When it’s time to retire a brand
- 27 February, 2020 07:26
When news of General Motors’ decision to ‘retire’ the iconic Australian Holden brand broke in early February, public outcry and a wave of nostalgia washed through the digital and print channels.
Media commentators and consumers alike promptly rummaged into the very many reasons for the brand’s demise, shared memories of riding in the Holden vehicles of their childhood, waxed lyrical about the first Holden car they owned, and generally mourned the loss of a brand that once symbolised the Australian dream and the nation’s unique landscape.
But as has been made clear, none of the emotion connected with Holden was enough to save the brand from the axe, a fact attributed to rapidly declining sales, the demise of the sedan in favour of the SUV, and the high cost of production for one of the world’s few right-hand drive markets.
With news of such a significant brand ‘retirement’, and the outpouring it generated, the team at CMO wanted to ask a bigger question: Just how do you know when it’s time to retire a brand? What are the warning signs? Have the reasons changed in a digitally and socially connected world? Which companies have done brand retirement well, versus those that did it badly?
And importantly: Would anyone have wanted to keep the Holden brand alive?
The business dilemma
The universal view from the many brand strategists CMO spoke is brand retirement or exits are very much a commercial, business decision. While viewing ‘retirement’ as a rare phenomenon, Zuni managing director, Mike Zeederberg, noted brand exits usually directly correlate with a business problem or issue.
“Almost exactly the same issues are at play when businesses rename, or change the name of a brand or product, and largely the same considerations,” he said. “How much equity exists in the existing brand? What value does it hold to consumers, and on the balance sheet, and what role does this branding play, if any, in the customer journey and purchase decisions?”
Zeederberg pointed to Kentucky Fried Chicken changing to KFC in 1991 in order to drop the word ‘fried’.
“With the advent of keto, the de-demonising of fat and the push towards trusted brands and nostalgia, the group changed back to the full name last year, now using both as part of its brand,” he said.
Equally, Landor Americas president, Gabriel Miller, positioned retiring or exiting a brand as a commercially driven business decision. “A brand is designed to reflect the company’s business strategy. If it’s not serving that strategy, and continuing to build value for the company, it’s time to start to think about next options, such as retiring or exiting from a portfolio,” he said.
A US case in point was when United Airlines acquired Continental Airlines. “United’s strategy was simply to add more routes to its offering, so it could start to retire Continental and maintain the same strategy, allowing United be the hero,” Miller said. “It’s about how the brand is helping the business grow.”
The Contenders, a boutique branding agency, refers to it as brands being fit for purpose.
“We have an internal mantra at The Contenders that brands must serve a purpose to be fit for purpose. Both fit and relevance can be measured and should to inform your approach to whether you retire a brand or not,” The Contenders CEO, Joe Rogers, said.
“The only question to ask is: Does the brand hinder or enhance your ability to deliver ROI? That should be your primary guide. From here, there are many different paths to explore from selling the brand to doubling down on it.”
Measuring brand value
Key to forming these decisions is a brand’s worth in the market. For Rogers, measuring a brand’s value comes back to brand salience and brand image.
“Does the brand still stand for something desired by consumers and unique to you and is the image of the brand something that in culture is big enough to sustain a business?” he asked. “Sales is the ultimate measure of a brand but ongoing brand tracking on attributes will predict your demise.”
BrandHook, CEO, Pip Stocks, highlighted the millions of customer insights clients have to go on the search for to keep up to speed with consumers and trends.
“We are always ‘banging on’ about customer intimacy and the need for brand leaders to get out with the customers. They need to find these insights by talking to customers, experiencing the brand as they do and essentially getting involved in their lives,” she said. “It’s about gathering their own ‘thick data’ to keep abreast of mind shifts and behavioural changes.”
Of course, emotion plays a big part in brands – not only in terms of positioning and impact, but also their cultural longevity. But it’s not necessarily the North Star you want dictating a brand’s future, industry pundits agreed.
