Cross-border brand failure cases

Author: Zeng Zhaohui
Publisher:
Publish Date: 2005-04-01
Features: Zeng Zhaohui's practical theory; The Necklace Theory: All brand communication and promotion must revolve around a core theme. Because a brand's individual advertisements, promotions, PR, sponsorships, and other activities, if not tied together by a unified theme, are at best just pearls. Only by threading all communication efforts together with a single main thread can a sparkling necklace be formed. The value of pearls and necklaces is incomparable. The Fruit Tree Theory: If a brand is likened to a fruit tree, products are the fruits on the tree. If a consumer picks a sweet fruit from a brand tree, they will believe that other fruits on the tree are also sweet. Therefore, companies must focus on building their brands, and after the brand succeeds, new products can be launched as long as they are labeled with the brand. The Flowing Water Theory: We often say, "Iron camps, flowing soldiers." Here, the iron camps refer to brands, and the flowing soldiers are products. Only when products constantly flow can a brand remain vibrant. The Brand Personification Theory: A brand is a person, and a person is a brand. Viewing a brand as a person is the simplest way to understand it. People have personalities, and brands have character; people have personalities, and brands have individuality; people have thoughts, and brands have substance; people have faces, and brands have images; people get sick, and brands face crises, requiring regular check-ups. The Button Theory: Conducting brand diagnosis and research is like buttoning a shirt—button one wrong, and the rest will follow. This book vividly describes the failure cases of 22 multinational brands (including Parmalat, Revlon, Red Bull, Nestlé, Philips, Ericsson, etc.), detailing their growth histories and deeply analyzing the subjective and objective reasons for their failures, offering profound insights for domestic brand operators. Since the implementation of the market economy, the Chinese market has experienced two eras: the Advertising Power Era and the Marketing Power Era. In the Advertising Power Era, advertising was the most important and effective means of communication. According to the "Bucket" theory, since the market was in a developmental stage, companies did not need every plank to be long—only the "long plank" of advertising was sufficient to dominate the market. In fact, many companies achieved fame overnight with a single outstanding advertisement, such as Kongfu Home Wine. In 1993, the Kongfu Group invited Wang Ji to shoot an advertisement—"Kongfu Home Wine, Makes You Think of Home"—which was broadcast on CCTV. After its release, Kongfu Home Wine quickly rose to prominence, selling nationwide, with distributors often queuing to pick up goods. In the Marketing Power Era, as the market gradually matured, the role of advertising was no longer glorified. Advertising became a conventional tool, working alongside channels, pricing, PR, promotions, and other means to contribute to integrated marketing. With the entry of international brands into the Chinese market competition, Chinese companies witnessed world-class brands like Coca-Cola and McDonald's sweeping the market with the power of their brands, as if entering a vacuum. In awe and admiration, some insightful individuals took up the weapon of brands to compete against them. The era of brand power has arrived! The word "brand" originates from the ancient Norwegian word "brandr," meaning "branding." In Chinese, its meaning is "" (). At that time, Western nomadic tribes branded their property on horses to distinguish between different tribes, with the inscription: "Do not move, it is mine," accompanied by tribal markings. This should be the earliest brand (brand) and slogan. From this, we can infer the original meaning of a brand: first, to distinguish products; second, to leave a brand mark in people's minds through specific slogans. In the modern sense, a brand refers to the entire experience between consumers and products. It includes not only material experiences but also spiritual experiences, conveying a lifestyle to consumers. When consuming a product, people are given symbolic meaning, and ultimately, their attitudes and perspectives on life are changed. People switch brands more often based on spiritual feelings rather than the physical attributes of the product. Products are cold, but brands are alive, with flesh, soul, and emotion; products can become outdated, fall behind, or be imitated by competitors, while brands are unique. In the West, brands are called the "atomic bomb of the economy," considered the most valuable, even speculative, investments. Some international brands' assets are worth billions of dollars, rivaling nations in wealth. For example, in 2003, Coca-Cola's brand assets reached 704.5 billion US dollars. As brands continue to appreciate in value, they also continuously generate huge profits from the market. The general rule of the international market is: 20% of strong brands occupy 80% of the market. This rule also applies to China. The future trend of the Chinese market will be: the weak become weaker, and the strong become stronger. Even the most beautiful factory will not make consumers visit it before buying a product; even the most advanced technology will not prompt consumers to delve deeper—consumers decide everything based on their perception of the brand. Therefore, for companies, the most important thing is not what you think your product is, but what consumers think of your product. When we conducted a brand psychology test for a beer brand, we conducted an interesting experiment: we filled empty bottles of the beer with Budweiser beer, then filled empty Budweiser bottles with the beer, and asked passersby on the bustling Wangfujing Street to taste it for free. First, we asked them to taste the Budweiser beer in the beer bottles. Most said it was not good, the taste was unnatural, and one person even vomited, complaining, "What's this taste? It's so awful." Then, we asked them to taste the beer in the Budweiser bottles. The results were unanimous: "This is