Every day millions look at the financial columns to see how their investments are doing. I’m sure many in the turnaround industry are in that category, too. Many TMA members are also looking for information about failing companies, M&A, bankruptcies and liquidations. One thing is common to all the successful and the distressed corporations, organizations and companies involved: each one is a brand.
Many TMA members, while skilled financiers and legal experts, do not consider the benefits of branding as a potential tool to use in order to save and improve their own clients’ business. The value of branding needs to be opened up for consideration.
While it’s obvious that legal and financial contributions to distressed companies are essential, those activities should not be considered the exclusive solutions or alternatives. Branding is as vital and important as any other turnaround tool. Collaboration between strategic legal advisors, financial experts and branding champions could lead to great outcomes, unexpected results and longer life for businesses.
First, let’s clarify the term branding. A brand is more than a name or logo — it is the sum total of a consumer’s experiences with a recognizable product/service — and it is powerful. A brand is an intangible strategic asset in both business-to-business (B2B) and business-to-consumer (B2C) scenarios.
For anyone looking for proof that a brand is an asset, and that brand equity is sometimes worth more than financial support or legal advice, look no further than the key lessons learned from the following examples at Blackberry, Radio Shack, McDonald’s and Twinkies.
- Ad campaigns never saved the business, even when some were well-liked.
- Bad relationships between creditors and lenders did not help.
- The cyclical, cruel retail wheel cannot be stopped; it fell asleep while others made progress.
- CEOs are not miracle workers, especially nine different CEOs in a row. Stability and consistency are a must.
- When a retailer is no longer the ‘place to be’, its days are numbered.
The RadioShack issues demonstrate that a good internal branding expert could have been helpful.
McDonald’s Current Turnaround
- This company, without a doubt, is in trouble.
- Turnaround experts are needed, but the company didn’t call on lawyers or financial wizards.
- A branding guy has been appointed CEO.
- Top communication and branding people were hired to solve the problem.
- All it must do now is become loved again. McDonald’s is currently on the top 10 “most hated brands” list.
McDonald’s is a classic turnaround case where the brand is the problem, and branding methods alone will be the solution.
- The company is one year into a two-year turnaround marketing plan.
- Focus on creating brand equity and value for customers and shareholders.
- After hiring a new CEO, new marketing team and new ad agency, the company has shown signs of recovery during the last couple quarters.
Blackberry is a good case of convergence and collaboration among legal, financial and branding experts.
Twinkies’ Return From the Dead
- Twinkies appeared to be on the brink of extinction.
- The factories’ equipment was probably worth pennies on the dollar.
- Other assets offered for sale didn’t attract much interest.
- Twinkies attracted Metropoulos — a company that had purchased several instantly recognizable all-American brands, including Bumble Bee Tuna, Chef Boyardee and Pabst Blue Ribbon — only because of the brand equity, which might be Metropoulos’ most iconic holding yet.
Conclusion: A brand is an asset. Property and machines are just commodities! If there was no brand, no deal could have taken place.
An Intangible Asset
A brand is an intangible asset that resides in people’s minds. It is defined by the expectations people have about the benefits they will receive. These expectations of benefits are developed over time by communications and, more importantly, by actions.
If we follow the simple logic of this definition, any brand that is going through a turnaround activity should consider the following:
- Financial rescue of any kind could be of limited value if the brand is not committed to responsible actions. For example, any rescued brand that gets financial assistance without commitment to market the goods/services, or properly serve its customers, is wasting money.
- Legal rescue of businesses, bankruptcy procedures or restructuring of ownership is not normally focused on the ultimate effect the brand will have on its consumers. So while the brand could be perfectly protected and legally structured, consumer opinion may differ on its performance and promises.
- Allowing a branding expert to participate in these previous phases could bring a whole different element into the mix. A branding expert can point to the series of actions needed for the consumers to appreciate the brand, consider it again after the turnaround and ultimately prefer it. Branding experts also can guarantee consistency and commitment for the brand long after the legal and financial functions are done.
During the long years I’ve been involved in marketing, advertising and branding activities, I’ve seldom thought of my work as “turnaround” work. But the facts speak for themselves.
Turnaround specialists are called to rescue and improve the fortunes of a brand during the maturity and declining stages of its life cycle. I’ve been right there, at the same junction, many times. We all find ourselves performing tasks with similar turnaround objectives for a variety of businesses, whether we are lawyers, bankers or branding experts.
Let me conclude with one final tale. Martha Stewart was a top lifestyle brand for many years. At its peak, Martha Stewart Living Omnimedia was valued at over $2 billion, and almost every department store wanted a piece of Stewart’s products. Her magazines were selling like hot cakes, and many across the country watched her TV program.
Stewart was popular and successful. But the company failed in more than one way. Analysts can skin that cat many times over, but the bottom line was lack of performance and declining income. This situation called for a turnaround. What’s interesting is that the rescue came from a company focused on saving and turning around brands — Sequential Brands Group. While the transaction enabled Stewart to retain an advisory role, it marked the end of the Martha Stewart empire.
Some believe this turnaround will bring a decent return on investment, and some don’t. Like it or not, the only solution in Stewart’s case is great cooperation among attorneys, financiers and branding experts.
The contributions a branding expert should provide in a turnaround process include:
- Understanding the marketplace as well as customer needs and wants, which is accomplished by researching the marketplace and customers (both B2B & B2C) as well as managing marketing information and customer data.
- Designing a customer-driven marketing strategy, using market segmentation and targeting to select customers and deciding on a value proposition through differentiation and positioning.
- Building an integrated marketing program that delivers superior value, building strong brands through product and service design, creating real value with pricing, managing distribution demand and supply chains, and communicating the value proposition via promotion.
- Building profitable relationships with both customers and marketing partners while creating customer delight.
These are all intangible strategic assets a brand can’t do without, even in good times — let alone when it’s time for a turnaround.