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Tuesday, May 08, 2007

Tired Brands: The Cream nightclub

Last dance saloon?

In the 1990s Liverpool nightclub Cream grew from being a small intimate venue catering for around 400 clubbers every Saturday night, to being one of the UK’s first ‘super clubs’ regularly attracting thousands of devotees from all over the country. It quickly capitalized on its success by launching merchandising material, setting up its own record label in partnership with Virgin, touring nationally and internationally with a variety of sponsors, and even embarking on a series of dance music festivals called Creamfields, catering for around 40,000 clubbers. By the end of the 1990s there were regular Cream nights in places as far afield as Buenos Aires and Ibiza, as well as the brand’s native Liverpool.

Yet in September 2002, Cream co-founder and boss James Barton announced that the Liverpool club was closing. Although Barton said the reason for the closure was to concentrate on other aspects of the company, he also admitted to Radio One that ‘if the club was doing the sort of numbers it was doing four or five years ago we wouldn’t be making this decision.’ The media responded by saying that the decision not only signified the imminent death of the Cream brand, but of club culture in general. Whether or not Cream manages to survive without its spiritual home remains to be seen, but the closure certainly indicates tough times ahead.

So why exactly did it happen? How could a club that became a household name for a generation suddenly lose its appeal? The reasons, as you might well expect, are numerous.

One argument was that as Cream expanded it gradually lost its cool factor. In 1992, the year James Barton and Darren Hughes set up the club, Cream was immediately viewed as a welcome antidote to the business-minded approach of the London club, Ministry of Sound.

Word of mouth helped to fuel its early growth, along with celebratory pieces in dance music magazines such as Mixmag which named Cream its ‘club of the year’ in 1994. Around this time Cream decided to expand its operation, moving the club to a larger venue and launching nights in Ibiza.

By the middle of the decade, Cream was everywhere. Clubbers were sporting tattoos of the distinctive Cream logo (which itself had won awards for its ‘propeller-style’ design), DJs from around the world were lining up to play in the main room, and one Liverpool couple even decided to get married at a Cream event. In 1996, Cream was cited as the third main reason people applied to Liverpool University in a poll conducted by the university. Over 60,000 people rushed out to buy the ‘Cream Live’ CD in the first week of release.

Then, in 1998, the first signs of trouble started to appear. Darren Hughes left the company to set up his own super club, Home, in London’s Leicester Square. The year after the first ‘Creamfields’ festival, Hughes started his own ‘Homelands’ event. The club’s former director was now the competition.

Another problem was the cost of putting on Cream events at the Liverpool club. Ironically, for a club which helped to establish the cult of the ‘superstar DJ’, the fees charged by big names such as Fatboy Slim, Sasha, Paul Oakenfold, the Chemical Brothers and Carl Cox were becoming the major weekly cost. However, without paying for the DJs, Cream would have risked losing its market altogether. ‘It’s the performers who make the real money, though they used to draw in enough custom to make it worth the club’s while,’ says Mixmag editor Viv Craske. ‘Big clubs still rely on the same old DJs, despite no longer drawing the crowds.’ With big names typically charging four or five figure sums for two hours’ work, the costs could clearly be crippling for a club such as Cream which always advertised their events on the strength of their DJ line-ups.

Another factor, and one beyond Cream’s immediate control, was the fact that its original customer was now getting too old to be on the dance floor at three in the morning every Saturday night. For many 18-year-olds, the idea of ‘super clubs’ and ‘superstar DJs’ was starting to be wholly unattractive. As Jacques Peretti wrote in a July 2002 article in the Guardian, this generational shift took place at the end of the 1990s:

These teenagers were more interested in rebelling against their siblings and joining a band. Instead of going to clubs, it became cool to follow American nu-metal bands such as Slipknot and Papa Roach – bands that preach hate and pain in ludicrous gothic garb, not peace and love, as ageing house DJs might. [. . .] Even to their natural constituency, super clubs epitomised everything that had gone wrong with club culture [. . .] The cutting edge of this culture now is not Cream or Ministry of Sound, but tiny venues with a word-of-mouth following.

