BRANDS IN TRANSITION

BRands in tRansition: CReating tHe RigHt CoMMUniCations MiX

AN MWW WHITE PAPER FAll 2012

2012 MWW GROUP, ALL RIGHTS RESERVED | WHITEPAPER | FALL 2012

BRANDS IN TRANSITION

Public Relations, in its many forms, should be an essential strategic discipline within a companys 360-degree brand marketing framework. Public Relations carries the greatest impact when it is folded into a larger plan that integrates a well-defined brand message across all marketing and communications activities. This holds particularly true for brands in transition.

2012 MWW GROUP, ALL RIGHTS RESERVED | WHITEPAPER | FALL 2012

BRANDS IN TRANSITION

Brands in TransiTion: CreaTing The righT CommuniCaTions mix This short whitepaper explores how Public Relations can fulfill a critical role in keeping the brand message on target and the value that the discipline brings during times of transition, as well as when other marketing priorities have wavered.
Every brand and company faces hurdles at some point that challenge their ability to either maintain the original brand promise or continue to define it with the original core customers that helped build the brand. Indeed, moving your brand from one place to a new position is often required to stay in business. For example, the Amazon of ten years ago is not the Amazon of today. Oil companies mostly recognize the need to find new sources of energy across the board, invest heavily in this area and now position themselves as energy companies. Subaru traded on its all-wheel drive capabilities for years but when that became less unique and distinctive they deftly transitioned to a car company built around active and outdoor lifestyles. In particular, brands that need to move from a niche positioning to create more mass market appeal, or established brands that need to drive higher shortterm sales due to competitive pressure, are particularly vulnerable to losing the equity of their brand. Category leaders are especially susceptible to the slippery slope built on successive small concessions that slowly undermine the perception of the brand. These small changes over time are often irreversible and premium positioning is slowly ceded to new entrants or fast moving competitors. Oftentimes these changes are necessitated by the cold reality of the bottom-line, but even in the most competitive spaces there are means to replace lost brand equity with new assets that can build a better brand for the future.

2012 MWW GROUP, ALL RIGHTS RESERVED | WHITEPAPER | FALL 2012

BRANDS IN TRANSITION

ouT WiTh The oLd, in WiTh The neW

The key is that for every point of brand equity that is ceded, a new asset is introduced. These new assets can take many forms, but they need to pass muster on the following points: Are they relevant? Are they distinctive? Are they ownable? Relevant brand assets are, by definition, ones that add value to the customer experience or brand perception. Distinctive and ownable assets keep brands from looking stale or appearing as me too brands. These are important points, because if a brand is ceding its position on something that was once relevant, distinctive or uniquely owned it has lost a significant competitive advantage. Consider Kodak as an example, it never lost its distinctive or ownable brand assets but it did lose its relevance during its failed brand evolution. By missing the opportunity to replace relevant brand assets with something new it surrendered its position in the world of photography. On the other hand, Amazon has continued to create new relevance in distinctive and ownable ways that have not eroded its overall position. It is this creation of new brand assets that has allowed Amazon to let go of some of its original core equities without diminishing the overall brand. This is the roadmap for brands that need to transition. If you need to let go of something that isnt working from a bottom-line perspective, you need to find a new brand asset to replace the old one. Changes in the marketplace demand brands constantly evolve and create a new brand vision.

2012 MWW GROUP, ALL RIGHTS RESERVED | WHITEPAPER | FALL 2012

BRANDS IN TRANSITION

The roLe of puBLiC reLaTions So where does PR fit into the mix?
Brand transitions are difficult and changes in philosophy or a brand promise usually dont take hold overnight. Practically speaking, the introduction of a new product, service, brand promise or other core asset or function requires trial and uptake. A brand moving off of its former position almost invariably needs to rebuild and most often with two sets of consumers: old ones it is hoping to retain and new ones it is hoping to develop. This is a brave new world for all parties and in response, communications strategies generally move from brand building, maintenance and investment to driving awareness and trial. This is where a double-edged sword begins to develop: the full range of former brand assets are no longer applicable and new brand assets need to be communicated. Awareness campaigns need to focus on a minimal number of intuitively understood components of the new offer (leaving some legacy attributes out of the equation), and the primary focus of new marketing efforts will be on promoting trial. So how do you effectively promote trial without losing the soul of your brand? What follows are two examples of what not to do and one example of how to get it right.

