Don't Tinker with the Brand!

(An appropriate article at an opportune time..!! Just managed to come across the below mentioned article from Al Ries’s blog. Do go through this, it’s so relevant to us, at this point of time.)

The economy is in trouble. The stock market has gone haywire. And consumers have drastically reined in their spending. These are not good times for most companies and most families.

But now is not the time to panic. Now is the time to preserve. To preserve our brand, its meaning and its identity by staying focused.

In the face of uncertainty, focus is more important than ever.

Of course, it is not easy to be calm and steady amidst such economic turmoil. Our natural instinct is to get out there and do something. Should we actively tinker with our brand to keep it afloat?

Economic markets rise and fall like the ocean. Strong brands will survive no matter what the tide. The key to long-term success is riding the waves up and down using our brand as a steady rudder. We should not attempt to sail against the current. And we should not over steer the ship.

Changing our strategy depending on the economy is a trap that many companies fall into. That is the worst thing to do.

When times are good, companies often launch expensive versions of their brands. When times are bad, companies often go down-market with coupons, discounts and sales.

Brands that stay strong and survive no matter what the weather are those that stay consistent. Our brand has meaning and strength only if it owns something in the mind. And the more we adjust and tinker with that meaning, the weaker our brand becomes.

Now that the economy is hurting, the worst thing we can do is to launch cheap versions of our brands or go the sale/coupon route. That just tells consumers our products weren’t worth the high prices us have been charging all these years.

Coupons are like drugs; once consumers get hooked they won’t shop without them. Only a fool would go to a Discount store, without a coupon. Several times people do drive by these stores and wanted to shop for something but refuse to go in because they have left the coupon at home.

Companies need to think long term not just short term. The choice is maintaining the brand or maintaining the sales.

Why not both, we may say. Well, when times are great that may be easy to do. But in today’s market that is going to be tough. Everyone’s sales are likely to go down. We need to focus on maintaining our market-share and our mind-share not our sales.

The goal is to preserve our brand, ride the storm and wait for sunnier days that will eventually come.

If we only look at our numbers over the next few months, we are going to be in trouble. We need to view the situation holistically. Because what might allow us to make our numbers today could sink our ship tomorrow.

Why should we care about our brand? Why not just look at the numbers?

Because our brand is what allows us to make a profit. Our brand is why people are willing to pay more for our product or service. And profits are what make companies successful. Not just sales.

When we destroy our brand, we destroy our company’s ability to make profits.

Sony, once a strong a powerful brand that has been decimated by years of reckless expansion. Compare Sony with Nintendo a company that just makes videogames and players.

In the last 10 years, Sony has had sales of $658.3 and net profits after taxes of $12.1 billion, or a net profit margin of just 1.8 percent.

In the last 10 years Nintendo has had sales of $48.3 billion and net profits after taxes of $7.5 billion or a net profit margin of an astounding 15.5 percent. (More than eight times as much as Sony.)

No wonder Nintendo is worth more than twice as much on the stock market as Sony, a company more than 13 times as large.

Sony is worth $26.5 billion. Nintendo is worth $54.1 billion.

Sony is a well-known but weak brand. Nintendo is a strong, focused and profitable brand.

We know it is ugly out there in the marketplace, but do a favor and don’t tinker, with your brand. Stay true, stay focused and everything will eventually be alright.

Have Faith ; Rewards will follow...