As Cream became ever-more commercial, it was seen to lose its point. What did it have to offer which couldn’t be provided by mass-market pub, club and restaurant corporations such as Luminar and First Leisure (which began to borrow the super clubs’ music policy for their own venues but without having to fork out for the high profile DJ)? Cream, and the other super clubs, had suddenly seemed to lose their sense of creativity and personality. (It is perhaps not a coincidence that in 2002, the year Cream shut its Liverpool club, the biggest nightclub event in the UK was School Disco – which completely rejected the dance music ethos in favour of unpretentious good fun, with clubbers dressing in school uniforms and dancing to Duran Duran and Dexy’s Midnight Runners).

Some people have also questioned the competence of Cream’s management team. The owners certainly had no formal training, as with most people in the clubbing industry. As Oxford graduate, former merchant banker, chairman and co-founder of Ministry of Sound, James Palumbo, once put it: ‘The world of nightclubs is so populated by incompetent people that you only have to be a bit better to make a success of it.’

This accusation is at least partly unfair though. In many ways Cream has been too ‘business-like’, at least ostentatiously. In an interview with the Liverpool Echo, James Barton was asked about the decision to close the club.

‘It is something which is unfortunate but I think we have to make these sorts of decisions,’ he said. ‘At the end of the day we are businessmen.’ Of course, they are businessmen, but that doesn’t mean they have to advertise the fact.

Equally, they were perhaps unwise to make such a big deal out of their tenth anniversary.

Cream is, or at least should be, a youth brand. As such it needs to be about the here and now, not the past. As one anonymous commentator remarked on the Internet, ‘when was the last time you watched other youth brands like Nike or Nintendo celebrate their birthdays.’ Certainly, when your core market is 18–24 year-olds the last thing you want to be telling them is that you are 10 years old. They don’t care about what you were doing when they were, in some cases, only eight years old. The club’s reputation has also been tarnished by its association with drug use. Merseyside Police expressed concerns in 2000 about the ‘drug culture’ at Cream, saying it could have taken more measures to prevent drug dealing at the venue. In 1999, a 21-year-old woman died after collapsing on the dance floor.

Although James Barton said after the club’s closure that the German brand remains at ‘the forefront of youth culture’ there is an increasing amount of evidence to the contrary. Its ‘Cream Collect’ album sold under 2,000 copies in total.

Competitors have also been quick to isolate themselves from the Cream closure, by blaming a lack of brand innovation. ‘Cream closing is a seminal moment in club land history,’ Ministry of Sound managing director Mark Rodol told the Independent newspaper. ‘It’s a lesson to club promoters that you can’t sit still. Ministry of Sound’s music policy changes at least every twelve months and has always done so, with our nights proving there’s still thousands of clubbers looking for a great night out.’

Although it remains to be seen whether the Cream brand will turn sour, or once again be able to rise to the top, there is no denying it needs a radical overhaul if it is to survive. ‘Clubs like Cream no longer empathise with customers,’ says Mixmag’s Crastke. ‘They’ve lost the trust of the kids. And once you’ve lost the kids, it’s very hard to get them back.’

Lessons from Cream

  • Don’t contradict your brand values. If you’re a nightclub which is open untilsix in the morning, your key market tends to be people under 24 years old. It was a mistake then to emphasize the age and longevity of the Cream brand to a market which cares little about such values.
  • Adapt or die. For youth brands, the only constant is change. The Cream nightclub relied on the same tried and tested formula for too long, using expensive DJs who had passed their sell-by date.
  • Avoid over-exposure. By 2000, Cream could be found everywhere. At festivals, in clothes shops, in music stores, on TV adverts. As the brand extended its line however, the identity became diluted and consequently the club struggled to attract enough custom to keep it going.
  • Watch market trends. The fact that 200,000 people went to see Fatboy Slim live on Brighton beach in the same month that Cream closed down proved that there was still a strong market for dance music events. It also proved that the Cream nightclub may have been moving in the wrong direction.

