Interview Questions

Brand turnaround and rejuvenation

Because brands are assets, companies try to make them produce earnings as long as possible. They do not believe in the brand life cycle. This is why even though their sales may have come to a minimum, or even after a number of years of inactivity, it is frequent to witness efforts to relaunch this activity. Investment funds and business angels are fond of sleeping beauties, brands whose name still evokes resonance in our memory.

There are good reasons for that. As assets, these brands are still endowed with brand awareness, attributes, beliefs: it is less costly to start from these premises than to restart from scratch. This is why, for instance, in 2003 Unilever relaunched Sunsilk shampoo for the third time in Europe.

Second, as old brands they capture a value enhancing emotion, nostalgia. Part of the past of many consumers in our ageing societies, they evoke the ebb of life and good times past. Some of these consumers may want to recapture these emotions, as a symbolic way to stop the passage of time (Brown et al, 2003).

It is necessary to differentiate clearly between a number of close and related concepts: an old product relaunch, a reinvention, an old product facelift and a brand revitalisation:

  • An old product relaunch consists in taking a product from the past and selling it as it was. In 2001, Wal-Mart listed a new and unknown brand, Lorina. This brand comes from a small company selling lemonade. For all distributors, lemonade is a commodity: the cheapest is the better. One litre of standard lemonade is sold at around a quarter-euro. Lorina sells it for s4. It has recreated the exact lemonade people used to drink in the 1950s, with a typical glass bottle, a very specific cap and a recipe from that time. Who are the buyers? People of 50 and older.
  • An old product reinvention is the new VW Beetle. No one, except collectors, would be prepared now to drive an old Beetle: it is too insecure and uncomfortable by modern standards. This is why Volkswagen decided to reskin it a little while keeping its unique design, and to completely revise all its functionalities to match a modern consumer’s bottom-line expectations. Whoare the buyers? Old consumers and those younger people who are willing to adhere to the brand community.
  • Brand revitalisation in the narrow sense consists of recreating a consistent flow of sales, putting the brand back to life, on a growth slope again. When the brand is made up of many products, we shall see that this typically entails two actions in parallel: keeping the old typical product globally as it is (to keep its franchise) and reinventing it for new and younger consumers (that is to say asking the question, what would this product be today, if we had to invent it from scratch for the needs of modern consumers?).
  • Brand facelifts (Lehu, 2006) are part of the revitalisation process. They refer to an upgrading of the performance and/or design of the brand to keep up with the competition.

A lot of people are interested in brand revitalisation:

  • Young investors or venture capitalists who buy an ailing brand at low price, often an old brand, with the objective of reselling it in a few years at a profit, after revitalising it.
  • Small businesses that will never have enough money to create their own brand, but are willing to buy the name of a formerly active brand for a reasonable price. For instance, 10 years after having stopped selling the European yogurt brand Chambourcy, Nestlé thought it could sell it. A small company bought it, but the fact that the name was still known did not guarantee the success of the revitalisation, and it soon went out of business. A brand alone without a viable economic equation is of no use. (Nestlé had, of course, put a number of restrictions on the use of the brand, since it did not want to find it competing against itself). In addition, the sales of a brand are the result not only of the attractiveness of that brand to consumers, but also of the muscles of the corporation operating it. Modern mass retailers also tend to value much more the capacity of a company to sustain competition, and to deliver products efficiently to their storage facilities, than its possession of a known but old brand.
  • Large companies are also interested in revitalizing old brands, but only if these brands are not perceived as old, that is to say as brands with no relevance for today, associated exclusively with older consumers. This is how Ford bought Jaguar and had to invest as much again into putting it back to use as a marque for quality cars.
  • Global companies might buy a leading local brand in order to ease and finance the local development of their international stars. The local brand is a door opener with local distribution. However, it is often found that these so-called local leaders present the clear symptoms of ageing (no innovation, too few younger clients, little challenge of the past practices, no systematic upgrading of packages, designs and communication).
The decay of brand equity

Although they may have ceased their commercial activity, brands do not immediately lose their assets. Learnt through time, their brand image is not erased from consumer’s long-term memories. Indeed, after many years a brand can still evoke a number of positive or negative associations. What is lost however is the key brand asset: brand salience, the capacity of the brand to be evoked spontaneously in consumer’s minds as soon as the need to buy the product type appears.

This is why belonging to the consumer ‘evoked set’ (or consideration set) is a key measure of brand equity, signifying both brand presence and its perceived unique relevance for that need.

Table below illustrates how brand equity decays over time. Brand X is a FMCG food brand in a very popular category (with almost 100 per cent penetration). Until recently, this brand was the number two in its market. Then it was bought by market number three, which immediately sold all Brand X’s factories so that the acquisition of the brand paid off immediately. Most important, it discontinued its activity and as a result became the market number two in volume and number one in value.

Eight years after the end of any kind of commercial activity, the brand equity had not disappeared.  Top-of-mind awareness had dropped from 13 per cent to 5 per cent and aided awareness from 86 per cent to 55 per cent. Interestingly, there are still 13 per cent of consumers who declare that they have bought it at least once over the preceding 12 months. This latter figure casts doubts on the validity of such indicators of brand equity in this FMCG category: it seems to be a mere reflection of spontaneous awareness.

How brand equity decays over time

How much would this brand be worth if its owner decided to sell it? Not far from zero. The owner would never take the risk of selling it so that it could be revived in its own market. Out of this market, it is just a name with faded remote credentials: there will be no buyer. Could the owner itself revitalise that brand? Probably in specific segments or niches. As far as the mainstream market is concerned, a return to the shelves would be impossible.

They are now overcrowded, first by private labels, and second by the few remaining producer’s brands, which have become megabrands. Typically, a shift of channel would be possible. For instance, a drink brand might be sold via on-premise distribution (for consumption in canteens and business restaurants), if this were a channel where it could add value without meeting fierce competition. Channel and use changes are a classic form of revitalisation for this very reason.

This example illustrates a fact too often overlooked: the value of a brand does not lie in its assets, but in the ability of a company to make a profitable business with these assets. After eight years of inactivity the whole commercial environment will have changed. Nature abhors a vacuum, and business does too. As soon as the brand disappears from the stores, the shelves are filled with other products from other brands, including the distributor’s own brand.

In order to sell the original again, they would need to be displaced. It costs a lot to induce the modern distribution to reallocate space for a comeback, with very little guarantee of success. A brand is not enough to stage a comeback, one needs an innovation.

It is clear why it is essential to prevent decline, and how a brand loses value after a period of inactivity. But what are the factors of decline?

Pragna Meter
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