delicious, the taste is right." We then asked if they had ever tasted Budweiser beer. Most said they had, and one even said, "I just drank a bottle at lunchtime, and it tastes like this." This was both amusing and absurd. Next, we removed the labels from the bottles and had them taste again. The tasters were confused, saying one thing was good and the other was good at different times. Coincidentally, at a beer conference in the United States, the organizers placed 30 varieties of beer in identical bottles and removed all the labels, asking the owners of 30 beer factories to taste and identify their own products. Not a single one could distinguish their own brand. This shows that in an era of increasingly homogenized products, the physical attributes of products are nearly identical, and only brands provide psychological cues, meeting consumers' emotional and spiritual needs. For consumers, a brand is an experience. In today's material-rich society, there are dozens, hundreds, or even thousands of similar products, making it impossible for consumers to investigate each one. They can only rely on their own or others' experiences. Because consumers believe that if one fruit from a tree is sweet, the others on the tree will also be sweet. This is the "fruit tree effect" of brands. A brand is also a guarantee. Consumers are reluctant to take risks on unfamiliar things, and they prefer branded products over non-branded ones, giving them confidence and assurance. For example, if Diego Maradona (Diego Armando Maradona) appears in a soccer match, we are more willing to watch because we believe that with Maradona on the field, the match will be exciting. Here, Maradona is the brand, the confidence, and the guarantee. A brand is also a reflection of individuality and a symbol of identity. People who wear Sheraton are completely different from those who wear Zara; those who drink XO are different from those who drink Erguotou; those who ride Ferraris are different from those who ride Cherys. The brands people use basically indicate what kind of people they are. For example, wearing Marlboro jeans shows you are a man of character, while wearing Levi's jeans shows you are free, rebellious, and have a personality. For competitors, a brand is a constraint. In certain fields, the market situation has been settled, and strong brands have formed, leaving very little market opportunity for latecomers. In areas without strong brands, competitors face good market opportunities with relatively fewer constraints, sometimes achieving success with minimal effort. For the brand itself, a brand is a covenant. However, this covenant is not written on paper but exists in people's minds. The brand promises the world: "I am excellent, I am trustworthy, choosing me means choosing peace of mind." But if there comes a day when it breaks its promise, it is as if it has broken the covenant in people's hearts, leading to feelings of betrayal and a loss of trust. Driven by international brands, today's market competition has divided into two levels: product competition and brand competition. Product competition is fierce, with thousands of products fighting for limited market space. To survive, some products resort to the weapon of price, harming both opponents and themselves. Brand competition, on the other hand, is healthy and positive, with established rules that all brands (consciously follow). For example, frequent price wars do not occur at this level, as they would devalue the brand. In reality, some brands have already entered a non-competitive area in their niche markets, becoming the ultimate winners. Products can be quickly imitated or surpassed by competitors, but brands are unique, so true, sustainable competitive advantages often come from strong brands. It can be said that whoever controls the brand controls the initiative in the future market. Tsingtao Beer fully utilized its brand resources, sparking a large-scale acquisition war in the Chinese beer market. Wuliangye Group used its brand assets as a guarantee to launch sub-brands like Liuyanghe, Jinliufu, and Jingjiu, achieving great success. McDonald's and KFC's brand expansion in China is even more remarkable, reaching 560 and 1,000 stores respectively by early 2004. In 2003 alone, KFC opened 231 stores, averaging one every 1.5 days. More international brands are using their brand advantages to acquire promising national brands, only to stifle them in their infancy. The experiences of brands like Qipiwang, Dahongying, Shengxiang, and Nike tell us that brand management can be completely separated from production. Nike outsources the production of a pair of shoes for just a few dozen yuan, but once branded with Nike, they are worth hundreds of yuan and highly sought after. Without Nike's logo, those shoes might not even be noticed. In the domestic market, a pair of 100-yuan jeans is already considered good, but with the Levi's brand, the same quality is priced at 300 to 400 yuan. Hangzhou's silk clothing has a strong market abroad. With their own brand, each piece sells for over 20 US dollars, but when resold by foreign companies with their own brands, the price rises to over 200 US dollars. Sony outsources the production of high-quality recorders to a factory in Shanghai for less than 40 yuan per unit, but once branded with Sony, the price rises to over 500 yuan. The future trend of the market is that unbranded companies will become contract manufacturers for strong brands, while strong brands will become the command centers for contract manufacturers. Factories need a large number of equipment and workers, but this command center will only need a few people, or even a dozen. This is not science fiction. The Doha Conference officially declared China's entry into the WTO, meaning that the future market will no longer distinguish between domestic and international markets—domestic markets will be international markets, and Chinese companies will compete with a host of world-class brands. As Sun Tzu said in "The Art of War": "He who calculates more wins; he who calculates less loses; and he who calculates nothing is doomed." Chinese companies, are you ready? Zeng Zhaohui March 1, 2005