Monday, May 07, 2007

Tired brands: Ovaltine

When a brand falls asleep

In 2002, the Ovaltine brand celebrated its 98th birthday. That same year, it closed its UK factory and was forced to admit it had finally lost its main market. The Ovaltine brand was put up for sale and, at the time of writing, no interested buyers have emerged.

First produced by a Swiss food company in 1904, the malt drink with added vitamins became the UK’s favourite bedtime drink. However, although commonly sipped to get a good night’s sleep, the original advertising for the brand highlighted opposite qualities. Indeed, Ovaltine was an official sponsor of the 1948 Olympics and was billed as an ‘energy drink’ years before the term became widely adopted. In 1953, it was used by Sir Edmund Hillary on his famous Everest expedition and it was even reported to cure impotence, decades before the arrival of Viagra.

Curiously, this image was reversed in the later 20th century, and it became more popular as a cure for insomnia than a tonic for athletes and the sexually challenged. As Mark Lawson wrote in the Guardian in June 2002, it also became seen as a drink for the elderly through advertising campaigns steeped in nostalgia:

The singing kiddies of the radio show, winsome in their Winceyette pyjamas, were accurate reflections of contemporary childhood at the time they started but, as they continued to be the official faces of the brand, kept sending the subliminal image that it was something your granny used to drink. In common with cocoa and Horlicks, Ovaltine took on the image of the sedative nightcap of veterans. Any potential buyer for the drink might reflect that the backwards-looking website Sterling Time – dedicated to ‘British nostalgia. . . Englishness and patriotism’ – contains a large section memorialising the Ovaltineys [the children used for the 1930s Ovaltine campaigns].

Future anthropologists may also be interested in the fact that so many people were once drawn to draughts reputed to put you out for the night. Part of the reason for the decline of Ovaltine is surely that more recent generations exist in a habitual state of exhaustion, caused by longer working hours, the collapse of public transport and the cult of intensive, hands-on parenting among young mums and dads. They are also far more likely than their grandparents to drink wine nightly and have the option of late-night or allnight television: all reliable knockouts. Graham Norton, Jacob’s Creek and long-distance commuting now achieve much of what Ovaltine used to.

When Ovaltine sales started to slip, it launched spin offs such as Chocolate Ovaltine, Ovaltine Light and Ovaltine Power. It also started to use contemporary children in its advertising, in its attempt to reposition itself as a ‘now brand’ as opposed to a ‘then brand’.

However, unlike other drink brands – such as Lucozade, which moved from medicine status to sporty essential through clever marketing – Ovaltine has not been able to shake off its sleepy, nostalgic identity. Whether a new owner will be able to perform such a miracle remains to be seen.

Lessons from Ovaltine

  • Don’t build unpopular brand associations. ‘The problem of this traditional bedtime cuppa is that it had become associated with two unpopular commodities, nostalgia and somnolence,’ wrote Mark Lawson.
  • Don’t fall into the nostalgia trap. Nostalgia can be a powerful selling force, but it can also ultimately make a brand irrelevant to the present market.

Sunday, May 06, 2007

Brand Extension Failure: 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.’

Brand People Failures: Guiltless Gourmet

Helping the competition

Although most people failures are a result of unscrupulous decisions or vicious personality clashes, on rare occasions people let their brands down despite having the best of intentions. This is what happened to Michael P Schall’s brand, Guiltless Gourmet, when he gave away the secrets of his success to his chief competition.

In the 1990s, Guiltless Gourmet was a small business success story which attracted a great deal of attention in its native Texas. The company, which made baked, low-fat tortilla chips, had evolved in the space of five years from being a home-based operation into a US $23 million business with a massive factory.

In addition to media support, the company also had endorsement from such lofty US health authorities as the Center for Science in the Public Interest, which supported claims that the Guiltless Gourmet range was a healthy – indeed ‘guiltless’ – alternative to other snack brands.

As is so often the case, Guiltless Gourmet soon became a victim of its own success. Frito-Lay, one of the largest US companies producing snack-food (and normally of the ‘guilt-filled’ rather than ‘guiltless’ variety) had watched the phenomenal growth of this small Texan company and wanted a piece of the action.

