Opinions on Business

  • A strong brand represents a statement of value to customers.

    It allows a company to focus all its efforts around its brand. It sets “automatic” purchasing decisions for consumers. And, perhaps most importantly, it allows the company to charge more for similar goods than its weak branded competitors.

    As long as its management keeps delivering on the brand promise, a strong consumer brand is very durable. In fact, over time a brand can become even stronger as it builds a heritage, enabling trust and usage decisions to recur across generations.

    However really bad management decisions can ruin even a strong brand. Take chocolate!

    In 2017 the winner of the Most Trusted Brand of All Brands Surveyed and winner of New Zealand Iconic Brands was Whittakers. Like chocolate this win was habit-forming, Whittakers winning for the sixth year in a row! A remarkable achievement in beating other category winners such as Toyota, Sanitarium, Dettol, Sony, Dilmah and Griffins.

    The Whittaker family has been dedicated to making high-quality chocolate in New Zealand for 120 years. Innovative product development, passion for excellence and old-school integrity maintain its powerful brand position. Its per-bar donations to “Kiwis for kiwi” via Operation Nest Egg are appreciated by consumers, furthering affection for the brand .

    So, whatever happened to Cadburys? It too won the Most Trusted brand for a seven-year streak (2002-2008), but then landed on a snake. Seems that three avoidable management decisions led to its reputational collapse. In 2009, Cadburys were outed as using palm oil as a substitute for cocoa butter, causing huge public disgust. Then in 2017, its offshore owners announced the closure of the historic and loved Dunedin factory. To make really sure, management failed to catch the shift in consumer preference, sticking with sweet milk chocolate at a low price point. While Dairy Milk and Caramello may have reigned last century, shelf facings today show a major shift to premium dark bars.

    Global brands are susceptible to arrogant or devious management decisions. The carnage to brand value is stupendous. Famous examples are Uber, Facebook, Volkswagen, BP, and the classic – Ratner’s Jewellery. In a speech to an IOD audience of 6,000 in 1991, Gerald Ratner managed to destroy his multimillion pound empire in ten seconds: –

    Asked how was it possible for his company to be selling a sherry decanter for the extraordinary price of £4.95 Gerald Ratner answered, to the amazement of his audience and his shareholders, the following:

    “How can you sell this for such a low price?”, I say, “because it’s total crap.”

    To make sure that he really made a good job of it he also stated that his company:

    “sold a pair of earrings for under a pound, which is cheaper than a shrimp sandwich from Marks and Spencer, but probably wouldn’t last as long”.

    “Doing a Ratner” has entered the lexicon.

    The only comfort for shareholders is that by IFRS – IAS38 criteria, internally generated brands are no longer recognized as intangible assets. In Ratner’s day, creative CFOs pumped up balance sheets with dreamland brand values for credulous bankers.

    Care for your goodwill – it is probably your most valuable asset,

     

     

    I read these and included some of their words and views in my piece.
    http://www.trustedbrands.co.nz/results.asp
    http://www.colmarbrunton.co.nz/wp-content/uploads/2017/03/Colmar-Brunton-Corporate-Reputation-Index-2017.pdf
    https://www.stuff.co.nz/business/industries/89522567/hero-to-zero–cadburys-take-large-bite-out-of-brand?rm=m
    https://www.businessblogshub.com/2012/09/the-man-who-destroyed-his-multi-million-dollar-company-in-10-seconds/
    https://www.magicdiligence.com/3-examples-brand-destruction-2018-01