Brand Killing

by , Feb 23, 2004, 12:00 AM
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Let's face it; if you are reading this today, an element of your career is brand building. Heck, I even run a business that was built on the methodology of building, stewarding and protecting brands.

We all have our favorite brands and envy those who have built them. At least once or twice I have said, "Wow I wish we had done that campaign."

It seems to me that we don't really discuss the bad brands. Well, maybe we do behind closed doors. Is it taboo in our industry?

Have you ever been put on a piece of business to turn around a brand (because it really sucks)? Everyone (including the top guns) run around thrilled at the challenge. It becomes an all-hands-on-deck feat. Turning around a brand is an agency's dream. They can smell the creative awards, press and cocktail party banter. They approach it in gang force like it's a war to be won.

If a brand is troubled and failing to the point of a faint pulse, why not kill it? I'm sure some of you just cringed that I put it so bluntly. Seriously though, why not?

No, this is not a new concept. Let me share with you a little story. In the 1930s, Neil McElroy, manager at P&G, sent out an internal memo stating the need for a brand-based management system. This system would allow each brand to have its own dedicated budget, etc. McElroy then rose to head P&G thereafter.

A recent Harvard Business Review article shares findings that indicate most brand don't make a profit. In fact it's less than the 80/20 rule. Other findings/case studies are:

  • Diageo, the world's largest spirit's company, sold 35 brands of liquor in roughly 170 countries in 1999. Only 8 of those provided the company with more than 50% of its sales and 70% of its profit.
  • Nestle promoted more than 8,000 brands in 190 countries back in 1996. Most of the profits came from 200 brands or 2.5%.
  • Procter & Gamble had more than 250 brands sold in 160 countries. The company's 10 biggest brands accounted for 50% of sales, over 50% of profit, and 66% of sales growth between '92 -'02. Unilever had 1,600 brands sold to 150 countries in 1999. More than 90% of its profits came from a mere 400 brands.

    When you look at it this way, it is clear that many brands are money losers. Killing a brand can't be done on the firing line. A delicate balance of when to phase out or merge brands is necessary. The reality is there are still brand loyalists of losing brands. It is critical to allow proper timing as to appease such consumers. A brand portfolio rationalization project is needed to properly assess each brand. When implemented by top management, it takes a company 3 - 5 years to see the effects.

    So I ask you dear readers, have you been in charge of merging brands, phasing brands out, or maybe putting one on life support? We'd love to hear from you on the SPIN board. Until then, I'll still be building, stewarding and protecting brands.

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