Schall, the owner of Guiltless Gourmet, had worked as a consultant for Frito-Lay, and had even invited the company to acquire the brand. But Frito-Lay hadn’t warmed to that idea. Instead, it wanted to create an entirely new tortilla brand to take on Guiltless Gourmet. And given Frito-Lay’s wellestablished distribution network, it wasn’t too long before its new product – low-fat Baked Tostitos – was available in supermarkets across the United States. Straightaway, Frito-Lay’s offering was chomping its way through Guiltless Gourmet’s market share. Within a year, Guiltless Gourmet’s revenues reduced to US $9 million, and the company was forced to shut down its factory and start outsourcing. Its workforce slimmed down from 125 to 10 employees.

Although it is easy to see this situation as unavoidable from Guiltless Gourmet’s perspective, there are always ways in which a brand can protect itself from outside threats. For instance, some have said that Guiltless should have broadened its product line into other relevant categories or outsourced production at an earlier stage.

There is also the issue of Schall’s decision to work with Frito-Lay as a consultant. When Business Week magazine enquired, Frito-Lay wouldn’t discuss the aborted buy-out nor the suggestion that it may have just been scouting for competitive intelligence. Of course, we can only assume that Frito-Lay are ‘guiltless’ but even they admit that the information provided by Guiltless Gourmet was helpful. ‘Guiltless Gourmet provided us with a great benchmark to get our product better-tasting,’ admitted Frito-Lay spokeswoman Lynn Markley.

Although Guiltless Gourmet’s low fat tortilla chips are still on sale, the future of the brand is still in doubt. Schall still believes the best route may rest with a buyout. ‘Our brand has great value,’ he told Business Week. ‘It would be good to become part of an organisation where that brand can be leveraged.’

Lessons from Guiltless Gourmet

  • Be aware that success breeds competition. Guiltless Gourmet’s success within a niche product category was inevitably going to catch the attention of larger rivals.
  • Have a Plan B. Brands need to prepare for such an eventuality and have a back-up plan.

Saturday, May 05, 2007

Rebranding failures: BT Cellnet to O2

Undoing the brand

In September 2001, UK mobile phone operator BT Cellnet announced it was getting rid of its brand name in favour of a new international identity.

The decision followed a continuing drop in its market share of call revenues. Furthermore, BT Cellnet’s arch-rival Orange (often admired for its brand name) increased its revenues and knocked BT Cellnet into third place, behind both Orange and Vodafone. Cellnet’s first parent company, British Telecom, had sold off its mobile operation and the new owners felt no reason to stick with the struggling identity.

When the announcement to scrap the brand name was made, analysts agreed it might be the right move. ‘Cellnet had a head start being part of BT but it has somewhat sat on its laurels,’ said Louisa Greenacre, telecoms analyst at ING Barings. ‘Orange has been more aggressive, while Cellnet has not got its branding strategy right, particularly as the brand Genie, BT’s mobile phone Internet portal, is slightly distracting.’ She added that BT Cellnet’s strategy, similar to many mobile operators, had been to grow a customer base as quickly as possible, but brand loyalty would be the key to increasing average revenues from that user base.

The new brand name was O2, the chemical symbol for Oxygen. ‘We have chosen a name that is modern and universal,’ said Peter Erskine, chief executive of the mobile business. The new name spelt the end for the variety of brands carried by the BT Wireless Group. These included Cellnet in the UK, VIAG Interkom in Germany, Telfort in the Netherlands and Digifone in the Republic of Ireland. The Genie mobile Internet portal was also to be relabelled.

So why O2? ‘Oxygen is the key thing to life and you don’t have to teach people to spell it,’ explained Peter Erskine. ‘There were hundreds of names to start with and O2 leapt off the pages fairly early. It’s a universal term. We wanted something that was easy, clean and fresh.’

