Building a brand is a combination of art and science, but killing a brand requires an equal and probably a more considerate application of both too. As an initial taster, it is interesting to read the below statement to the SEC (USA):
This non-cash charge relates to a change in how HP plans to use the “Compaq” trade name in its branding strategy going forward. As part of our focus on simplifying our marketing and customer experience, beginning in 2013, HP will change how it uses the “Compaq” brand for certain computing products. We will continue using the Compaq brand, but it will be used for basic computing at entry-level pricing. In the past, we have used the jointly branded name “HP Compaq” to describe certain computing products, but that approach will be discontinued. As a result of these changes, accounting rules compel us to change the carrying value of the “Compaq” brand, resulting in what is called “goodwill impairment”.
This was a frank acknowledgement from Hewlett-Packard on its on-going strategy for the Compaq brand name and an admission that an accounting change will reflect the loss of equity that will result from killing the Compaq brand name.
In a seminal 2003 article in the Harvard Business Review, Prof. Nirmalya Kumar put forward recommendations on rationalising global brand portfolios: https://hbr.org/2003/12/kill-a-brand-keep-a-customer
One of the key recommendations was around the concept of liquidating brands and there were four essential routes – merge, sell, milk or kill (in the order of simplicity of execution). Even though killing a brand was positioned as the simplest of all, it was a challenge back then in 2003 and it is even a bigger challenge now. It is important to understand the brand’s life cycle when a decision to “kill” it is taken. There are some interesting examples of organisations approach towards “brand kill” decisions where the life cycle factor has played a key role:
TUI’s decision to phase out Thomson and First Choice brands: In May 2015, the TUI Group, who owns the Thomson and First Choice brands, adopted a one brand architecture strategy for all its portfolio brands. As a consequence of this, the Thomson and the First Choice brands will be slowly phased out, and according to TUI’s own statement, they will be no hurry to do so. The reasons are very obvious. The Thomson brand was setup by Roy Thomson in 1965 and is almost synonymous with packaged holidays. The brand has a strong equity, which TUI needs to carefully transition to the master brand much before the phasing out process actually begins.
The strategy adopted to implement this transition is still unclear. The Thomson UK website still clearly mentions ‘Thomson’ with the TUI logo. The mentions of “The TUI Group” are in smaller text and not very visible. So, if TUI plans to suddenly remove the Thomson logo one day and replace it with TUI, that might be a recipe for disaster, unless the transition has been efficiently communicated to current and future consumers. The negative impact of phasing out Thomson can be mitigated by taking into account two key factors:
– Consumers are familiar (and not only aware) that TUI owns both Thomson and First Choice brands. A complete ignorance of TUI’s ownership and future plans around the Thomson brand only makes the transition difficult and increases the possibility of significant revenue losses for TUI
– Consumers have an understanding of TUI’s brand positioning in the packaged holiday space in isolation (i.e. without the halo image impact of Thomson). In some countries, where the Thomson brand is smaller, this would be more clearer but in markets where Thomson defines the packaged holidays category, this may be quite challenging (especially the UK)
The fact that TUI has decided that the UK will be the last country to migrate to the one-brand architecture, reflects the fact that it has given the Thomson brand the consideration it deserves.
Was the above example, relatively straightforward in terms of “brand kill”? Possibly the easiest to align on and take a decision, but difficult in terms of implementation (e.g. differences in the about to be phased out brand’s market and category strength in different markets, differences in the master brand’s category strength in different markets, consumer awareness of the master brand and associated perceptions).
Let’s take a look at another example of a “brand kill” but in a different circumstance.
This is a slow phasing out of a master brand that is happening in the Indian automotive sector. I grew up in India and was surrounded by this brand from the time I could make sense what brands were. Maruti Suzuki India, very recently has started to slowly phase out the master brand “Maruti” from its premium model launches in India. These include the recently launched S-Cross. More details here:
This in the first instance, sounds like an exercise that risks a significant loss of equity for Maruti Suzuki, but the reality is different. Maruti Suzuki’s strategy of corporate brand endorsement was slowly phased out after the Maruti 800 was phased out as the entry level model from the manufacturer in India. Marketing and communication campaigns of subsequent models focused more on the model than the corporate brand endorsement. Secondly, it is an uphill battle for the manufacturer in India to establish its credentials in the premium and luxury segments (with the likes of Audi, BMW and DaimlerChrysler aggressively focused on these segments).
Maruti Suzuki’s strategy in India is now focused on establishing the individual marques in their respective segments. An endorsement from the corporate brand Maruti does not add to the positioning, credibility and segment fit of marques that have been launched or are to be launched in the premium segment. In reality, it takes away from the premium positioning because Maruti in itself does not have premium or luxury credentials. This is an example that does not qualify under the pure definition of “brand kill”, but under the definition of “brand de-emphasisation”. In India’s ultra competitive automotive market, it is critical for individual marques to justify their price labels. This will be a combination of brand equity, positioning, functional benefits and the competitive framework. If the corporate brand adds to the marque’s equity (e.g. BMW, Audi and Mercedes), it makes commercial sense to add an endorsement. In Maruti’s case, it makes sense to not add this endorsement.
