Tommy Hilfiger is one of the world’s best-loved designer clothing brands. During the 1990s Tommy Hilfiger moved from being a small, niche brand targeting upper class US consumers to becoming a global powerhouse with broad youth appeal. But then, in 2000, the brand was suddenly in trouble. From a high of US $40 per share in May 1999, Tommy Hilfiger’s share price fell to US $22.62 on New Year’s Day 2000, and was cut in half again by the end of that year.

Sales were slowing and, most tellingly, flagship stores in London and Beverly Hills closed down. Various runway shows at fashion events worldwide were also cancelled.

So what was going wrong? According to Tommy Hilfiger himself, the explanation is to be found in his decision to be adventurous with the brand.

He said in a 2001 interview with New York magazine:

At one point, I told my people, ‘We have to be the first with trends’, so we ran out and tried to do the coolest, most advanced clothes. We didn’t just do denim embroidery. We jewelled it. We studded it. We really pushed the envelope because we thought our customer would respond.

But the customer did not respond in a big way, and our business last year – men’s, women’s, junior’s – suffered as a result.

Part of this ‘pushing the envelope’ strategy involved reworking the brand’s famous imagery. Tommy Hilfiger, more than any other brand in the fashion industry, is a brand based on a logo. Indeed, some of the company’s most successful products have been T-shirts with the red-white-and-blue logo emblazoned across them. Everything about the logo, from the primary colours to the capital letters shouting TOMMY HILFIGER, suggested a bold, brash and 100 per cent US identity. When you wore a Tommy Hilfiger T-shirt everybody knew exactly what you were wearing, so long as they could read.

Of course, these logo-centric US brand values had been present in other fashion labels – most obviously Calvin Klein and Ralph Lauren – but Tommy Hilfiger had taken it a step further. And by 1999, Hilfiger himself was starting to feel it may have been a step too far. ‘When business plateaued in 1999,’ he explained, ‘we thought the customer didn’t want the Tommy logo anymore. So we took it off a lot of stuff. We made it tiny. We became very insecure about being a red-white-and-blue logo brand. We thought we had to be much chic-er, more in line with the Euro houses like Gucci and Prada.’ In other words, Tommy Hilfiger abandoned the values that had built the brand. Of course, the brand had in many senses become credible in high fashion circles but this credibility arrived, in part at least, by the brand’s urban appeal. In No Logo (written before Tommy Hilfiger’s dip in fortunes).

Naomi Klein explored the twin identity of the Tommy brand: ‘Tommy Hilfiger, even more than Nike or Adidas, has turned the harnessing of ghetto cool into a mass-marketing science. Hilfiger forged a formula that has since been imitated by Polo, Nautica, Munsingwear and several other clothing companies looking for a short cut to making it at the suburban mall with innercity attitude.’

However, this twin identity (suburbia meets the inner-city) happened initially by accident. In the beginning, Tommy Hilfiger produced clothes for the ‘preppy’ market, falling somewhere between the Gap and Ralph Lauren.

Pretty soon though, the hip-hop community embraced the label, and the Hilfiger logo could be seen popping up on every other rap video. It was only later that Hilfiger deliberately designed clothes for this market. In effect, this meant accentuating what was already there – making the prominent logo even more prominent, and the baggy T-shirts even baggier.

This strategy proved successful because the company was only exaggerating a formula that was already there. In 1999 though, the formula was abandoned completely, and, because of this, it strayed from the original preppy style that had made the brand so strong originally. For instance, Hilfiger launched a ‘Red Label’ sub-brand aimed at the very top of the market. This logoless range included such garments as US $7,000 patchwork, python-skin trousers. Clearly these items were out of the reach of the average Tommy Hilfiger customer. Another bad move was the decision to place stores in locations such as London’s Bond Street and Beverly HillsRodeo Drive. ‘The London flagship store wasn’t open for a year when we realised we had made a mistake,’ he said in the New York magazine interview. ‘And the average age on Rodeo Drive is probably 50 years old. My customers are much younger than that. We thought all the cool people in LA come to Rodeo. But they don’t.’

Since 2001 though, Tommy Hilfiger has been learning from his mistakes and going back to basics. ‘As a result of learning from our errors, we went back to our roots: classics with a twist. We’re about colour, we’re about preppy, we’re about classic, we’re about America!’ And as a result of this turnaround, customers and investors alike are again comfortable with the Tommy Hilfiger brand. ‘It will never again be the hot, sexy, overly talked about, flashy, zippy, fast-growing company it was, but it will be a damn nice company with lots of cash,’ observed one Wall Street analyst at the time of the turnaround. ‘What you’ve got now is a company that went from an Aplus to an F-minus. And now it’s going back to a B. And it’s a hell of a business as a B.’

