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Why 13 brands fell off a cliff and disappeared/Econsultancy

11 Jan

a coastal cliff

We love brands, right? We marvel at the most successful, and feel genuine sorrow for previously loved brands that disappear.

The life of any company founded today is shortening as time goes on. Brands have disappeared, and will continue to do so, for many different reasons.

A company can seriously jeopardise its future by taking its eye off the ball for less than a year. Agile methodology is becoming more and more important, as power is wrested away from old-school, bean-counting management.

This post presents some lost brands, some soon to be lost, and asks the question ‘why exactly?’

First off, what makes a meaningful brand likely to live long? Havas Media publishes itsMeaningful Brand Index (MBI) every year.

The index connects human well-being with brands at a business level.

It measures the benefits that 700 brands bring to the lives of over 134,000 consumers in 23 countries. It measures the impact of the brand’s benefits alongside its impact on 12 different areas of well-being, such as health, happiness, financial, relationships and community among others.

Unsurprisingly, tech brands top the MBI, seeing as they have such power to change our lives, as opposed to, say, toothpaste (though P&G are at number 10).

What’s truly a wake-up call for companies looking at Havas Media’s report is this:

Most people worldwide would not care if more than 73% of brands disappeared tomorrow.

Only 20% of brands worldwide make a significant, positive effect on people’s well-being.

So, with the current pace of change in business and technology, combined with consumer apathy, who has lost out?

Controversy and competition

Tab

Tab introduced the artificial sweetener sodium saccharin, which was shown (since disproved) to be carcinogenic soon after. This led to mandatory warning labels.

On top of this, Coca Cola introduced Diet Coke and pushed it as the number one diet cola. Cue the end of Tab.

Persil (briefly)

Persil nearly copped it in 1995 over the Persil Power fiasco. Persil Power was the “revolutionary cleaning product” that would combat Ariel’s assault on the market.

Not long after launch, Persil revealed that Persil Power in fact slowly rotted clothes. The product was axed and the brand took a long time to recover.

The launch of Persil Tablets finally put Persil back in the lead.

Poor customer experience

Levitz Furniture

A very successful warehouse store that failed to arrange the furniture to suit the consumer. In the 1990s, new stores merchandised the furniture to look like it would in the customer’s home.

Levitz subsequently filed for bankruptcy and liquidated in 2007.

Market decline

Kodak

In two years, camera sales worldwide fell 18% from a high point in 2010. The decline continues in 2013.

On top of this market shrinkage (obviously due to smartphone sales) managerial ineptitude played its part and some say that the original diverse chemical manufacturing business shouldn’t have narrowed to imaging.

Wang Laboratories

In the ’80s, Wang had over 33,000 employees and made $3 billion annually selling word processors.

When PCs took over, Wang suffered, filing for bankruptcy in 1992.

Destroyed by Amazon?

Borders

With the online store struggling, Borders outsourced ecommerce to Amazon in 2001.

With the ecommerce business siloed and basically outsourced, Borders didn’t make digital one of its core competencies. From 2006, the last time Borders made profit, to 2010 its annual income dropped by $1 billion.

In March 2007, the company announced the end of its marketing alliance with Amazon, as well as plans to launch its own online business in early 2008

Destroyed by supermarkets

Woolworth

The growth and expansion of the company contributed to its downfall. The product range was broad enough that as grocery stores such as Walmart expanded (offering cheaper prices), Woolworth no longer became a destination, rather somewhere perhaps to pop in off the high street.

Woolworth’s parent company eventually split off the Footlocker brand.

JC Penney (obviously still kicking)

JC Penney is trying to change its image, from discounts to brand shops within the store.

This is again because large stores such as Walmart are outcompeting on discount goods. Of course, as JC Penney changes, it will start to compete with department stores such as Macy’s, which are also bigger and will prove stiff competition.

Even without this competition, MSN Money argues a J.C. Penney comeback is not realistic.

For the quarter ending Nov. 2, comparable-store sales dropped 4.8%, gross margins fell to 29.5% and the company reported a net loss of $489 million.

Shares of JCP are down more than 50% on the year. This month, it was announced that the company would be removed from the S&P 500.

Too slow to adapt

Blockbuster

With the benefit of hindsight, Blockbuster’s passing up on the chance to buy the nascent Netflix in 2001 for $50 million was a bit of a ‘D’oh’ moment.

Blockbuster faced a whole host of problems, from unprofitable stores in some locations (even before changes in media consumption) to the slow realisation that first buying DVDs, then using postal services such as early LoveFilm, then streaming media had all done for the rental business. Of course, Blockbuster did adapt to these changes, but it was too little, too late.

Out of fashion

Merry-Go-Round

Most retailers adapt by rotating merchandise, especially in clothes retailing where tastes change quickly. Merry-Go-Round expanded too quickly and continued to push its late ’80s ware for too long.

Competition and decline

Nook (projected decline)

Tablet sales are still rising, while e-readers are thought to have hit their peak.

Sales at the company’s Nook segment, which includes both the e-reader and online books, declined by 26% between the third quarter of 2012 and the third quarter of 2013.

It competes against much larger e-commerce sites that have access to hundreds of millions of new readers. While Amazon has more than 130m visitors a month according to Quantcast, Barnes & Noble has just over 6m visitors.

Changing consumer tastes and decreasing margins

Hostess

With production costs rising and consumer tastes changing, the Twinkie didn’t deliver a high enough margin. Hostess has been bankrupted a couple of times, most recently in 2012.

Identity crisis

Avon (in decline)

Whilst Avon has exited some less profitable markets like Vietnam and South Korea, it faces an identity crisis.

Its door-to-door heritage has been somewhat sloughed off and the company doesn’t just sell directly any more. Competing with big players in-store such as L’Oréal is always going to be tough. Having a brand that is so associated with direct sales (a sales approach that obviously has limitations) means it’s hard for Avon to change tack.

Ben Davis is part of the Econsultancy editorial team. Follow on Twitter @herrhuld or connect via LinkedIn or Google+

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