Posted in Marketing & Strategy Articles, Total Reads: 694
, Published on 24 November 2015
Let’s go back to few decades. Currently world’s most recognizable brand “Coca-Cola” was facing stiff competition from its arch rival Pepsi cola as well as some of its own products like Sprite and Fanta during 1970s and 80s. In the beginning of 1980s the no 1 position of Coca Cola started looking vulnerable. It was rapidly losing its market shares to Pepsi. It was only Coke’s more effective distribution channel which kept it ahead. To get out of this vulnerable situation the company decided to rebrand itself, the decision which turned out to be disastrous and has also been referred as “biggest marketing blunder of all the time”.
Coca Cola decided to change its decades old formula. After working on a new formula for more than a year it followed the same method of Pepsi Cola challenge and conducted 200,000 taste test across US to see how it fared. The result of the test was more than satisfactory. People not only liked the new formula but also preferred it over Pepsi Cola. Overwhelmed by the result Coca Cola announced New Coke in 23rd April 1985. Days after the announcement a large portion of US population decided to boycott the product. The sales decreased drastically forcing the company to change its management and recall all New Cokes and announced return of older formula.
Same thing happened with Pepsi Cola’s Tropicana when it changed its logo and packaging in 2010. People rarely look at logos but when packaging of a popular brand changes suddenly they notice. In the new package the original logo of the brand which was horizontal changed to vertical at reduced size. The most important change was the replacement of orange and its straw by a big transparent glass full of juice. Within few weeks the sales of Tropicana plunged 20%. People started criticizing the brand and the company was forced to bring back its original packaging. The move by Tropicana instead helped its competitors like Minute Maid to grab its market share.
Most of us wonder how a brand like Coca Cola failed. The trouble was that the Coca Cola Company severely underestimated the power of its brand. The whole money poured by Coca Cola in market research couldn’t measure the deep and abiding emotional attachment of people with the original Coca Cola. In 1985 a century after the beginning of the company the only word people were associated with Coca Cola was “NEW”. Coca Cola had been involved with US history. One out of many example can be its greeting to Apollo astronauts by the quote “Welcome back to earth, the home of Coca Cola”. Thus it was a big mistake by Coca Cola to confine its brand’s significance only to “taste”.
What did not work for Tropicana was package’s unrecognizability. When people went to shop they had no idea where there brand was. The new product missed the signature icon of the brand Tropicana. People thought the packaging has changed thus the inside too.
The recent decision taken by Maruti Suzuki India Ltd to drop the name “Maruti” from the boot lids of its newly launched high-tech chain of showroom “Nexa” has generated similar concerns among market experts. Dropping a name which high emotional attachment with people may make it difficult for people to accept the product. Maruti Suzuki’s plan to use “S” badge can become a boomerang for Maruti itself. Suzuki has no emotional attachment with people and it has failed in two wheeler category in India. Again in most countries Suzuki is considered as an inexpensive brand and it has failed in countries like USA.
Once a brand has strong perception in consumer’s mind it is very difficult rather impossible to change. So what should companies do to avoid risks while redefining their brand? Here are some steps that can be taken into consideration to minimize the risk of redefining and again it may not hold true for all kind of situations.
The worst thing that can happen while rebranding is fail to get a rebrand accepted and forced to return to the old branding which has happened in case of Coca Cola and Tropicana. Thus the first and foremost thing that the companies need to do is “Market research” and obtaining customer feedback. Companies need to assess how redefining their brand will have an impact on consumers and find out what is there not working in the current brand. Companies also need to understand the perception of their brand in customer’s mind. Nestle is currently doing aggressive market research to revive its flagship brand “Maggi” and bring it back to the shelves in India.
Next thing marketers need to do is competitor analysis in the target segment. In case of Maruti there are a number of big players like Honda, Volkswagen, and Toyota etc. in premium segment which it wants to target. So it may be difficult to attract consumers to a new brand which has come from Maruti.
After competitor analysis the next step is “Internal branding” which means trying to build the brand internally before unveiling it externally. A brand will be successful only when its employees live the brand. Take the example of FORD which rebranded itself in 1970. FORD employees became brand ambassador and the change made a difference.
Marketers most adopt a holistic marketing approach while promoting the brand. They must sell the value that the customer will get after using the product rather than selling the product.
Only time can tell whether the idea of Maruti Suzuki India Ltd will succeed or not. But for the time being if Maruti wants to sell premium cars it should sell under a new brand name like Toyota’s Lexus and Nissan’s Infiniti. In other words being better than what you were yesterday is not good enough; marketers need to be realistic about the finiteness of brand stretch.
This article has been authored by Shyama Prasad Panda from FORE School of Management