As we make our way to 40 an old problem claims number 39 on our list…
Common Brand Problem Number 39: The brand is gradually undermined by quarter-over-quarter revenue and profit pressures
Analysis: Constant market pressures to increase revenues and profits cause a myriad of problems. One of the biggest problems is putting pressure on the brand to extend into more and more market segments to broaden its appeal and to provide for more revenue growth. This eventually comes at the expense of the meaning of the brand itself. Witness Volvo. It had a very clear point of difference—family safety, until it created the 850 GLT, which was intended to extend the brand into younger and older childless markets. Volvo promoted this car as a fun car to drive—not necessarily a safe car for the family. Its styling departed from the boxy, armor/safety-implied styling of typical Volvos. The car’s success has been underwhelming, precisely because it is incongruent with the brand’s image. The degree to which the 850 GLT is successful is the degree to which it will blur Volvo’s primary point of difference in the marketplace.
Key Point: If a company must grow to keep Wall Street happy (as all public companies must do), then it should consider one of two approaches: (1) introduce new products and services that deliver against the brand’s essence and promise (a family-safe ride in Volvo’s case) or (2) bite the marketing bullet and launch new brands.
Click here to explore the other most common brand problems in our countdown.
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