The branding exercise was viewed as all-important, both inside and outside the company. ‘Brands are now being measured in a way they haven’t been measured before,’ one analyst told the Telegraph. ‘They’re not seen as a nice accessory, they’re seen as a valued part of the business.’ BT Cellnet was a confusing brand, complicated by BT’s other UK mobile brand identity, Genie. When British Telecom sold off its mobile operation, the new owners felt the name-change would help to forge a clearer, more relevant identity. But did it?

The early signs are that it didn’t. Indeed, despite a massive marketing campaign including sponsorship of the TV show Big Brother, many are unfamiliar with the name. According to a poll conducted by Continental Research for their Summer 2002 Mobile Report, almost eight in ten BT Cellnet subscribers did not realize the service had been renamed O2. ‘The decision of the new owner to abandon the brand has left customers – many of whom are older executives who were the first to buy mobiles – unimpressed,’ reported the Guardian. ‘This does suggest there has been some difficulty communicating the change of name to current users of the O2 network,’ agreed Colin Shaddick, the director of Continental Research.

Lessons from BT Cellnet

  • Don’t overlap brand identities. When BT set up different mobile businesses with different names, such as Cellnet and Genie, it created consumer confusion.
  • Realize that brand names can’t be ‘undone’ overnight. Despite investing millions into the name change, O2 remains unfamiliar to many mobile users.

Friday, May 04, 2007

People Brand Failures: Hear’Say

From pop to flop

The UK reality TV show, Popstars, was the first programme to document the making of a band from obscurity to pop superstardom. The aim was to create a pop ‘brand’ that would not only be able to sell albums and singles, but also a wide variety of merchandise.

Hear’Say was the end product – consisting of brand members Noel Sullivan, Danny Foster, Suzanne Shaw, Myleene Klass and Kym Marsh. Their first hit, ‘Pure and Simple’, released in March 2001, became the fastest selling single in UK music history, with sales of over 1.2 million copies. The first album, ‘Popstars’, also went to number one and a 36-date tour was sold out.

However, as the memory of the TV show started to fade, so did public interest. The strength of the Hear’Say brand suddenly seemed to be in doubt.

The band’s second album was a complete flop and they started to get heckled at public appearances.
As the band had been completely manufactured (none of the members had known each other before the TV show), relationships within Hear’Say soon broke down. As a result of constant bickering, Kym Marsh left the band at the beginning of 2002.

After she had left, the band made the mistake of holding a supposedly ‘public’ audition for her replacement only to employ one of their dancers, Johnny Shentall. This generated even more bad headlines.

Then, on 1 October 2002 a statement from their record company Polydor confirmed that the band was splitting. The statement explained ‘they felt they had lost the support of the public and Hear’Say had come to a natural end.’

The band members also told the media that they were tired of getting abuse from the public, which made their lives ‘hell’. Suzanne Shaw told The Sun newspaper that their pop brand fell victim to the fickle nature of fashion. ‘It’s like a pair of trainers: one minute they’re in and the next minute they’re out,’ she said.

So while the Popstars phenomenon continued to be a success, spawning shows such as Pop Idol and Popstars: The Rivals in the UK and American Idol in the US, the pop brand it created was on a downward slope almost from its conception.

Lessons from Hear’Say

  • Hype can turn against you. At the start of 2001 Hear’Say was the most hyped band never to have released a single. However, the weight of the media interest soon turned against them to crush the brand.
  • Have something to unify your brand. The Spice Girls weathered Geri Halliwell’s departure (at least in the short term) by rallying behind the ‘Girl Power’ banner, but as the Guardian reported ‘poor Hear’Say, only in it for the fame, didn’t have so much as a slogan to stand on.’

Brand PR Failures: Farley’s infant milk

The salmonella incident

When the UK Central Public Health Laboratory made the connection between Farley’s infant milk and salmonella in 1985, the story made the headlines. The product was recalled immediately at a cost of £8 million. Farley’s parent company Glaxo Smith-Kline was forced to put Farley’s into liquidation and sold its two plants to high-street chemist Boots for £18 million.

Boots had an almost impossible task in rebuilding the brand, given the amount of negative media coverage it had suffered. After all, health scares are always damaging for brands, but health scares involving babies are, if anything, even more catastrophic.

