The Ford Taurus was a brand success of the 1990s. Its jellybean shape helped pioneer aerodynamic and dramatic styling when it was introduced in 1985, a time when most Japanese and American vehicles were little more than square boxes with round wheels. It had a powerful but fuel-efficient V6 engine. The moderately priced car made middle-class buyers feel like they were standing out without sticking out.
The Taurus revived a Ford that was on the financial ropes. Ford sold 263,000 units the first year. In 1986, Motor Trend magazine named the Taurus "Car of the Year." A year later it was Ford’s best-selling car. By 1992, it had surpassed the Honda Accord as the best-selling passenger car in the US. It kept that title for five straight years, outselling both the Accord and the Toyota Camry. Eventually, Ford sold about 7 million Tauruses and 2 million Mercury Sables (essentially the same car). But at the end of 2006, the last Ford Taurus rolled off the line at an assembly plant in an Atlanta suburb.
Says Peter DeLorenzo, publisher of auto-extremist.com, an automotive website: "Ford is the only auto manufacturer in history to take a number-one-selling car and systematically destroy the franchise through a fatal combination of ineptness, incompetence and flat-out neglect."
The death of the Taurus is a contributing reason why Ford reported a $5.8 billion loss last October, the worst in 14 years, announced the closing of 14 plants (including the plant that produced the Taurus), and now wants to borrow $18 billion to help revive the company.
How did this king of automotive brands get beheaded? Ford provides a textbook case in how to destroy a brand. Key lessons include:
- Ignore your target customer segment: The Taurus was most popular among 50+ consumers, the group with the most disposable income. But Ford was entranced by the 18-35 group, and redesigned the car twice to appeal to this segment. The redesigns turned off the Taurus’ customer base while failing to turn on younger buyers. Listen to the customers who actually buy your product, not the ones you want to buy your product.
- Stop promotion: Unbelievably, Ford stopped advertising one of its best-selling cars for two years. That’s one reason Taurus sales dropped from a high of 410,000 in 1992 to 145,000 last year. Remember that advertising and promotion is not just for new products. It is also for established products.
- Undercut the value: When sales started declining, Ford took the quick and easy route of expanding sales to rental companies as well as taxi and corporate fleets. It also substantially boosted dealer and other discounts. While these have the temporary effect of juicing sales, they also harm profits for companies and resale value for customers. Never do anything that hurts your brand among existing customers.
- Focus on new, and not loyal, customers: Remember the Contour, Windstar, Escort, Galaxy and many other Ford brands? Automotive companies are infamous for spending millions to develop and promote brands, then inexplicably orphaning them years later to devote resources to newer models. Abandon a product only when it is truly at the end of its life-cycle, not because something sexier comes out of product development.
- Cannibalize your product unnecessarily: Fixed costs are high in the automotive industry, which means that profitability depends on volume. Ford cannibalized sales of Taurus by introducing the slightly bigger Five Hundred, and the slightly smaller Fusion. The Fusion, which came out in late 2004, has been a hit, but sales of the Five Hundred have not met expectations. Would Ford have been better off devoting the resources dedicated to Fusion and Five Hundred to the revitalization of Taurus? Who knows? However, while it is important to be receptive to new segments, gains must be measured against the losses to established products.
Ford is not the only company to recently destroy a brand. Wonder Bread and Twinkies are such iconic brands that they have even been immortalized by Andy Warhol. Yet the manufacturer of those brands, the $3.5 billion Interstate Bakeries, filed for bankruptcy last September. Mistakes made by Interstate include focusing on low-profit, mass-produced products like Wonder Bread at a time when customers were turning to tastier alternatives like fresh-baked supermarket offerings. They rested on their Twinkies’ laurels at a time when mothers everywhere were worried about childhood obesity.
BTW: This represents yet another strong argument against the relevance of brand equity as a marketing measurement. Few products have the awareness of Taurus, Wonder Bread and Twinkies, but such “brand equity” did little to rescue their companies from unprofitability.
What other brands are on the road to failure? Two strong candidates are Gap and Time magazine. At one time, Gap set the fashion benchmark for both boomers and yuppies. Who hasn’t owned a pair of Gap khakis? But same store sales have declined year-over-year for 23 of the past 24 months. In UK, Gap’s share of the clothing market has dropped by 25% over the past three years. Its recent advertising featuring Audry Hepburn has done little but make “worst ad” lists.
What happened? Gap committed the ultimate branding sins – a lack of focus and knowledge of what its customers valued. Robert Buchanan, a retail analyst at the stockbroker AG Edwards, says: "In their heyday, they were really good at taking care of the baby boomer .... They stopped targeting them and started aiming for the children of the boomers - but not having done much research, they blew it. Then they took a democratic approach and tried to be all things to all men. If there's one thing that doesn't work in retailing, it's a lack of focus."
If there is a better example of trying to be all things to all people, it’s Time’s recent choice for “Person of the Year.” For more than 70 years, Time has selected a person who has had the most impact – for good or bad – on world events. Agree or disagree, Time’s choice always made you think. But this year, they put a cheesy reflective Mylar strip on the cover and said, “the Person of the Year is … You!” If you believe that a brand must drive its stake into the ground and say proudly, “this is what we stand for, and these are the customers we want” then Time’s “we-love-everybody” pandering is a reason to cringe. This follows other missteps, like putting radical Ann Coulter, who advocates terrorism against American institutions and believes that all Muslims ought to be forcibily converted to Christianity, on the cover, and recently adding Bill Kristol, who forcefully advocated the invasion of Iraq to bring peace and democracy to the Middle East, as one of its star columnists. (Full disclosure: I used to work for Time-Life.) Talk about alienating middle class customers, the bread-and-butter of a mass-circulation magazine.
A lot has been written about how to build a brand. But valuable lessons can also be learned from dead and dying brands. Undoubtedly, the most important lesson is not to let a disconnect grow between you and customer. When was the last time you talked to customers about what they valued, and how well you were doing to deliver that value?
(Got candidates for dead and dying brands? Send them to me. And check out amazon.com for my latest book, “ProfitBrand: How to Increase the Profitability, Accountability and Sustainability of Brands.”)
Comments