5 Big Brand's Mistakes Solved How five companies messed up -- and what they should have done.
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Stumbles are expected in the startup stage. But when big brands mess up the spotlight on their failings is much less forgiving.
From JCPenny's confusing re-branding attempt to BlackBerry's service interruptions, we take a look at how five major players faltered and what they can do to regain their customers' loyalty.
The problem: Customer confidence takes a hit
In the past year or so, American Airlines has been saddled with some grueling challenges. Following the bankruptcy filing of its parent company in November 2011, the airline faced negative publicity surrounding reports of loose seats on its aircrafts. "It's a terrible image to think about being bounced around in flight," says Bobby Zafarnia, founder of Praecere Interactive, a Washington, D.C.-based branding firm. This was coupled with a companywide reorganization and labor strife with the airline's pilots union that caused widespread flight delays and cancellations. "With all of this happening at once, you'll inevitably have a lot of branding erosion," he points out.
In a case of terrible coincidences, two days after The New York Times published a story on one writer's rough travel experience flying American--including getting grounded in London and experiencing a seemingly endless tour of Heathrow--the airline's Facebook page asked users to share their favorite London travel experience. "When a company's social media channel is disengaged with what's happening in the general media, that's a huge disconnect," Zafarnia says.
The solution: When the seats came loose, the airline initially blamed the malfunction on spilled beverages. According to a CNN story that ran in October, an airline spokeswoman said the plane can "get gunked up over time with people spilling sodas, popcorn, coffee or whatever, and that can affect that locking mechanism on the ground that locks the seat to the floor." This raised even more questions for already skittish flyers. "The main focus should have remained on safety, and efforts to restore the fleet should have been communicated step by step every time a spokesperson spoke about mechanical issues," Zafarnia says. An American Airlines spokesperson was not available for comment by press time.
The problem: Core service interruptions
BlackBerry users can be fiercely devoted to their brand. However, that loyalty has been tested in the past year or so as the devices experienced power outages, leaving some without access to the internet, e-mail and messaging. "The company failed to deliver on the expectation of reliability," says Scott Seroka of Seroka, a brand-development firm in Wisconsin.
BlackBerry's numbers are evidence of the damage. In 2012, BlackBerry made up just 5 percent of the global smartphone market, down from 11 percent in 2011, according to IHS iSuppli, a market research firm. A New York Times story from January described the company as being "in survival mode."
"While existing customers prefer it, winning new customers away from the competition remains challenging," Seroka says. "BlackBerry has to sell the fact that they have something better to offer. For example, is it the operating system or the keyboard or the reliability factor? They have to offer customers something they don't even know they're looking for--something Apple is great at doing."
The solution: BlackBerry must convince its customers (and prospective new ones) that the technical difficulties are a thing of the past. "They should come out and say, 'Here's how we'll be reliable from this day on,'" Seroka says. "I don't think customers are going to be as tolerant of future outages." The company hopes the BlackBerry 10, introduced in January, will welcome customers with an improved product and snazzier web browser. "They're banking on the 10 to help them recover," Seroka says.
The problem: A flood of options dilutes the brand
Last year consumers were introduced to the high-alcohol beer Bud Light Platinum with an ad during the Super Bowl; they saw the launch of the margarita-flavored Bud Light Lime Lime-a-Rita; and they witnessed the demise of Bud Light Golden Wheat. Mike DiFrisco, aka The Affordable Branding Guy, says the ever-changing product line makes it "hard for consumers to know what Bud stands for. Apparently, a Bud is now just some form of alcohol-based liquid."
With the Budweiser name standing for so many different things, customers can get confused when standing in front of store shelves. "The worst thing you can do is make it difficult for consumers to figure out your brand," DiFrisco says. "Their purchase decision should be immediate, and that's always easier when you stand for something singular."
The solution: While the new line extensions aim to help owner Anheuser-Busch reverse a decline in sales, too many variations on a brand can come at a cost. "To grow the brand, they must forgo their ego," DiFrisco says. "Bud's a great name, but when launching a new off-core brand, like Lime-a-Rita, they should create a new brand rather than hang the Bud name on it, ultimately watering down what Bud stands for."
The problem: Mixed messages confuse customers
Last year JCPenney, the 111-year-old chain of midrange department stores, launched JCP, an ambitious new brand identity. As part of that, it unveiled a pricing strategy that eliminated most sales and reorganized its stores, creating "boutiques" for top brands.
The moves did not seem to resonate with customers. "JCPenney's communications message and in-store signage didn't connect with their new strategy," says Sara Rotman, founder of New York City branding agency MODCo Creative. "While the logo and graphics were strong, JCPenney felt derivative of Target's recent success."
The company's message of "everyday low prices" without the need for sales caused confusion. "There were no less than three or four disconnected and stylistically divergent ad campaigns running concurrently," Rotman says. "The constant changing of marketing strategy and communications only served to paint the brand as insecure and directionless."
The solution: Consistent messaging could help boost sales at the chain, which posted a $203 million loss in the third quarter of 2012. "It's the best way to clearly define and establish a brand's DNA to a consumer base," Rotman says. "Consistent messaging is also the best way to be efficient with spending. Conversely, if a brand isn't disciplined with its messaging, it risks confusing the customer and ultimately misses an opportunity to gain customer support and retention. Customers are smart, so constantly changing direction reads as insecure."
The problem: A hip name change lessens authenticity
It has been in the electronics retail business for more than 90 years, but amid the tech boom--and competition from computer giants like Dell and big-box retailers like Best Buy--RadioShack appears to have lost its way. In fact, last year Moody's downgraded the beleaguered company to junk status.
In an effort to regain relevance, in 2009 RadioShack experimented with a "hip" reinvention that included taking a new name: The Shack. Apparently, customers were not keen on the change. "RadioShack should have continued embracing the geeks who knew them back when they were all about transistors and diodes," DiFrisco says.
The company faced another PR nightmare with its sponsorship of Lance Armstrong and his Livestrong Foundation before cutting ties in October 2012 amid the doping scandal. It was, DiFrisco notes, "another black eye for the struggling brand as it tries to remain relevant. As Warren Buffett said, 'It takes 20 years to build a reputation, and five minutes to ruin it.'"
The solution: RadioShack should return to its roots and court younger tech types.
"RadioShack must stop trying to compete with big-box retailers, who will always win on price and variety," DiFrisco says. "They should get back to the folks who were truly loyal customers. Sure, the marketplace for electronics components has changed, but to be authentic--while remaining relevant--RadioShack should stay focused. The more they diversify, extend their services or target new audiences, the better chance they have of alienating people."
