When General Motors Corp. tried to revive its Daewoo car division in the United Kingdom early in 2005 by rebranding it with the Chevrolet badge, it ran into big trouble. Car buyers had difficulty linking the iconic American brand — immortalized in countless movies, celebrated in numerous songs and enjoying more than 90% brand awareness — with the low-priced Korean autos. The result was falling sales and the resignation of the chief executive of GM’s operations in the United Kingdom.1 Moreover, the Chevrolet brand itself deteriorated significantly in the 2006 J.D. Powers & Associates annual satisfaction survey in the United Kingdom, ending up ranked just ahead of troubled automakers such as Fiat S.p.A. and far behind other American makes such as Ford Motor Co. or other Korean brands like Hyundai Motor Co.
In another instance, marketers at Nestlé S.A.’s British operations chose to capitalize on the brand equity of a much-loved confection, the historic KitKat bar. In a bid to boost lackluster sales in 2003, the marketers launched brand extensions in multiple flavors such as Blood Orange, Lime Crush and Christmas Pudding. Although there was temporary interest in the new launches, the experiment failed spectacularly. KitKat’s overall U.K. sales fell by 18% in the two years prior to April 2006.2 Nestlé has since dropped almost all of the unusual flavors.
These vignettes illustrate the actions of managers who fail to understand all the dimensions of a brand. Specifically, few managers grasp the fact that perceptions of a brand can and do change dramatically over time and from one social or cultural setting to another. Indeed, companies cannot so much manage a stable brand image as negotiate an evolving one — meaning that their managers must redefine the brand discourse in more flexible language.
The Heart of the Problem
At root, brands are symbols around which companies, suppliers, supplementary organizations, the public and, indeed, customers construct identities.3 It is a given that branding is a critical issue for marketing and sales; strong brands facilitate the repeat purchases on which sellers rely to enhance corporate financial performance. Brands also ease the introduction of new products and assist promotional efforts. And they enable premium pricing as well as the market segmentation that makes it possible to communicate coherent messages to specific target customer groups.
1. CAR, September 2005, 51.
2. D. Ball, “Flavor Experiment for KitKat Leaves Nestlé With a Bad Taste,” Wall Street Journal, Sunday, July 7, 2006, sec. A, p.1.
3. P. Berthon, M.B. Holbrook and J.M. Hulbert, “Understanding and Managing the Brand Space,” MIT Sloan Management Review 44, no. 2 (winter 2003): 49–54.
4. N. Klein, “No Logo: Taking Aim at the Brand Bullies” (New York: Picador, 2000).
5. A. Chaudhuri and M.B. Holbrook, “The Chain of Effects from Brand Trust and Brand Affect to Brand Performance: The Role of Brand Loy alty,” Journal of Marketing 65, no. 2 (April 2001): 81–93.
6. F. E. Webster, Jr., “Understanding the Relationships Among Brands, Consumers, and Resellers,” Journal of the Academy of Marketing Science 28, no. 1 (winter 2000): 17–23.
7. “Death of the Brand Manager,” The Economist, April 9, 1994, 67–68
8. B. Morris, “The Brand’s the Thing,” Fortune 133, no. 4 (March 4, 1996): 28–38.
9. K.R. Popper, “Objective Knowledge: An Evolutionary Approach,” (Oxford: Oxford University Press, 1979, rev. ed.); and K.R. Popper J.C. Eccles, “The Self and Its Brain” (New York: Springer International, 1979).
10. K.R. Popper, “Knowledge and the Body-Mind Problem: In Defence of Interaction,” ed. M.A. Notturmo, (London: Routledge, 1994).
11. A.M. Muniz, Jr., and H.J. Schau, “Religiosity in the Abandoned Newton Brand Community,” Journal of Consumer Research 31, no. 4 (2005): 737–747.
12. See for example, J.C. Ellert, D.G. Hyde and J.P. Killing, “Nestlé-Rowntree (A),” IMD Case 0111 (Lausanne, Switzerland: International Institute for Management Development, 2002).
13. T. Rozhon, “Men Ask: Who Needs to Buy Clothes,” New York Sunday, June 8, 2003, sec. 3, p.1.
14. J.W. Schouten and J.H. McAlexander, “Subcultures of Consumption: An Ethnography of the New Bikers,” Journal of Consumer Research no. 1 (1995): 43–62.
15. Y. Benkler, “Coase’s Penguin, or Linux and the Nature of the Firm,” The Yale Law Journal 112, no. 3 (2002):369–446.