Learning from Brand Failures

Close-up of several brown autumn leaves with dried surface, fallen on the ground above other such leaves.

“Failure is the key to success; each mistake teaches us something.” Morihei Ueshiba.

A few days ago, we had posted an article entitled ‘What Were They Thinking?” In that post, we had covered some of the lessons that Robert McMath had uncovered from his study of brand failures in the U.S.  McMath ran (I am speaking in the past tense because I am not sure whether his Center is still operational) the New Products Showcase and Learning Center in Ithaca, New York, that had a repository of over 80,000 brands and products that at one time or another were considered “new and innovative” or “new and improved” but are since dead. Based on their study of the 80,000 duds at the Center, Robert McMath and Thom Forbes wrote the book “What Were They Thinking?” in which they highlighted some of the mistakes that failed brands had made.

One can draw important lessons from studying brands that have failed. However, to ensure that the lessons are relevant, one needs to do a thorough study of the brands. In some cases, a single dominant factor could explain a failure; however, in others, the failure could have been due to multiple factors.

Matt Haig has attempted to study failed brands in some detail. In his book, Brand Failures: The Truth About the 100 Biggest Branding Mistakes of All Times, he has put forward the factors that led to the failure of 100 brands, many of them from the stable of very successful companies. Some of the lessons are generic while others are specific to the brands.

Why Brands Fail

Brands create a bond between themselves and consumers; once that bond is broken, consumers of the brand can be quite unforgiving. Haig identified seven generic reasons for brand failure:

  • Brand amnesia: In many cases, old, established brands tend to forget what they stand for, what really made them successful. In their quest for higher growth, they end up making a move that could prove disastrous. A classic example was the launch of new Coke. Coke was facing intense competition from Pepsi in the 1980s and taste tests were showing that younger consumers increasingly preferred the sweeter taste of Pepsi. In a move that is now considered cataclysmic, Coca Cola decided to change the formula of Coke and launched new Coke. The backlash from the consumers was so intense that the Coca Cola Company had to reintroduce the original formula as Coke Classic.
  • Brand ego: Sometimes, success makes some brands overestimate their importance. In these cases, the brands end up making one of two mistakes: they either support a market singlehandedly, as Polaroid tried to do with its instant photography, or they enter a new market for which they were totally ill-suited, as Harley Davidson did by line extending into perfumes.
  • Brand megalomania: If brand ego was not bad enough, some brands make the mistake of expanding into every conceivable product category. Some like Virgin succeed, at least for the time being. However, there are innumerable examples of brands, especially from Japan and Korea, which have just gone under.
  • Brand deception: You can fool some of the people some of the time. However, in this connected world, deceiving consumers is a foolish strategy that has very little shelf life. Being honest about your brand and product is increasingly the only worthwhile strategy.
  • Brand fatigue: Of course, some brands do become tired and need to be revitalised. However, in many cases, it was the company itself that gets bored with its own brand.
  • Brand paranoia: All brands operate in a competitive environment. However, some brands get so paranoid about competition that they commit one or more of three mistakes – never-ending lawsuits, reinvention of their brand at quick intervals and imitating competition, especially those that are doing well.
  • Brand irrelevance: All of us would like our brands to be immortal. However, the truth is that markets evolve and in some cases, brand becomes irrelevant and obsolete. Kodak is an example; despite inventing digital cameras, the brand continued to put its weight behind conventional photography. By the time it realised its folly, it was just too late; other brands had taken over the digital photography space.

Brand Myths

Some brands have also failed because they have been caught up in misplaced axioms. Here are six that Haig identified:

  • If a product is good, it will succeed. Al Ries and Jack Trout have written a lot about the myth of the better mousetrap. There are innumerable examples where the better product has just not worked. Take Sony’s Betamax, for example. The Betamax technology was clearly superior to the VHS technology of Panasonic. However, it was the latter technology that became the industry norm. Left to fend for itself, Betamax failed.
  • Brands are more likely to succeed than fail. Reality is obviously a lot different. There are studies that have shown that almost 80% of new launches fail; and an additional 10% of new brands fail within 5 years of launch.
  • Big companies will always have brand success. Well, New Coke was a disaster from a highly respected company. One just has to look at the US auto companies to know that big companies can have the biggest flops. And so on and so forth.
  • Strong brands are built on advertising. This too is a myth. In The Fall of Advertising and the Rise of PR, Al Ries tried to show that, in many cases, it was good PR that built brands, not advertising.
  • If it’s something new, it will sell. This one is a myth too; something new will sell only if the consumers find it relevant. Else, they will just ignore the innovation. RJR Nabisco Holdings introduced the ‘smokeless’ cigarettes on the assumption that smokers would love the smokeless environment. What they missed was that smokers actually considered cigarette smoke as an integral and likeable part of smoking.
  • Strong brands protect products. This is not true. Increasingly, it is becoming clear that it is strong products that end up protecting brands. Apple was a brand with little sales and a small, fanatical fan base. It was a series of great product launches, starting with the iPod, that has made Apple Inc. such a huge and profitable company.