Furthermore, while Farley’s had been off the shelves, its two main competitors – Cow & Gate and Wyeth – had stepped up their production leaving little room for Farley’s to squeeze back in. Although Boots ploughed millions into promoting and marketing Farley, the brand’s market share was never able to return to the levels it had reached before the salmonella incident. After years of persistence, eventually Boots sold the business to Heinz in 1994.

Lessons from Farley’s

  • Keep a look out for internal threats. The salmonella incident had been avoidable because it had been caused by an employee not following adequate procedures.
  • Remember that competitors will take advantage. After Farley’s products had been taken off the shelves, its main competitors seized the opportunity and made it harder for Farley’s to make a comeback.

Thursday, May 03, 2007

Tired brands: Moulinex

Going up in smoke

Moulinex, the French-based electrical household appliance manufacturer, filed for bankruptcy in September 2001. The action placed the brand in immediate jeopardy, but was seen as necessary. ‘If they want to keep going but the shareholders wouldn’t agree, they had to do this, otherwise it would have meant liquidation,’ said one analyst at a Paris-based brokerage.

As the company neared collapse, Moulinex’s 21,000 employees started to resort to unusual methods in order to keep their jobs. One microwave factory in northern France was occupied by workers and then set on fire. The following day employees returned and threatened to detonate homemade bombs to destroy what was left of the plant. According to Business Week magazine, union officials even kidnapped the government appointed mediator to try and get a better deal on lay-off packages. ‘I am somewhat detained, but it’s not a real drama,’ was the message the nabbed mediator managed to phone in to the press.

These dramatic events constituted only the final chapter in what had been a slow and steady slide for the company. Under the management of Moulinex founder, Jean Mantelet, the company failed to anticipate the economic slowdown of the early 1980s, and from 1985 onwards losses began to mount up. Another problem related to the company’s core product offering – microwave ovens. Asian manufacturers were flooding the European market with similar products, and often at lower prices. But still Moulinex continued to spend money, with a strategy based on the takeover of other companies, such as the luxury coffee-maker specialist Krups, which Moulinex acquired in 1987. Debts steadily grew, and in 1996 Moulinex tried to return to profit by laying off 2,600 workers. This tough measure worked, at least in the short term.

In 1997, the company declared a profit for the first time in years. However, the celebrations were short-lived. Not only had the job-cuts damaged the brand’s reputation in France, the following year saw the new collapse of the Russian economy. As Russia was Moulinex’s second largest market, sales were dramatically affected and the company went back into the red. Things got even worse with a similar economic crisis in Brazil, a country where Moulinex had made various acquisitions.

In September 2000, the company merged with the Italian company Brandt. This did nothing to prevent declining sales and rising debt. The bankruptcy filing in 2001 was a drastic, but almost inevitable last resort.

As Moulinex is still struggling to find a buyer, the omens are not good for one of France’s most famous brands.

Lessons from Moulinex

  • Watch the competition. Moulinex was caught off guard by the influx of microwaves from Asian manufacturers.
  • Watch the economy. When economies are in trouble, so are brands. Following the economic crisis in Russia, Moulinex lost a major part of its market overnight.
  • Keep employers on side. The numerous disputes did more to damage Moulinex’s reputation in its native France than anything else.

Wednesday, May 02, 2007

People Brand Failures: Fashion Café

From catwalk to catfights

Although it eventually proved to be a flop, Planet Hollywood spawned a number of imitators. David Hasselhoff tried to launch a Baywatch Café chain complete with waitresses in red swimsuits. Magician David Copperfield reportedly ploughed millions into a magic-themed restaurant chain which later vanished in a puff of smoke. Steven Spielberg invested in Dive, a submarine-shaped restaurant in Los Angeles with a giant cinema screen, taking diners on undersea voyages. It sank without trace.

One of the most spectacular of these Planet Hollywood-inspired failures was the Fashion Café, launched in 1995 by supermodels Naomi Campbell, Christy Turlington, Claudia Schiffer and Elle MacPherson. However, the chain, with its main branches in London and New York, struggled from the start. The connection between models and food was not an obvious one, and ‘fashion’ was not a theme that made people feel hungry.

