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A Squandering of Brand Value: Developing A Case Study…

April 22nd, 2013

In my last entry I mentioned that I would be running a series that would break down the elements of how brand value is can be so easily squandered when mixed into a larger corporate portfolio, or under the watch of an executive team lacking the proper motivation. This is obviously a pretty complex issue and can’t be contained in a single blog entry, which is why I have chosen to take the approach of outlining the issue in a series of entries. Keep in mind, that while my approach might be directed at an entity that rolls up into a corporate parent, it can easily apply to a stand-alone entity. My experience in seeing brands fail to reach their true potential has typically been linked to a corporate parent. Ultimately, it’s an inequality of brand level performance, a lack of consistent accountability, a lack of proper resource allocation, as well as a highly political environment.

The walk we will go through on this case study will be a top down overview of the company’s P&L. Starting with revenue, progressing down through cost management, expense management, and ultimately addressing key issues such as personnel, accountability, and communication.  A company and its employees can always work through certain levels of resistance. Resistance is a natural part of the growth process. However, when each one of these potential resistance levels are compounded on each other it develops into a strong headwind where forward progress is minimal and the amount of energy needed to overcome ends up becoming, in some cases, more than the team can tolerate and key team members opt out. It’s not the hard work that turns them off, but the extreme efforts and frustration it takes for small incremental gains. Gains that could be much larger in the face of a cohesive effort and proper support.

In particular, we’ll dive into the following areas;

  • Corporate Influence. Are the brands financial goals clear and aligned with the expectations of corporate? Are the resources being deployed enough to support the achievement of those goals? Will the brand goals remain unchanged in the event of under performance by another brand or division?
  • Revenues. Is there a defined revenue plan in place that has been developed in the spirit of longer term sustainable and healthy growth for the brand? Is the brand constantly being challenged with pushing last-minute & unplanned revenue to offset a lack of performance by another brand or division. Is the revenue plan supported by the proper product initiatives and investment to see the plan realized? Is the revenue plan properly detailed by channel, product line, key customers, or similar detail? Macro level plans are only hope in disguise.
  • Cost Management. Are the projected margins for the product offerings, as well as the channel strategies, aligned with the expected outcome? Do you have the proper contingencies in place should there be a disruption in costs or supply chain? Are suppliers being paid as negotiated by corporate or are late payments affecting what might potentially be the optimum product costing?
  • Inventory Management. Is the brand being given the latitude to make the proper inventory investments to fund the planned growth? Are inventory resources constrained due to the lack of performance by another brand or division? Are you managing the brands inventory levels so as to maximize margin performance, avoid potential brand dilution in the market, as well as optimize cash flows?
  • Expense Management. What is the trend of operating expenses for the brand relative to historicals, as well as against expectations for the current plan? Is the brand continually seeing an improvement as a percentage of revenues or do they continue to grow disproportionately? Are you being denied the proper resources by corporate in order to offset non-performance by other brands or divisions? Do you have the proper staffing to execute on the original plan? Is a current lack of proper headcount creating risk that may not be seen for a few more Quarters but is allowing corporate to show more favorable results in the current results?
  • Quality of staffing and accountability.  Is the brand employing the right talent to deliver on what the brand has promised to corporate? Is the brand being given the latitude by corporate to execute on the plan that was delivered, and possible communicated in a public manner, or was it an exercise in futility? Are the levels of accountability the same across all brands or divisions? Does the same commitment to top talent extend across all brands or divisions or do results tend to be overlooked in favor of tenure? Is there a consistent level of communication across the brand relative to goals, progress, and commending the team for what has been accomplished?

Each one of these areas will be looked at in more detail. What is interesting to watch unfold is how each of these areas, even by themselves, can have a material impact on profitability. Take a combination of these and you then see how the effect is millions of dollars that are lost throughout the year. Not lost in a theoretical sense, but realistically lost and are NEVER regained. It’s not just the potential loss that might happen over a few Quarters, but that loss combined with the opportunity cost in the time spent rebuilding. Add to this the loss of key players who leave to align themselves with better performance and you lose some of that core brand knowledge that is so critical for the rebuild.

Thanks for reading…

Jeffrey Ishmael

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