Of the 100 brands that Haig has covered in his book, most would have failed for one or more reasons that have been highlighted above. In addition, he divided his 100 case studies into nine categories, some of which explain the primary reason for the failure of the brands covered within them. I have picked up one example from each category:

  • Classic failures – There are a number of brands in this category including New Coke and Ford Edsel. The brands in this category are the ones that have become part of folklore. As is to be expected, the reasons for failure of each of the brands in this category are very different.
  • Idea failures – Sometimes, unique ideas may just not be relevant and consumers may reject them for that reason. Pepsi came out with an idea that seemed unique – a ‘clear’ cola. What the guys at Pepsi didn’t get was that the colour of a cola was as important to consumers as the brand name. The result – a resounding kick in the pants.
  • Extension failures – P&G’s Crest toothpaste became the largest selling toothpaste in the US on the back of its fluoride content, its cavity-fighting abilities and the endorsement by the American Dental Association. It overtook the erstwhile leader, Colgate. However, from then on, P&G continued to launch new variants of Crest and at one time there were 52 of them. This indiscriminate line extension did not help in an increase in market share; on the other hand, market share continued to decline. Then, Colgate came out with its masterstroke – Colgate Total – and recaptured the market leader position. Simplicity was not P&G’s forte in the 1980s – it line extended many of its brands including Head & Shoulders. Of course, it has learnt its lesson since then and has rationalised its brand offerings.
  • PR failures – In an earlier post, we had covered how well Johnson & Johnson handled the PR disaster of their cyanide-laced Tylenol. However, there have been a number of brands that have failed due to poor PR. One example is Pan Am, an iconic airline brand. When a Pan Am plane disappeared over Scotland in 1988, the company didn’t handle the resultant negative publicity well. The result was that flyers started ignoring Pan Am and the company had to eventually declare bankruptcy and shut down.
  • Culture failures – Multinational brands that have been successful in some markets need not be successful in others. Take the example of Kellogg’s cornflakes. The brand entered India to change the breakfast habits of Indians. It missed out on two points – Indian ate a variety of breakfast foods and, more importantly, they had their cornflakes with hot milk, not cold. In hot milk, the flakes turned soggy and consumers were unwilling to pay high prices for Kellogg’s to serve soggy cornflakes. However, while Kellogg’s has had a tough time in India, it has still not given up and may succeed eventually.
  • People failures – Celebrity endorsements have worked for various brands; equally, they have not. Look at Planet Hollywood – the eatery was launched by some of the biggest names in Hollywood – Bruce Willis, Demi Moore, Whoopi Goldberg, Arnold Schwarzenegger and Sylvester Stallone. It was launched with a lot of hype; however, in all the hype, the brand missed out on talking about its core product – its food. Trials were good but word-of-mouth and repeat visits were abysmal and the brand folded up.
  • Rebranding failures – Generally, rebranding is attempted to revitalise a tired business. When Royal Mail was facing declining revenues due to a decline in its mail business, it decided to change its name to Consignia. The logic was correct because the company was not just a mail company – it had added logistics and a call centre business to its services. However, the new name just didn’t have the gravitas of Royal Mail and just didn’t catch on.
  • Internet and technology failures – There are innumerable examples of failures in the internet space. One key reason is that many internet businesses have been launched with a poor strategy; armed with easy money from investors, many have been competing on price and price alone. Increasingly, as also pointed out by Michael Porter, internet brands will need a clear and strong strategy to become successful.
  • Tired brands – There are many brands that do not keep up with the times or just become irrelevant. Kodak is an example. Levi’s is another. The iconic jeans brand has fallen into hard times. And some of its problems are of its own making. In trying to widen its appeal, it has widened its product offering and has also launched new variants and sub-brands instead of strengthening the core brand.

We all want our brands to grow from strength to strength. However, handling brands is not an easy task and one has to safeguard it from a number of possible dubious moves. The lessons from the failure of brands, including some very well established ones, is invaluable. Haig has tried to look at a wide range of brands to explain the reasons for their failure.

Visual courtesy: https://www.flickr.com/photos/horiavarlan/

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This article was written by andy

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