The Biggest Threat to Brands

My belief is that the biggest threat facing brands today isn’t cynical consumers or rapid change in digital media. 

The biggest threat is actually short-termism.

Short-termism, or the focus on short-term profits rather than long-term growth drives far too many brand and product decisions today. The maniacal focus on quarterly performance forces marketers to act tactically and react, rather than think about long-term steps to keep a brand healthy and strong. 

A downward trend in sales doesn’t require a new packaging innovation for the summer season or a fruit-flavored malt liquor brand extension as a quick fix to goose sales. These are cheap tricks to gain attention and trial from customers that already know your brand. And by being successful, they cheapen what made people like the you in the first place.

It reminds me of the quote goes from the movie Charlie Wilson’s War: 

First off, I'd appreciate it if you didn't throw my name around quite so much, because from time to time I use it myself, and I need it in good condition.

Extensions and product innovations have a cost in brand equity. Each extension or gimmick attached to a brand name mines a little of this equity and makes the brand less valued and loved.

Making the problem even bigger is the waste of resources on the innovation pipeline, a fractured media budget to support a launch and the man hours to manage bringing a new product to market. All of this takes valuable resources needed to remind consumers what originally made a brand special.

While difficult to quantify in financial terms, brand is your most valuable possessions. It’s the reason people love your products, why they pay a premium and most importantly, allow you to make mistakes. It represents shared values and when you make gigantic errors, those shared values allow you to make things right. 

If you don’t believe me, think of the well-managed brands who bounce back quickly after major mistakes: Jet Blue stranding people for three hours on a hot tarmac, the launch of New Coke and resulting backtracking to get the original back on shelves.

Brands can take a strategic path to growth and product extension by focusing on core brand values and a smart customer segmentation. Corona offers a great example with Corona Light and Corona Premiere, which have 70% new user consumption. 

They have seen both steady growth and managed to launch brand extensions that actually introduce the brand to new consumers. Rather than cannibalize existing consumers with a gimmicky variation they develop a subtly different product that respects by knowing the brand's place in culture, the core equities and the overall customer segmentation. All the while, continually investing in the master brand. 

So during the next annual plan or discussion around innovation, think about what your brand will mean in three years after the innovation cycle is over. It might make sense to invest in the the core brand rather than pushing out a "quick fix."