2012 MWW GROUP, ALL RIGHTS RESERVED | WHITEPAPER | FALL 2012

BRANDS IN TRANSITION

TED TED was originally a single conference based around technology and design. As a brand its primary attributes were built around the concept of ideas worth spreading. At its core, it was aspirational where only the best of ideas were presented and disseminated. While the TED events could also be seen as elitist, this was counter-balanced by the free distribution of the presentations under Creative Commons licensing. Where TED has seen its brand diminished is primarily in the introduction of TEDx which licenses the TED brand for presentations around the globe. The concept of the best ideas has been seriously diluted with the inclusion of 3,200 new TEDx events and 16,000 new presentations of widely varying quality. TED as a brand has grown and reached new audiences but its reputation for uncompromised quality has taken a strong hit. What is happening is an unacknowledged transition which is not uncommon from a brand management standpoint. TED is trying to communicate that it is staying true to its original values (ideas worth spreading) while loosening controls and allowing sub-par presentations under the TED umbrella via TEDx. These are incompatible and create a tension around a brand that is not staying true to its core brand promise. In this case, adding new assets while letting go of old ones could have easily precluded any brand diminishment. A slight shift and value add of becoming an incubator of ideas would have sufficed but the opportunity was missed when it was assumed the brand promise would remain relevant for TEDx. Had there been the right mix of communicating value and strategic vision, TEDs transition could be in the books.

2012 MWW GROUP, ALL RIGHTS RESERVED | WHITEPAPER | FALL 2012

BRANDS IN TRANSITION

JC PEnnEy JC Penney has found itself in a much tougher situation. The brand was built on years of promotion heavy advertising and communications, so when they chose to cut-off the promotional approach to retailing in exchange for everyday low prices in the Spring of 2012, they lost a huge swath of customers. The reason? Even with a new look and a new spokesperson, the strategy wasnt uniquely distinctive or relevant. JC Penney never stood a chance of picking up the customers they lost to Target by offering something similar. JC Penney needed something more substantive, but instead the changes looked like window dressing to their customers. So where could Public Relations have helped JC Penney? JC Penney needed to better articulate the value of its approach to consumers and the media. Do the everyday prices create more value? Theoretically, yes, but it was hard to prove and was following a position already owned by other retailers. Public Relations could have laid the groundwork for articulating that JC Penney was more than just a retailer it could have built on job creation, impacts to local economies, giving programs and support of its workers. These may not have been enough to overcome all of the current issues but it would have positioned JC Penney as a brand with a soul, and not just a brand where you can buy things cheaply. These programs could then have formed the basis for the next level of transition away from promotions to a company investing in its employees, communities and customers. As the proof points and brand perceptions grew, promotional advertising could be balanced back out with newly developed brand assets. In the end, JC Penney went cold-turkey on promotions and had to eventually bow to pressure and re-introduce them. Now they are back to a transitional state with no new brand equities in place. Time will tell if JC Penney will remain viable but the core lesson is that if your communications are solely based on driving traffic and sales via promotions, the sales and promotions will define your brand.

2012 MWW GROUP, ALL RIGHTS RESERVED | WHITEPAPER | FALL 2012

BRANDS IN TRANSITION

SuCCESS STory: EnErgy DrInKS CaTEgory TaPS InTo BranD rElEvanCE TED and JC Penney are examples of where brands have gone wrong. Now lets look at brands getting it right. The energy drink sector yields some prime examples. Red Bull stands as an iconic brand across the globe but this wasnt entirely built on the product and certainly wasnt based on mere advertising. Red Bulls history begins as a truckers drink in Thailand. The opportunity Red Bull capitalized on was the burgeoning always on lifestyle and the trend to push limits and boundaries among youth in the mid-90s that aligned perfectly with its brand promise. Red Bull became a brand that raised the bar for what a beverage could offer and reinforced that by aligning itself with a range of active sports and edgepushing sponsorships and events from football (soccer) to ice cross downhill (Google it!), to surfing, cliff diving, grand prix and many more. As a privately-held entity it is impossible to pinpoint how much Red Bull spends in these areas, but the mix is evident: favor media-worthy investments in tandem with or in place of traditional advertising. The Red Bull philosophy is that if their results, achievements, events and activities are worth reporting, you will read about them. This philosophy has led to the brand becoming an iconic symbol synonymous with energy drinks that has maintained a significant price premium over the competition, including its primary competitor in the United States: Monster. Monster in and of itself is another good example of understanding what makes your brand assets relevant to the consumer. Monster was launched by natural juice and soda company Hansens, but the two brands could not be more different. Take the Monster product and put it under the Hansen brand and it fails. But the brand also understood its market and the relevance of the

