Of course brands suffer damage from time to time, often it is terminal, sometimes recoverable and occasionally reversible. But always it underlines the fragility of brand reputation.
I suggest there are four main types of brand damage, the first two are usually terminal, while the latter two can be recovered from in time:
- Critical Success Factor Damage – there are certain things a brand MUST get right to survive in its sector. Failure in these areas is usually catastrophic for the brand. For example, car tyres are expected to be safe – this is fundamental. But when Firestone tyres were linked to crashes with the Ford cars in the US, the brand suffered near fatal damage, despite many question marks over Ford’s culpability and a rigorous recall programme.
- Core Value Damage – brand values, and especially the core values a brand represents are among its major strengths and differentiators (and in many cases can embody Critical Success Factors (CSF) as discussed above. But while these are recognised as key strengths, if they fail the whole brand reputation may be damaged irreparably. Look for example at Anderson Consulting: core values of such an organisation include probity and corporate responsibility. When these were seen to fail in the light of the Enron scandal, the brand could no longer survive.
- Communications Damage – ‘foot in mouth syndrome’. While organisations spend vast proportions of their communications budgets on promoting their brand and its values, it only takes one ill advised comment to hole the brand below the waterline. The classic example, now part of brand folklore was the speech given by Gerald Ratner, former CEO of jewellery chain, Ratners, to the Institute of Directors in 1991: ‘We also do cut-glass sherry decanters complete with six glasses on a silver-plated tray that your butler can serve you drinks on, all for £4.95. People say, “How can you sell this for such a low price?” I say, because it’s total crap.’ Result, £500 million wiped off the company’s value and turnover plummeting.
- Damage by Association – Sectors suffer damage, countries too have their reputations damaged and associated brands find themselves also suffering. We are seeing this at the moment with banks and financial institutions the world over. Despite some extremely high quality output China and many far eastern companies are tagged with reputations for poor quality and controls. Damage by association is difficult to deal with, as many of the brands are already doing everything right but overcoming perceptual prejudices takes exceptional brand management to overcome.