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Why Do Businesses Ignore Brand Loyalty?

My husband and I got into a conversation today about a city very loyal to my heart, Nashville, Tennessee. It is where I got my bachelors and masters degree and lived for 6 years. While working through college, I worked on the General Jackson Riverboat, at the Opryland Hotel. If you are somehow not familiar with Opryland, I'll give you the super quick summary. At it's height, way back in the 1990's, it was a booming Theme Park. They had the Grand Old  Opryhouse, the gorgeous Opryland hotel, the showboat, river taxis, the theme park, country music shows, and more. It held a special place in the hearts of many country music fans and was a must-do stop for all of Nashville's tourists.

Things started changing with new management in the 1990's. The Opryland hotel more than doubled its size, the theme park was shut down and bulldozed and a shopping mall was put in its place - yes that right - a shopping mall replaced a theme park just as amazon was getting off the ground. Employees were treated differently as well. They had to park far, far away, be bused to a uniform warehouse, change, and then be bused to their jobs. This is a very, very reduced list of changes that occurred, but it should be plentiful to prove a point. A new CEO, Colin Reed was brought on board in 2001. By 2009 he made a speech stating the the theme park closing decision was a horrible decision (you think)? Floods hit the whole complex in 2010, and now, there is very little left. The mall was eventually rebuilt and sold. The hotel has been sold to Marriott. Dolly Parton even briefly considered bailing out the struggling businesses by building a water park with her name, but high tailed it away when Marriott got involved.

 As a marketing professor, I know very well, it is kind of a "marketing 101" rule not to re Brand except for in extreme crisis - like when Valujet became Airtran. Again, if you are not aware, Valujet Airlines crashed an airplane in the Everglades and a public relations nightmare followed. The ONLY choice was to disappear and quietly reappear later as a different company with a different name.

The example quite frequently used in academia is New Coke. Again, again, to refresh your memory, Pepsi pretty much always beat out Coke in taste tests. So brilliant Coco Cola executives decide that the way to boost Coke sales was to change the formula. What they failed to realize was that people didn't drink Coke for taste, they drank it for Brand Loyalty. Coca Cola, unlike Pepsi,  is famous for never changing its colors, logo, or message - never - meaning all the way back to the 1890's. 100 years of the same product, marketed the same way created a customer base that was very loyal. This loyalty was based on the fact  that these customer knew that every time the reached for a Coke, it was consistent. This consistency created a nostalgia feeling and helped add to continued brand loyalty. Once Coca Cola changed the formula, they upset the loyalty and Coke drinkers actually had strikes against Coke. The executives quickly realized their mistake and changed the formula back, but this lesson serves as a powerful lesson for all those who think about making similar, bad decision. 

But companies do it all the time. They change their product line (Opryland, Coke), their pricing structure (think JCPenneys last pricing change), and even their brand name or brand logo (my current employer, University of Akron). Unless you have crashed a place into the everglades, these are all stupid decisions. Let's very briefly look at each one:

Product offerings or product line

Customers don't just like consistency, they crave it - they need it. The principles of brand loyalty  arise out of consistency. Change it and you will lose customers. What about if you product offerings are outdated? Italian restaurants that are still serving heavy, cream and tomato dishes are probably struggling. Clothing companies are not selling acid washed, pegged jeans (actually they are, but bear with me), and electronic companies are not selling tape cassette players. You obviously have to know your customers and how they use your product and where the feeling of loyalty comes from. We expect trend based product lines to change. However, there is even nostalgia built into that statement - hence, the reemergence of clothing trends, toy trends, and movie franchises. 

Also, how do customers use your product? Think of the Opryland example. If customers go to a theme park, you can lock them into at least a 3 day vacation. You cannot keep people at a mall for more than a few hours. So the decision to close an amusement park affects the sale of hotel rooms.  If a store stops selling gourmet cheeses, it will affect wine sales.

Pricing structure

Once you start low, customers are not going to accept a higher price. You've established yourself as the cheap brand, it is hard to then pass yourself off as the expensive, high quality brand. Do yourself a favor and just hope you are the established, high quality brand and then don't ever change.

Brand name or logo

Do customers chose your product due to its brand logo? I'm not saying you don't buy Nikes because they are Nikes - I'm saying do people buy Nikes because of the exact curve of the swoosh logo? Of course not, there are 1,000's of other factors that have lead to Nikes brand loyalty, such as high quality, cute designs, and great, well planned celebrity endorsements. Changing a brand name or logo only establishes a feeling of inconsistency and your customers should never feel that. If sales or profits are down, you have to figure out why. I can almost promise, it will never be due to your logo font. Most likely, sales always slip due to customer service. No one wants to hear that simple statement. It seems as if the easier answer is throwing money at marketing. But, that won't work. You have to go back to the basics and make sure every aspect of your customers' experience is fabulous and makes them feel respected and wanted. You also might need to get control of out-of-control spending.

No matter what the cause, rebranding, repackaging, product changes, etc, are seldom the answer.

Have you seen rebranding in your company destroy brand loyalty? What should companies do about bad branding situations? Let us know. Comment below.

This post first appeared on Common Sense Business Advice, please read the originial post: here

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Why Do Businesses Ignore Brand Loyalty?


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