As soon as the disappointing figures were in, the drama really started. Elle MacPherson and Naomi Campbell publicly accused founder Tomasso Buti of encouraging them to invest in the chain only to see US $25 million ‘vanish’ from the account books. Then Claudia Schiffer walked out of the venture, blaming ‘old problems’ with Naomi. ‘Instead of promoting our cafés Naomi only thinks about collecting lovers,’ Claudia told Italian newspaper Il Messaggero. ‘We agreed to make more presentations for our group, but Naomi is always on a yacht with some boyfriend.’ Naomi wasn’t slow to respond in an interview with The Sun. ‘Greed is a bad adviser,’ she remarked. ‘Claudia is wrong to leave the business.

And it’s not true that I have abandoned the promotional side.’ The infighting may have helped to sell newspapers but it did nothing for the brand. Although some branches turned an operating profit most failed to cover all their start-up costs. In 1998, three years after opening, it was time to call in the receivers.

Lessons from Fashion Café
  • Don’t follow a failing formula. Planet Hollywood was already struggling in 1995 when the Fashion Café was launched.
  • Have a logical brand association. Models and food didn’t really gel together.
  • Don’t bitch about your colleagues. It will only make the wrong sort of press headlines.

Tuesday, May 01, 2007

Tired brands: Rover

A dog of a brand

Rover has been making cars since 1904 and contributed its share of technological advances – the Rover gas turbine car in 1950 and the four-wheel drive T3 in 1956 with its fibreglass bodywork.

The P4, P5 and P6 series became hallmarks of British motoring throughout the 1960s and 1970s, with the P4 affectionately known as ‘Auntie’ Rover. During the prosperous post-war years, Britons bought as many Rovers as the company could turn out, but its industrial problems in the 1970s signaled the start of a long decline.

In 1994 BMW bought the UK manufacturer, trying to transform it into a competitive carmaker for the 21st century. But BMW was mainly interested in the group’s Land Rover division of four-wheel drive vehicles.

The Rover 75 was the first new car produced after BMW had bought the troubled company so every effort was made to ensure that it was a technical and aesthetic success. At first, these efforts seemed to have paid off. Across Europe, Japan and the Middle East, the Rover 75 was heralded as an excellent car by the automotive press during the year of its launch, 1999. One magazine commended its ‘elegant retro look’, and described it as ‘classy, stylish and refined.’ In total, the car won 10 international motor industry awards. And yet, despite such weighty endorsements, people have been reluctant to buy the car. In 1999, just 25,000 were sold, which was well below target figures.

The problem, it appeared, was not with the car itself, but with the brand.

According to Jeremy Clarkson the Rover name has a certain stigma attached to it. ‘It’s just about the least cool badge in the business,’ he said. ‘Rover, the name, is a dog.’

Of course, this may only be a matter of opinion. The sales figures, on the other hand, are a matter of fact. ‘A look at the numbers shows that the buyers are bargain hunters who flock to the showrooms only in response to extraordinary discounts,’ reported the BBC. The sluggish sales associated with the Rover 75 were therefore symptomatic of a broader problem regarding the Rover name itself. The company had become, in the words of one journalist, ‘a living symbol of the UK motor industry’s decline.’

‘The Rover 75 was the turning point. It was supposed to be the car that set the seal on Rover’s renaissance,’ says Jay Nagley of the Spyder consultancy.

‘The Rover 75 was a good car, but the problem with Rover is the image. People in that market sector didn’t necessarily want the Rover image no matter how good a car it was attached to.’

By March 2000, BMW had had enough. With Rover piling up £2m losses a day, the firm decided to break up the company.

Lessons from Rover

  • If the name doesn’t work, change it. Critics suggested the Rover name should be dumped and rebranded as Triumph.
  • Concentrate on the brand not the products. ‘The problem is the brand rather than the cars,’ said motor consultant Jay Nagley.