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November 2007
"Every touch-point
between consumer and company is an opportunity to enhance
the brand identity, and thus, see brand equity grow; or else
detract from that relationship and experience a negative
impact on brand equity."
Those words are preached
to every client in every situation. They ring down on every
employee during BrandTraining
to ensure that everyone realizes the importance of
relationship in the branding process. The theory is that the
stronger the relationship between customer and company, the
more brand equity is accrued. Further, the stronger the
brand equity, the more loyal the customers; and
subsequently, the more loyal
the customers, the more valuable the customer base and
consequently the company becomes. This is often a
rollercoaster ride...a proverbial ebb and flow of branding.
Such a ride must be
managed carefully. After all, the goal is simple: to
ensure that the name on the door of the company transcends
the function of the business inside those doors. In other
words, we work to make sure that prospects and customers
link your company to ideas that extend beyond the basics of
what you do. The ultimate goal is to build a brand identity
that builds relationships between customer and company.
Within this relationship,
both parties find a mutually beneficial bond and
kinship allowing brand equity (and the company's value) to
grow.
With that in mind,
consider a few examples of national companies that
experience the ebb and flow of Brand Equity...Blockbuster
Video, Stouffer's French Bread Pizza line and Slendertone.
Blockbuster Video
Blockbuster Video has become more active in the on-line
rental market, responding to Netflix and other competitors
claiming valuable market share. This response has been
tiered. The first tier involved a change in rental policy
which allowed customers to keep movies beyond the 2-7 day
return date. "Great!" says the customer...and brand equity
increases.
The next tier of change was a dramatic, strategic and costly one.
Blockbuster created its own on-line rental program. Several plans were available with the primo plan giving the
customer unlimited on-line rentals and a free rental coupon
every week. It was a clear-cut win-win and brand equity
soars once more. The primo plan cost the consumer around $20 per month, but
such an arrangement meant that even though the customer was
tied to Blockbuster for their movie rentals, they were getting far more than $20
worth of rentals when combining the on-line rentals and free
coupons. Blockbuster wins because they were guaranteeing
stack-up revenue from customers each month. Plus, one free
rental coupon was a small loss-leader when it might generate
rentals of 2-3 extra movies with each visit.
Then, things changed...for the better. Rather than shipping
the movies back through the mail, the customer could return
the movies to the store and exchange the on-line rentals for
in-store movies. The free weekly coupon was also replaced
with a free monthly coupon, but such a loss was more than
made up for in the customer's eyes with the in-store
exchange policy. This solidified the customer's loyalty to
Blockbuster, cementing the relationship and ensuring a
positive impact on brand equity as the premier movie rental
company in the nation.
Then, things changed...for the worse. The cement cracked.
Blockbuster decided to remove the "-less" from the tag of
"Limitless Rentals". The company put a limit on the number
of in-store exchanges its customers could make each month.
Therefore, the program had changed twice drastically within
six-months. To go from 10-16 rentals per month in the
initial plan to 20-24 rentals per month was great, but to
move from 20-24 rentals back to the 10-16 per month...all
for the same $20 will undoubtedly result in thousands of
upset customers, Previously very loyal customers who now
either feel at worst, a victim of an elaborate
bait-and-switch con, or at best, the customer to a company
that either lacks strong vision and leadership. Either way
(and regardless of industry), less product for same money is
typically going to have a sour effect on customer
relationships with an equally damaging effect on brand
equity.
Stouffer's--French Bread Pizza line
This is a product line of which I am a big fan. So, when I
noticed a newly designed box with a 6 percent price
increase, I was a little weary. Rarely do we see an
established product add price and value without a more
elaborately visible marketing approach. Actually, I feared
the opposite. As is typical, I was concerned that the
product would shrink with the escalation of price--this is
often seen in the food industry: for example, smaller candy
bars mean less cost to manufacture and rising prices mean a
boost in profits to pad the bottom line or respond to
inflation, etc. Further, Stouffer's price was raised nearly an
additional four percent within two weeks of the initial
increase. I could think of no substantial reason for the 10
percent escalation. Had the cost of pizza's ingredients
raised? Possibly, but not by a double-digit margin, which is
quite a healthy increase from one week to the next. If
you're keeping score, that's Negative Downturns in Customer
Relations-2 and Positive Upswings- 0.
However, no such shrinkage was noticed in the product and in
fairness, there had been very little (if any) price movement
with this product in recent years. Those two factors were,
at least, something positive and a little consolation.
Perhaps this was a response to competitive pricing as it
relates to positioning? At any rate, it will be interesting
to see how this story plays out and to see the effects on
market share and further on brand equity that might develop
from a double-digit increase.
Slendertone
One more product that promises to help that flab around your
tummy transform into a six-pack with little to no effort
required. A friend called me quite upset about this product
after seeing a TV commercial and visiting their website. It
promoted a Risk Free Trial of the product for 30-days with
free shipping. The cost: $14.95. "Great," I said. "So, try
it out...who knows, maybe it will work and if not, you're
only out $15."
Her response: "That's what I thought!" However, when she
visited the website, she learned that the cost of the
product was not $14.95, but rather that was the charge for
the "Risk Free Trial". Keeping the product past the 30-day
trial period would result in additional charges totaling
$199.80 plus tax. My friend felt deceived before she could
read further about the product's alleged ability to "tone up
those abs".
That bad news for Slendertone is simple. It's a new product
with no strong brand identity established and subsequently
little brand equity built. They do not have the long
relationships with their customers that the ever-changing
Blockbuster has with its or Stouffer's and their price
spikes have with theirs. Any deception will be greeted
rudely by any customer regardless of relationship, but when
no bond has previously existed, well, Slendertone is a
double-click away from short product life span.
Brand Equity is an ebb and flow matter in this ever-changing
marketplace. Some will take a few upturns and downturns and
survive. Case in point: Blockbuster Video. Others will
respond with less relationship-damaging tactics and survive
a little more heartily: Case in point: Stouffer's French
Bread pizza. Still others, have little margin for error
because of a distinct lacking of relationship longevity and
the brand equity such longevity carries, and will
undoubtedly crash and burn before hitting stride. Case in
point: Slendertone.
© BrandVision Marketing.
2007. Matthew Scott Trueblood. All rights reserved.
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