Lessons from Tommy Hilfiger

  • Don’t deviate from your formula. Known as the brand which produces ‘classic with a twist’, Hilfiger concentrated too much on the ‘twist’ and not enough on the ‘classic’.
  • Don’t compete with irrelevant rivals. Tommy Hilfiger attempting to compete with successful European high fashion brands such as Gucci and Prada on their own terms was a mistake which even Hilfiger himself has acknowledged.
  • Don’t over-extend the brand. During its bad patch, Tommy Hilfiger moved into a lot of new product categories for which it wasn’t suited.
  • Don’t be scared of your logo. The logo is what made Tommy Hilfiger the brand it is today. In fact, the Tommy Hilfiger brand is pure logo. When the logo disappeared or was toned down, the brand ran into trouble.

Brand people failures: Ratner’s

When honesty is not the best policy

One of the most popular and influential books ever written about marketing is The 22 Immutable Laws of Marketing¸ written by Al Ries and Jack Trout and first published in 1993. Their fifteenth ‘law’ is ‘the law of candour’. This states that if a company admits a negative aspect about a brand, the consumer will think more highly about that brand because of the company’s sheer honesty.

Ries and Trout say that it goes against corporate and human nature to acknowledge a problem or weakness. ‘First and foremost,’ they write, ‘candour is very disarming. Every negative statement you make about yourself is instantly accepted as truth. Positive statements, on the other hand, are looked at as dubious at best. Especially in an advertisement.’

The authors go on to give a list of companies which have used this honest approach to great effect. They admire, for instance, the strap line ‘Avis is only number two in rent-a-cars.’ They also declare that ‘positive thinking has been highly overrated’:

The explosive growth of communications in our society has made people defensive and cautious about companies trying to sell them anything. Admitting a problem is something that very few companies do.

When a company starts a message by admitting a problem, people tend to almost instinctively open their minds. Think about the times that someone came to you with a problem and how quickly you got involved and wanted to help. Now think about people starting off a conversation about some wonderful things they are doing. You probably were a lot less interested.

Another example given is that of Listerine mouthwash, a brand that successfully deployed the slogan: ‘The taste you hate twice a day.’

However, despite the many successful examples of frank candour, there are times when honesty is not the best policy. Of course, if there is a serious and indisputable flaw with a product then it needs to be recognized and addressed by brand managers, so that they can move on to a more positive message. But if it is only an honest but negative opinion that is being expressed, it usually causes brand damage.

As Ries and Trout themselves acknowledge, ‘the law of candour must be used carefully and with great skill.’ To understand what can happen when great skill is not deployed, you could do worse than ask Gerald Ratner.

During the 1980s he built his Ratner’s business into the world’s biggest brand of jewellery, through a series of publicity stunts and takeover deals. In 1991, however, Ratner managed to destroy his brand in the space of a sentence. In a speech to the Institute of Directors in London, he said the secret to Ratner’s success was that many of its items of jewellery were ‘total crap’.

He also joked that Ratners earrings were likely to last for less time than a Marks & Spencer sandwich. Although the room filled with laughter, Ratner’s investors and customers couldn’t see the joke. Shortly afterwards he backtracked, saying that he was referring only to a very few items, but the damage had been done.

The Ratner’s brand name was now synonymous with ‘crap’ products and a lack of respect for its customers. The company’s share price plummeted from £2 to less than 8p, and consumer confidence sank without trace. Group profits fell from £112 million in 1991 to losses of £122 million a year later.

‘Consumers would have been totally embarrassed and humiliated to have bought its product. It just became impossible,’ says Tom Blackett, group deputy chairman of London-based branding consultancy Interbrand. Gerald Ratner, and his eponymous brand of jewellery, were forced to make an exit. Shortly after he left the jewellery trade, he took part in an interview and appeared to be taking the situation in his stride. ‘Someone said he had met comedians who wanted to be millionaires, but I must have been the only millionaire who wanted to be a comedian,’ he told the interviewer. However, in 2002 Ratner was back on a mission to resurrect the Ratner’s name and create an online version of the brand, called simply Ratners-Online.

‘I didn’t want to use the Ratner’s name but research shows that it is still the best-known name in the jewellery business despite the fact that there hasn’t been a Ratner’s shop for years,’ Gerald told the Evening Standard in 2001. In another interview, for the Guardian, he said the name would provoke curiosity from Web users. ‘We were going to call it something else but thought it was more likely to get hits on the Internet – even from a curiosity point of view.’

Whether this curiosity will be converted into long-term sales remains to be seen. Gerald also needs to make sure that this time he keeps his foot a good distance away from his mouth. ‘It is difficult for me to resist jokes, even if I am the only one that really finds them funny,’ he chuckles. ‘But I really will try.’

