By Kirk Kardashian, December 2011
Published Dec 19, 2011
Starbucks was in bad shape in 2008. After steady growth since the early 1990s, it was experiencing its first major decline. The company seemed to have lost its way, ditching personal attention, great coffee, and a unique experience for more automation and efficiency. Then, in 2009, Howard Schulz came back to the CEO office to turn things around. He closed 7,000 stores for three hours one day, just so the baristas could learn how to make a proper espresso. He invested in new coffee makers. And from the depths of its doldrums Starbucks has emerged again as the premier provider of specialty coffee with style.
The lesson in all this, says Kevin Lane Keller, the E.B. Osborn Professor of Marketing, is to never underestimate the power of brand revitalization. Keller has helped scores of major corporations refine their image, and teaches courses on branding and strategic brand management at Tuck. Revitalizing a brand, he says, is a process that exists on a continuum from a “back to the basics” simplification of purpose to a complete reinvention, and all companies, at one point or another, have had to do it. “Whether it’s the economy, consumers, or competition,” says Keller, “there are a lot of reasons why brands’ fortunes take a turn. The question becomes how to bring them back.”
With a reinvention, “the brand’s old strategy just doesn’t work anymore,” Keller says, “and the company has to come up with a new one.” The classic example is Mountain Dew. It had the best-case scenario for reinvention because the product already had good distribution and awareness, but it had a dated image, and people had all but forgotten about it. Over the course of decades, Mountain Dew’s taste didn’t change at all, yet its image got a total makeover. It morphed from rural to urban, relentlessly pursued a young audience with its “Do the Dew” campaign, and turned into an edgy soft drink that was a precursor to energy drinks like Red Bull. Today, Mountain Dew is one of the top selling sodas in the U.S.
By contrast, Harley Davidson wasn’t forgotten, it just forgot how to make good motorcycles. “People loved the brand,” Keller says, “but the product just failed.” The company almost went bankrupt two or three times. With a strong image, however, all it had to do was go back to the basics. So Harley invested a lot of money into its factories. When it once again produced motorcycles that lived up to their image of freedom and rebellion, the company had a great run. It even swept up a new market segment: “Rolex riders,” the older, more affluent crowd who saw a Harley as a ticket to cool cultural capital.
When companies want to figure out where on the spectrum of “back to the basics” to “complete overhaul” they must land, they do a brand audit. Keller runs his students through such audits in his Branding course, which entails looking at a brand’s strengths and weaknesses and coming up with a set of recommendations. Since the value of a brand is in the mind of consumers, consisting of all their thoughts, feelings, images, experiences, and beliefs about the product, the audit is very consumer focused. And it reaches beyond consumers’ feelings about the brand in question and asks how they feel about competitors’ brands. “It’s not just what you’re doing and what you haven’t been doing,” Keller explains, “but also maybe what other brands have been doing.”
A recession can spur brand audits because sales often drop and consumers become more price conscious. “Brands have to justify their value a little more during a recession,” he says, “and really deliver on their promise.” Such conditions often highlight a brand’s weaknesses, making it a good time to reevaluate strategy.
By the same token, brands that have the worst trouble in a recession are the ones “that were kind of hurting to begin with,” Keller says. A prime example of this is the Gap. It had a strong stretch in the 1990s, establishing itself as the maker of simple yet smart clothing. Keller, however, was on the lookout for a downturn, because he expected consumers to get bored with the Gap’s offerings. That reaction did indeed happen, and the Gap made a classic brand revitalization mistake. “The one thing with revitalization you have to be really careful about,” Keller asserts, “is that you don’t panic when your sales go down.” When the Gap panicked, it tried to bring in much more fashion-forward clothes, chasing after customers that they never would have lured in the first place. “In the process, they disappointed and confused their core customers,” Keller says. “They’ve had a decade of that, and the recession has made it especially hard to get back on track.”
Audi has actually used the soft economy as a time to change its image, something Keller says smart companies can do. Over the past few years, it has invested heavily into its brand—overhauling design elements like the shape of its headlights and breathing new life into its marketing campaign, which now includes a series of Internet thriller movies starring Justin Timberlake. The strategy has paid off: Last year, the luxury car maker sold 50 percent more vehicles in China than it did the year before, and its October sales in the U.S. were up 25 percent from 2010’s figures. Twenty-five years ago, it accounted for just one percent of luxury auto sales; today it’s more like 10 percent.
Although most companies see their brand slip every now and then, it is not an inevitability. The antidote to sales slumps and periods of soul-searching is the process of “always reinforcing the brand, always innovating and staying relevant, always moving forward in the right direction,” Keller says. Great brands, such as Nike, do that well. They have so much momentum that they overpower any crises that come up. And such brands make quality an imperative. “The branding is important,” Keller says, “but it means nothing if your product isn’t any good.”