Minimising Brand Risk
Most people relate to the benefits of a relatively strong brand (greater loyalty, premium pricing of products/services, ability to attract and retain the best talent, higher stock price etc) yet the reality is that this information hasn’t hit home to motivate and generate similar interest in the safeguarding of the Brand.
Brand equity represents what a Brand means to the consumer – loss of that brand equity makes organisations vulnerable. This can be brought on by activities such as focusing the brand into too many product areas; changing the name / face of a brand or its highly recognised visual brand elements; and especially through loss of consumer trust in services or products offered.
This happens specifically to those brands which aren’t consciously managed or are pushed into the direction of becoming commodities, either through price, the downgrading of customer experience, or cultural shifts. Add to this a Brand taking on meanings that confuses the customer and the result is a diluted Brand.
This lack of focus weakens customer interaction and trust, especially if it is as a result of opportunistic actions and trendy marketing messages which disjoint from the Brand Essence. Threats to Brand equity lurk as the:
- Drive to maximise short-term profit (above all else)
- Lack of Brand management knowledge and actions
- M & As
- Acting against consumers’ best interests (Customers first over increases in short term profitability at all cost!)
- Opportunism
- False claims
- Increasing product line extensions unnecessarily
- Inconsistent support for past brand standards
- Inconsistent Product quality/service.
Testing for Brand Dilution
Three primary risks exist to Brand
- Brand Equity losing differentiation from competitors,
- Reputation risk – loss of trust with consumers and to quality, built up over years
- Marketplace risk – changes to economy, industries or markets that the brand shares with others
Specifically though, in terms of contributing to potential loss of brand equity, there are other scenarios which have the capacity to harm the brand. For example,
- the introduction of new products which differ markedly from others;
- the merging of multiple companies, products or services into one;
- developing marketing messages which don’t match a company’s actions;
- loss of customer personal data;
- adopting decisions which possibly harm consumers; and
- not providing relevant support and interaction around products and services as desired by the consumer.
Undertaking certain initiatives will ascertain whether your Brand is being diluted.
Here are some questions that are a good place to start.
- Have we got a defined brand business scope?
- Are our organisational values and company vision stated obviously for stakeholders and employees to be easily understood and adopted?
- Do the brand’s products or services align with the Brand Vision?
- Are customers, employees or analysts questioning a brand’s reason for even offering certain products,
- Are we keeping to our Brand Promise?
Brand equity is precious, safeguarding it from risks and the business ramifications of dilution which include reduced market cap, profits and future sales, is crucial.
Questions and Answers
Article Tags:
company branding
,brand management
,marketing strategies
,brand strategy
,brand identity
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