Lessons from Ratners

  • Think before you speak. It often takes years to build trust among consumers, but as Gerald Ratner proved, that trust can be blown in a couple of words.
  • Remember that most dangers come from within. Most brand damage does not arise from product flaws or distribution problems. A lot of it comes from employees or managers who fail to live up to their role as ambassadors of the brand. In service industries, where most employees are interacting with the public on a regular basis, it is especially important to maintain a positive attitude.

Tuesday, December 05, 2006

Brand PR failures: Perrier’s benzene contamination

No matter how careful a company is, bad things can happen to its brands. The part that is within the company’s control is how it decides to handle crises when they occur.

The company most respected for its crisis management capabilities is Johnson & Johnson. When a problem emerges with a Johnson & Johnson brand, the company addresses it immediately, and never tries to cover it up.

For instance, when the company learned that its Tylenol brand of painkillers had been tampered with in a US supermarket, the company acted straightaway.

It ordered that the Tylenol product be taken off the shelves of every outlet in which it was sold, rather than just the specific supermarket where it had been tampered with.

Once the recall was in effect, Johnson & Johnson announced that it would not put Tylenol painkillers back on the market until the product was more securely protected. This meant making sure Tylenol had tamper-proof packaging, and so the company designed individually packaged pills in foil bubbles. Of course, both the recall and the repackaging cost Johnson & Johnson a lot of money, but this short-term loss was more than compensated by the fact that Tylenol’s brand was preserved in the long term. Some experts have argued that the Tylenol brand eventually benefited from the crisis, because consumers were so satisfied and reassured by the company’s response.

Not all brand crises are handled so effectively. In 1990 high levels of the toxic substance benzene were discovered in bottles of Perrier. The company had little choice but to recall the product. Within a week the company withdrew 160 million bottles worldwide.

However, when the media first found out about the problem Perrier did not know what to do. For a brand whose whole identity was based around the idea of ‘natural purity’, the benzene incident was clearly a disaster.

Although the recall had been announced straightaway, Perrier’s information vacuum started to provoke even more consumer anxiety than there would have been otherwise.

Furthermore, although the company set up a 24-hour hotline in the UK, Perrier refused to see it as a global issue. This was a mistake. As Alex Brummer commentated in the Guardian newspaper: ‘all politics may be local, but brands are global.’ There was a lack of a coherent and consistent response from Perrier subsidiaries, and no lead or co-ordination from the French parent company Source Perrier. Mixed messages were being given, with contradictory and conflicting statements emerging from different divisions of the company. In some cases, the media was even given incorrect information.

Perrier therefore made a bad situation worse and failed to tackle the global implications of the crisis.

Of course, the Perrier brand is still fizzing away. Indeed, when Perrier returned to the shelves it was accompanied by the successful ‘Eau! Perrier’ advertising campaign. However, Groupe Perrier was taken over by Nestlé in 1992, and the brand has still not been able to regain its pre-1990 volume share.

Lessons from Perrier

  • Don’t hide the truth. ‘Managing news in crisis, not just wars, is not about trying to suppress bad news – that will lose your credibility,’ says Martin Langford, managing director of Burson-Marsteller’s corporate and public affairs practice. ‘Consumers and journalists are far too smart. You’ve got to be dead straight with the media because your employees will be if you’re not.’
  • Don’t breach the consumer’s trust. A brand has been defined as the capitalized value of the trust between a consumer and a company. Breach that trust, and the brand is in trouble.
  • Accept that global brands need coherent communications policies. A global brand such as Perrier cannot ignore the fact that problems in the United States will be able to impact on sales in Europe. Such a brand needs a common purpose throughout the organization, so the response to a crisis can be co-ordinated.
  • Recognize that some brands’ crises are worse than others. The benzene contamination was the worst possible crisis to afflict a brand associated with natural purity.

Monday, December 04, 2006

Rebranding failures: Consignia

A post office by any other name

When the UK state-owned Post Office Group decided to change its brand identity, a new name was the first on the shopping list. The reason for the brand makeover was partly to do with the fact that the 300-year-old Post Office Group was no longer simply a mail-only organization. It had logistics and customer call centre operations, and was planning a number of acquisitions abroad. There was also growing public confusion about what the purpose of the organization’s three arms – post offices, Parcel Force, Royal Mail – actually was.

‘We were researching hard into what this organization called the Post Office was facing,’ explained Keith Wells to BBC Online. Wells was from Dragon Brands, the brand consultancy that helped to repackage the organization.

‘What we needed was something that could help pull all the bits together.’