2012 MWW GROUP, ALL RIGHTS RESERVED | WHITEPAPER | FALL 2012

BRANDS IN TRANSITION

Investing and building a long-term core of relevant brand assets through events, media coverage, sponsorships and word-of-mouth power the brand today.

product during a time of transition in the consumer market, and recognized that the Hansen brand was not relevant to the younger consumer core for energy drinks. Similar to Red Bull, Monster built its brand by staying true to the products relevance with surfers, bands and extreme sports by investing in building those connections from the ground up and prioritizing earned reputation building over reaching a mass market via advertising. So while pushing trial and promotion early in the brands history was necessary they were also investing and building a long-term core of relevant brand assets through events, media coverage, sponsorships and word-of-mouth that power the brand today. Early investment in Public Relations enabled both brands to successfully undergo brand extensions and transitions. As a result, both brands have held off larger players in the beverage industry, and have seen former upstarts such as SoBe fall by the wayside, and have illustrated how a long-term view of investing in building true brand equity is an earned activity.

2012 MWW GROUP, ALL RIGHTS RESERVED | WHITEPAPER | FALL 2012

BRANDS IN TRANSITION

Lessons Learned Based on these scenarios, there are three lessons to learn:
rECognIzE a BranD TranSITIon To stay in business, companies must recognize how even minor changes to their services, products, or market trends impact the relevance of their brands. As mentioned before, this is what kept Subaru and Amazon from becoming irrelevant. And these companies must also understand that the transitions require support beyond advertising, so that media can understand the transition, why it matters and what that means to the customer. Thats where Public Relations comes in: to highlight the trend and illustrate how the brand was committed to capitalize on the change. PromoTIonal CommunICaTIonS nEED a CounTErwEIghT These kinds of lessons extend across many industries and brands. When a brand loses the drive to maintain its distinctiveness and relevance over the long-term in place of driving near-term spikes in moving units via promotions the delicate balance that allows the brand to maintain its position in the consumer mind is at risk. In other words, if all you communicate about your brand is that you offer promotions and discounts, that is all anyone is going to remember. Marketing science literature (see Kopalle, Mela and Marsh) has identified that promotions can lead to triple jeopardy. Whereas when discounts become more frequent, baseline sales decrease over time. Second, temporary price reductions increase price sensitivity and make it more difficult to command higher margins. Third, the frequent use of deals makes them a less effective tool for gaining share from other brands. Thus, your brand needs a substantive counterweight to promotional marketing in order to allow for transitions back to brandbased premium pricing necessary for long-term profitability. TaPPIng InTo BranD rElEvanCE maTTErS Promotions in particular are relevant to a time and place but they expire and their relevancy expires as well. Yesterdays discount means nothing today except if it was one of a string of many discounts, then it may be expected again tomorrow thus holding off purchase or incenting discountseeking behavior from other similar brands. When your brand is relevant to a consumer only through sales, discounts and promotions, you truly have no real brand equity. Any brand can offer a discount. What can you offer that others dont? While the brand transition focuses on driving trial and conversions, the broader brand picture and equity building slack needs to be picked up via positive media coverage, digital content development and social engagement. Whether or not those equity building initiatives fall under product attributes, corporate social responsibility, thought leadership, events, outreach programs, cause marketing or some other activity is dependent on the brand and management culture but to ignore them is to ignore an opportunity and risk the long term relevance of the brand.

Companies must also understand that the transitions require support beyond advertising, so that media can understand the transition.

2012 MWW GROUP, ALL RIGHTS RESERVED | WHITEPAPER | FALL 2012

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BRANDS IN TRANSITION

for more informaTion, pLease ConTaCT:

Executive Vice President, Global Consumer Marketing Practice Leader 201.507.9500 | alblate@mww.com

Alissa Blate

Doug OReilly MWW

Vice President, Director of Insights 917.675.2345 | doreilly@mww.com

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