“It comes back to what is the business decision, knowing you may impact some loyal fans. If that small constituency doesn’t create enough value for the brand, then it’s time for that brand to make some tough decisions,” Miller said. “Brands are like children – they aren’t cheap, they grow up, go to school, you have to buy them clothes and it’s expensive to evolve a brand. It also becomes more expensive to hold onto it for a long period of time. There may be a strong financial decision to retire a brand.”
A good example of a brand that’s done retirement well is Google, Miller said. He noted the company’s approach as it looks to create the total home experience, acquiring companies such as Nest, then subsuming the brand.
“As Google has acquired brands, it’s doing a good job of making them fall under the Google umbrella and ensuring that shift from saying a Nest home, to a Google home,” he commented.
Brands that went wrong
But there are plenty of brands that went wrong. Zeederberg pointed to iSnack2.0 as a famous example of product branding gone awry, and Vegemite being forced back to the drawing board by consumers. Another example is Blockbuster, which failed to adapt to the world of streaming content and was superseded by Netflix.
“It’s brand and categories that do a good job of seeing the future and embracing change, that embrace business shifts and shift to make themselves relevant to modern times,” Miller said. “Brands have to adapt – look at taxis with Uber, or hospitality with Airbnb – they’re having to adapt to changing times.
“Blockbuster wasn’t agile enough when the world was moving to stream to adapt, and didn’t do a good job there.”
Most brands get retired because they no longer have value, or they've gone out of business, Zeederberg said. Just look at Kodak or Vine.
“Culture shifts and technology improvements definitely change the way customers think and behave,” Stocks added. “The key for any brand is to continue to evolve, keeping up to date and staying relevant. Essentially, it’s about continuing to meet customer needs. If brand leaders fail to keep on top of this and improve their customers experience constantly, their brand will die a slow [or sometimes] fast death.”
In a digital world, what’s also become apparent is consumers are looking for holistic experiences, conversations and interactions versus transactions, Miller said.
“If you are a brand still thinking about a static one-to-one relationship, and not capturing the full immersive experience with your brand assets, you are probably mediocre at best anyway. Digital is a huge part of that brand experience and how you engage with a consumer, which is paramount,” he said.
The dos and don’ts
While there’s no one-size-fits-all approach to what to do when it’s time to exit a brand, brand strategists cited several dos and don’ts.
“Pre-retirement is about communicating your intentions, retirement is about honouring your commitments, and the post-brand axe is about protecting the legacy of a brand,” Rogers explained.
For example, during pre-retirement, be clear on possibilities but do not be unequivocal in your decision, he advised.
“During retirement, do ensure the organisation is equipped to meet its obligations to consumers from warranty to product return but do not communicate emotionally. Be factual and informative,” he continued. “Post-retirement, do seek to find ways to enhance the legacy of the brand through establishing its place in history but do not expect to be thanked.”
Miller referenced emotional connection as a key element in tackling brand retirement successfully.
“If you have a huge social media following or your website is a big database of loyal users with major influences, you want to proactively think of how you answer these questions from the loyal following before you make big decisions,” he advised. “Externally, you need to look at how it affects the market, and pre-emptively have a plan to articulate why you made that decision.”
Internal sentiment and culture is another important facet here, and Miller raised the question of how a brand exit will affect people and livelihoods behind that brand. “How does it impact their day-to-day work?” he asked.
It’s for this reason the decision and process of shuttering a brand shouldn’t be just the marketing team’s remit, it must involve all stakeholders from the beginning, through the journey and at the end.
“I also use the Goldilocks theory – you don’t want to be too fast with a decision, or take too long, as it can create confusion in the marketplace. Have a game plan,” Miller said. “It’s like a divorce or death in the family, you need a pragmatic approach to exiting the brand and to stick to the plan from day one. And you definitely have to be more nimble in our current digital environment.”
Rogers quoted the old saying: People forget what you said but always remember how you made them feel.
“The people who work for the brand you are closing down have lost a job and colleagues. Lead with empathy and support them to transition to the next chapter of their lives. The way an organisation does this with its employees with trickle down to consumers and impact how they feel about the brand being retired and also the brands left,” he said.
Communication and transition are two key words here. “Keep your customers up to date about what you are doing and why; then help transition them to something else,” Stocks said.