The consultancy considered the name of each division but none was appropriate. The name ‘Post Office’ was dismissed as ‘too generic’. ‘Parcel Force’ was, again, inappropriate. So what about ‘Royal Mail?’ ‘That has problems when operating in countries which have their own royal family, or have chopped the heads off their royals,’ said Wells. So Dragon Brands set about creating a new umbrella term for the whole organization. It wanted to come up with something non-specific, something which would work equally well throughout Europe, not just in the UK, and most of all something which didn’t tie the Post Office Group down to mail.

There is a wise logic behind such thinking. After all, many companies have come unstuck as time moves on and their name is no longer relevant. For instance, Carphone Warehouse may have once imagined a world full of consumers waiting to upgrade their carphones, but the reality is that now most people wouldn’t recognize a carphone if it hit them over the head. And other brands have managed to create very successful identities with brand names that have no direct relevance to their products, or anyone else’s products for that matter. This is especially true on the Internet. While selfdescriptive brands such as and flopped, vague and mysterious brand names such as Amazon, Google and Yahoo! have worked exceptionally well. Indeed, many of the largest brands in the world follow this model. To take the most obvious example, no-one who spends their money via Richard Branson’s company expects to take home a real virgin, any more than people buying books at Amazon expect to be transported to a tropical rainforest. These names are about evocation. They are about the identity of the brand, not the product.

Before the Post Office, many other British institutions had also tried to bring themselves into the new millennium. British Steel had become ‘Corus’ following its merger with Koninklijke Hoogovens. ‘Centrica’ was a former arm of British Gas. ‘Thus’ was the new name given to the telecoms division of Scottish Power. The list goes on and on.

So what was the name given to the Post Office? On 9 January 2002, the group’s chief executive, John Roberts, stood outside his organization’s headquarters and declared that the name was Consignia. This name, he added, was ‘modern, meaningful and entirely appropriate’ to the rapidly evolving organization.

Dragon Brand’s Keith Wells was equally happy with Consignia. ‘It’s got consign in it. It’s got a link with insignia, so there is this kind of royalty-ish thing in the back of one’s mind,’ he explained to the BBC. ‘And there’s this lovely dictionary definition of consign which is “to entrust to the care of.”

That goes right back to sustaining trust, which was very, very important.’ In addition, the name change had been approved by the controversial government minister Stephen Byers, who was at that time the trade secretary.

The reaction from the media and the general public was considerably less sympathetic. Some thought it sounded like a new brand of aftershave or deodorant. Others thought it was the name of an electricity company. The BBC’s Web site referred to ‘the most notorious ever Post Office robbery – that of the name itself.’ The Web site also asked the British public to e-mail their opinions of the name. Their responses were almost unanimously critical of the re-brand.

‘Consignia doesn’t sound like the national institution that the Royal Mail does. Instead, it reminds me of that brand of anti-perspirant, called Insignia,’ wrote one.

‘It’s a poor excuse to say that Royal Mail could be confusing when it takes a paragraph to explain what Consignia means,’ wrote another. One respondent e-mailed in with his tongue firmly in cheek saying that ‘given the current crisis within the Post Office, Consignia Plc seems like an excellent name. It is an anagram of Panic Closing.’

Soon it became clear that the name change was not having a positive effect. Although the Post Office had shifted to become a plc, the public still felt it belonged to them. If they didn’t like the new name, they therefore felt it was their right to be angry.

As the Post Office’s corporate performance started to falter, the name was blamed even more. ‘The name got muddied with the comments that business is doing appallingly – this idea that nothing had been the same since the name change. It’s a soft target,’ said Wells.

Soft target or not, May 2002 saw a U-turn as the new Consignia chairman Allan Leighton confirmed the name was to go – ‘probably in less than two years.’ He also admitted that he hated the name. ‘There’s not really a commercial reason to do it, but there’s a credibility reason to do it,’ he told BBC TV’s Breakfast with Frost programme. He said the name change was ‘unfortunate’ as it had coincided with a period of underperformance by the company (it lost over one million pounds a day during one month in 2001).

However, the news was lost on some people, as the Consignia brand had failed to become a household name. ‘I didn’t know that the Post Office wasn’t called the Post Office,’ one member of the public told a radio news interviewer at the time of the announcement. ‘Everyone I know calls it the Post Office.’

Lessons from Consignia

  • Don’t change for the sake of change. The public perception was that the whole rebranding exercise was pointless. This impression was confirmed by a lack of advertising. ‘We thought what would be the point of advertising if all you would be saying is this name change is happening which is not going to affect you?’ justifies Dragon Brands’ Keith Wells.
  • Realize that business realities have an impact. The new brand suffered due to the fact it coincided with a poor period of corporate performance.