What determines whether a damaged brand has reached a tipping point from which it cannot recover?
One of the remarkable facts of brand equity is its persistence. A strong brand can withstand almost anything. The Apple and Harley-Davidson brands survived years of shoddy unimaginative products and are now among the strongest brands. The AT&T brand suffered from decades of terrible service, yet is now probably the strongest brand in its space. Incredible. However, some brands do not recover easily.
The GM brand was tarnished by the mismanagement of the eighties and parts of the nineties. According to Bob Lutz in his book Car Guys vs. Bean Counters, its sullied reputation lingered for decades. Even in the last few years the media ascribed an inability to design quality cars that objectively was not justified. The Audi sudden-acceleration problem exposed in a 60 minutes piece in 1986 tarnished its brand. Even though according to the CEO of Ford (in a private conversation), Audi had the best car on the road for many years later, they could not sell it. It took well over a decade for this incident to dissipate.
These brand incidents and many like them are complex and there are many market factors involved in the story. However, some hypotheses might be offered.
- The strength and heritage of the brand will factor into its ability to come back. Apple, Harley-Davidson, and AT&T were extremely strong brands before their problems surfaced. In particular, these brands had high visibly and credibility with respect to their categories. However, if the brand is weak or if the negative publicity gets too large with respect to its equity, the brand equity will turn negative. If so, it is hard to turn it around.
- The seriousness of the problem and whether it is central to the brand’s value proposition. When Perrier had a water contamination problem and had to suspend distribution, it subsequently lost coverage especially in restaurants from which it never fully recovered. The Audi sudden acceleration issue was clearly central to its brand. If the problem is minor, a strong brand may not be affected at all.
- The credibility of the solution is a factor. If its solution is visible and credible it is likely to recover. Apple created new, “Apple-like” products and Harley solved the production/quality problems. Audi could never convince a confused audience that it has solved the sudden-acceleration problem. And the GM management disaster of the eighties and early nineties was so complex that it was difficult to credibly convince people that it was over.
- The context might change so that the specifics of the past problem may seem irrelevant. AT&T benefited from being in an industry that was so dynamic and with so many new offerings that customers might assume that past performance is not a predictor of future performance as much as its heritage values. The tipping point that identifies when a brand will not rebound should depend on the brand strength going in, the size of the problem, the credibility of the solution, and whether the context has changed. What is your favorite brand rebound story?