Posted by on Aug 28, 2012 in Discussions, R Srinivasan, Showcase | 1 comment

As a marketing consultant I have had several occasions to work with companies with established brands and had ringside view of how some companies systematically work to destroy such great brands with out realizing that they are doing so.

 I will share here a couple of cases which can be quite illuminating as to how not to work against your own brands. While each of these cases had some unique market situations the basic lessons can be extended across all brands for any types of products or services.

 Every marketing man swears by the importance of brands and would give his life metaphorically to protect his brand and its image. But quite often this passion for the brand starts and ends with the marketing executive whose role is to build communications around the brand. When rest of the organization doesn’t think it is there concern to protect the brand that the problems arise.

 My first major experience was when I was involved as a marketing consultant to help launch a new 2 wheeler brand using the established brand identity of the famous Vespa of Piaggio of Italy which has recently relaunched itself in India after a gap of nearly 20 years. Shortly after the first wave of liberalization in auto industry was announced in 1980′s, several international brands in 2 wheeler market decided to enter India through their local collaborators. Vespa, which was an established name before their brand id had to be removed from the Bajaj scooter brands due to end of their collaboration agreement with Bajaj Scooter, decided to re-enter the Indian market with 2 collaborations: one with Lohia Motors in the north and another with AP Scooters, a public sector undertaking in the south based in Hyderabad. Both the companies knew from the background of starved Indian market during the permit license Raj and also from the huge wait list for the Bajaj scooters running for more than 7 to 10 years at that time, they had a killer product in their hand. And both the companies aggressively relaunched their respective scooters using the Vespa Brand name as a prefix and got huge advance bookings which should have kept their factories running for the next 10 years. However today both these companies don’t exist in the market for scooters and Vespa had to wait for another 20 years to re-enter the Indian market recently with a relatively soft launch to hopefully re-establish there lost image.

 What went wrong. One of the lessons in marketing is that Brands represents the value benefit as perceived by consumers. By using the brand companies can effectively communicate the promise of the values embodied in that brand. But customers also would like to experience that benefit when they actually use the brand and if the experience reinforces that value the brand becomes stronger in the market place. In both the case of Lohia and AP Scooters while the Vespa name helped them get customers to wait for delivery, once the product started hitting the market the experience of the customers was far different from the Value promised by the brands. For example in the case of Lohia they had introduced the wide body design very similar to the Bajaj scooter but due to a policy of excise duty prevailing at that time to keep the price of the vehicle down they launched the product with 100CC engine. The first impact was that these 100CC engine could not carry the whole family consisting of man, woman and at least 2 children with enough power and the vehicle started failing on the road. In the case of AP scooter they had launched the narrow body version of the same model with 100cc engine but their problem was that power was not an issue but the size of the scooter was too small for this whole family. Apart from this basic flaw they also faced problems of quality hitting the customers hard and over a short period of time all those who had booked having got these reports and negative publicity associated with these models started cancelling their bookings. By the time these companies could address these problems and come back to the market with improvements they had lost their so called Vespa Brand Equity and other players had taken over the enlarged share of the market created by the relaunch of Vespa at that time.

 Another example is from building materials industry where the company was pioneer in the launch of several brands of building materials in the decorative and industrial laminates market and they also had commanded a premium for a long time. Customers were used to long delivery delays from this company due to this premium image and the whole company was managed based on a philosophy that there customers would be willing to wait for their production to deliver. But the situation started changing after 1992 when liberalization and certain policies of the government favoring small businesses gave them excise duty differential benefit in pricing and soon several small units with simpler technology to make decorative laminates came up with both price advantage and also faster delivery. And many of them were prepared to supply directly to customers even for order sizes of one sheet at a time which was impossible to emulate unless our major players were prepared to reinvent themselves in terms of both manufacturing practices and also manage the supply chain differently to compete with the local small players. This was a tall order for the management of the company who had got used to the comfortable life style of being in the sellers market and suddenly finding themselves competing in the buyers market and unwilling to let go of their old practice. Half hearted attempts were made to change but as we said some where else in this website about the importance of leadership for bringing about change, I found the lack of committed leadership to bring about change was a major limiting factor and soon the company became victim of sickness and BIFR case. Even though the brand image of this company was very strong they could not capitalize on it due to there inability to respond to the customer expectations.

 I have many more cases on these lines but the principle lesson I wanted to share was that Brand Image is a double edged sword. In the hands of a competent management it becomes a cash cow and in the hands of others it becomes like a knife in the hand of a monkey.

Share the wisdom!