Breathing new life into old brands | KPMG | BE

Breathing new life into old brands

Breathing new life into old brands

Millions of dollars in revenue are generated globally by 'zombie' brands - famous brands that were axed years ago by their original owners but are now flourishing elsewhere.

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Classic brands die in many ways. On-demand video streaming and movie channels on digital TV sent Blockbuster into administration in many markets in 2013. Yet the brand and the business model remained viable in Mexico where only 31% of households have internet service. Last year, Blockbuster Mexico rented more than 5 million movies and games to users, generating almost US$117m in revenue in the first nine months of 2013. It has since been acquired by Grupo Elektra SAB, a retail and financial company controlled by billionaire Ricardo Salinas. The deal adds 300 outlets in 108 cities to Elektra’s network, through which the company plans to sell electronics and financial services.

A brand that has faded in its home market - such as Blockbuster - can thrive elsewhere, where the benefit the brand offers consumers is still relevant, says Lou Ellerton, senior consultant at brand specialist The Value Engineers.  "Many companies have found that in emerging markets, the brands on offer can be 10-15 years behind those in developed markets."

Zombie brands

To resurrect or not to resurrect

In many countries, a brand may keep resonating partly because of its American aura. Founded in 1956 in the US, restaurant brand Mister Donut was outperformed and acquired by Allied Lyons subsidiary Dunkin’ Donuts (later to form part of Dunkin’ Brands). There is now only one Mister Donut store in the US – near St Louis, Illinois. Yet in Asia, cloth maker Duskin Co has built Mister Donut into a restaurant chain with more than 1,100 outlets in Japan. Duskin’s success inspired Ramcar, one of the largest multinationals in the Philippines, to pick up the master franchise for its markets, building a network of 700 stores. With other franchisees signing up, there are now around 10,000 Mister Donuts outlets worldwide.

Some brands simply ended up in the wrong company at the wrong time, falling foul of corporate realignments, mergers and divestments. Others lacked luster when compared to the big, iconic names that generate most of the profits. In some cases, however, companies have resurrected such brands. In the UK in 2007, Cadbury heeded demands from 14,000 followers on 93 Facebook groups and revived Wispa, the chocolate bar discontinued in 2003 when sales flagged. Initially, the bar was revived only while stocks lasted. Seven years later, the brand is still selling.

In consumer markets where launching brands is costlier than ever, a judicious relaunch can make sense. 

“Creating a compelling brand is time-consuming, risky and requires substantial investment,” says Ellerton. “Reviving a brand from your back catalogue is a lot cheaper than creating one from scratch.”

Reviving a brand from your back catalogue is a lot cheaper than creating one from scratch.

In an uncertain world full of disruptive change, nostalgia appeals to customers. Research by Paul M. Connell of the State University of New York found that people exposed to certain food brands before they were 13 developed warm feelings towards those foods that could last a lifetime.

Identifying the right market

At home or abroad

Ellerton says there’s more to reviving a brand than dusting down a product and sticking it back on the shelves: “Once you decide a brand is still relevant, you need to identify the right market: at home or abroad. The difficulty with that, particularly in foreign markets, is you can’t assume consumers will have the same needs and reactions as those your brand originally targeted.” The other risk, she says, is that: “Brands that were anchored to a single product – or to meeting a single consumer need – can struggle to get past that association and stay relevant.

The imperative for consumer and retail companies considering reviving a brand, is not to rush to judgment," says José Manuel González, Partner and Head of Retail at KPMG in Mexico. “Technology, the growing power of consumers in emerging economies and a general decline in customer loyalty have created a more complex marketplace. As manufacturers strategically review their brand portfolios, they need to think carefully about what to keep, kill or sell.” Most brands die for a good reason but the wrong decision could allow competitors into your markets.

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