“Remember you are going to have lovers of the brand and some people who might rely on the brand so taking them with you in brand retirement will be key.”
An added element in the mix today is social media, one of the more recent innovations driving the need for transparent, swift and responsive action.
“So you have to be as direct as possible, and respond in a way that’s much faster. Think about hashtags, adding and providing people in one direction. Understand social media is quicker than you think,” Miller said.
It’s also vital you engage with social media. “Transparency is an often used word, but you have to be transparent about the reasons with end users and your culture,” Miller said.
For Rogers, social media is either a communication or connection tool. The strategic decision is deciding which is which.
“If you take the communication tool approach, it can have advantages in communicating to the community affected by the brand retirement,” he said. “If you are seeking to build connection, the trick is to give a face to the media channel through an organisational leader such as the CEO.”
Up next: Could brands actually stage a comeback? Plus more on lessons from Holden's demise
Staging a comeback
There’s also the question of whether it’s right to kill off a brand at all. If the underlying economics of the business are still strong, it may just be to time to stage a comeback, TRP Agency strategist, Kyle Ross, said. There’s three ways the agency looks to make this decision.
The first is whether it’s a product problem, and if products being offered are working for people in terms of performance, pricing, distribution or accessibility.
“For example, SUVs make up for around 45 per cent of all new car sales in Australia, but Holden’s SUV sales sadly couldn’t make up for big drops in sales of passenger car,” Ross said, bringing the criteria back to General Motors.
The second question is whether it’s a brand problem. For instance, are there unhelpful brand associations that limit popularity with predictable effects on sales, Ross asked.
“Is there something about the brand or people’s beliefs about that brand holding sales back?” he asked. “One of Holden’s best assets was its Australian identity. But that arguably ended in 2017 when the last car rolled off the factory floor, with Net Trust Scores declining steadily thereafter.”
The third question is if it’s a communication problem. “Are we telling the right story, working in the right way or targeting the right people?” Ross posited.
“While Holden struggled to gain traction advertising a new line-up of SUVs and 4x4s, Ford found success by positioning the Ranger as the smarter truck for the contemporary pick-up truck driver. In doing so, Ford succeeded in ‘depositioning’ the market leader, Toyota HiLux, as outdated, ordinary and a somewhat unimaginative choice. Consequently, the Ford Ranger tripled its baseline sales growth, and became Australia’s largest selling 4x4 pick-up truck growing market share from 12 per cent in 2013 to 22 per cent in 2017.”
And what of other views on the loss of the Holden brand? Rogers described the core brand issues for Holden as twofold. The first was brand salience, which has been falling for years while awareness remained high.
“The other shift is in brand image versus our image of ourselves as Australians,” he said. “The basis of the Holden brand image is in a version of Australia that no longer leads our cultural narrative. In a world where what leads in culture is safety, blurring gender norms, increased urbanisation and diversity and environmental responsibility, Holden failed to reinterpret its foundation myth [freedom] through the trends of the day. In the end, Holden has made the classic mistake of confusing brand awareness with relevance.”
Zeederberg assigned the demise of Holden locally to the lack of value, and said brands are often traded when this happens, especially in the FMCG world.
Just look at Violet Crumble, the iconic South Australian chocolate invented in 1913, which was bought by Rowntree and eventually Nestle and ‘retired’ in 2010.
“In 2018, Robern Menz bought the brand, and it started shipping again last year. So retired brands, like aging rock stars or worn out sports people, are prone to ‘comeback tours’, assuming there's still an audience and a revenue opportunity,” Zeederberg said.
And with the Holden brand retaining significant value, Zeederberg expected to see it sold off and resurrected locally in some way.
“After all, a brand that elicits enough passion to start street brawls amongst hoons and to get people to set portable toilets on fire at Bathurst definitely has value to someone,” he added.
Follow CMO on Twitter: @CMOAustralia, take part in the CMO conversation on LinkedIn: CMO ANZ, follow our regular updates via CMO Australia's Linkedin company page, or join us on Facebook: https://www.facebook.com/CMOAustralia.