There are several factors that make “brand kill” an extremely difficult strategy to implement after the brand has reached a stable state within the category in terms of growth and market share. Complex brand architectures are one of the major impediments to the successful implementation of phasing out strategies for brands.
Some key factors to consider before embarking on a “brand kill” strategy would be:
1) The foremost factor to consider is the life stage of the brand in the category. The more established the brand, the more difficult it is to phase out. The example of phasing out Thomson in the UK is a characteristic example. Brands that have been around for a long time have high levels of awareness, differentiated positioning, a combination of generic and specific perceptions and equity. It is challenging to remove such brands without significant impacts on revenues and profitability. The longer the phasing out period of established brands, higher are the chances of minimising the impact. To put it even simply, smaller the market share, easier and faster it is to kill a brand
2) The brand’s position in the overall brand architecture is an important criteria that defines phasing out strategies. In reality, it gives strategic directions to brand owners on the complexity of the phasing out process. If we consider the following scenarios:
Brand exists without any form of endorsement: If there is no form of endorsement, then it is understood and accepted that the brand in itself has equity in the category. The decision to phase out the brand than depends on the existence of a superior alternative, a wider strategic decision of existing the category and not been able to find a buyer or an organisational level strategy shake-up that warrants a move away from individual brands
Brand exists with corporate endorsement: In this scenario, the phasing out strategy is probably simpler but it depends on whether the brand is being phased out or the corporate brand endorsement is being phased out. The complexity and potential impact depends on the relative strength of the corporate brand and the brand in the endorsement equation (whether the brand in itself has enough equity and credibility or whether the corporate brand endorsement is required). If the endorsement is being phased out, then it is a clear indication that the endorsement doesn’t add anything to the individual brand’s equity (the Maruti Suzuki example). The opposite generally happens in situations of acquisitions. When an organisation with a strong corporate brand acquires brands, sometimes it makes sense to roll-up these acquired brands under the corporate brand
3) The time and complexity of phasing out brands is also dependent on the organisational strategy that warrants this change. In M&A situations, “killing brands” is generally a complex process. The phasing out of Orange as a brand from the UK exemplifies this challenge. The ‘Orange’ example also highlights how killing a brand from one country / region does not lead to the complete disappearance of the brand. Orange UK (owned by France Telecom) and T-Mobile UK (owned by Deutsche Telecom) formed the Everything Everywhere (EE) joint venture in the UK. After lots of dithering on the name of the merged entity, the joint owners settled on EE and the Orange brand was phased out from the UK telecommunications category (and its high street presence). But France Telecom, who own 50% of the EE JV, had recognised the power and the equity of the Orange brand much earlier. Such was the recognition of the power of Orange, that France Telecom rebranded itself to Orange S.A. in 2000. Orange has remained the brand name of the company’s mobile, landline, internet and IPTV services since 2006
The above example highlighted the need for a “brand kill” in one individual country, while the brand phased out in one country assumed much higher significance at an organisational level (for France Telecom).
4) “Brand kill” strategies can also be adopted when an organisation feels the need to rationalise the portfolio of one single brand. This usually happens when a hyperactive, out of control innovation programme has started damaging a brand’s equity. This also happens when there have been sporadic brand extensions into newer categories, which without thought, had started damaging the core brand’s equity. Think of any short lived brand extension and there is a “brand kill” associated with it, even if it meant the death of the sub-brand
5) Co-branding scenarios eventually lead to “brand kill” situations. One example of this is the Hewlett Packard – Compaq merger scenario. The death of the Compaq brand was an eventuality, it was only a matter of time. In many instances, mergers and acquisitions lead to situations where two brands in the combined portfolio have equal (or similar) standings in the category. The merger of France Telecom and Deutsche Telecom again exemplifies this. Not only did the France Telecom owned Orange brand disappear from UK high streets, but so did the Deutsche Telecom owned T-Mobile brand. Both were replaced by a completely new branded entity – Everything Everywhere (EE). The oft-cited example of Sandoz and Ciba-Geigy to form Novartis is an equally relevant one
The emergence of digital marketing has added a significant challenge to killing a brand. It is an easier process to remove visibility from physical consumer facing interfaces, but much more difficult to completely erase a brand’s digital footprint. Defunct brand domain names can be bought again and sold to enterprising entrepreneurs or competitors. Funnily, owning a domain name for decades does not guarantee your brand a safe passage. Look at what happened to Google for 12 minutes – http://www.mirror.co.uk/news/world-news/man-owns-google-one-minute-6563791
Till now, there is no definitive way of completely deleting a digital footprint (even with the Right to be Forgotten ruling). Killing a brand requires a comprehensive exercise involving gradual withdrawal of the brand’s visual identity, significant clawing back of marketing and communications, phased withdrawal of stock from shelves and more importantly, honest responses to questions from consumers. Haste in a “brand kill” process has done more damage than benefits (I would classify the phasing out and reintroduction of “Classic Coke” as an example of a brand kill process going completely wrong).
Urban Outfitters seems to have embarked on a similar journey with its Athleisure brand Without Walls: