Toyota, Home Depot, Motorola, BP, Wal-Mart--Brand Erosion Hits The Biggest And Best Brands. What's Going On?

Posted by: Bruce Nussbaum on January 10, 2007

There appears to be an epidemic of brand erosion going on, with some of the best and brightest companies with years of doing things right stumbling and hurting themselves in eyes of their consumers. I think part of the reason is that companies forget their core competencies in the drive for growth.

So Toyota has quality problems. Think of that. Toyota built its rep on quality and then looses it by growing too fast. Motorola shapes a beautiful new thin form factor with the RAZR and builds 50 million of them, but neglects the user interface, driving people nuts who can’t hear their phones or access what they need. The original StarTac phone was easy to use. Home Depot had a great reputation for customer service, literally helping people build their own products (kitchens, bathrooms). Then it guts its service and angers loyal consumers. Ditto for Wal-Mart. Have you seen those comments on my Wal-Mart post? Amazing feelings of letdown and betrayal by Wal-Mart people. BP was going green, until a chemical plant blew up and oil was spilled over half of Alaska because of poor maintenance and penny-pinching. How disappointing is that? What were the leaders of BP thinking? I used to love Gap but just walk by these days because there is nothing new in the stores for me. Gap used to be connected to its customer culture. Now it isn’t. How could that happen? If the lines at Starbucks get any longer, I’ll start walking by those places too.

What are the lessons here? You can grow too fast. You can get dfisconnected from your consumer base. You can forget your roots and DNA. You can lie and cheat and betray consumer trust. What else? Let me know what you think.

Oh, and then there is Apple.

Reader Comments

Sean

January 10, 2007 10:57 PM

Your right on all counts except Starbucks. Even with one on nearly every corner, the lines are long. Why? Good, consistent coffee drinks and happy, loyal customers. The only thing they might be doing wrong is not expanding fast enough to meet growing customer base. I don't believe this is a stumble. Rather it looks like careful, steady expansion that continues to pay off.

steve baker

January 11, 2007 3:28 PM

I think there's a plethora of new voices to highlight the real and imagined flaws in these brands. What's more, I think we have a more skeptical global culture, which is suspicious of strong and powerful brands, whether it's Google or the United States of America.

Dan Lewis

January 12, 2007 2:37 AM

I find it interesting how universal Starbuck's brand is -- I was in Lima, Peru, staying in a lovely hotel, I went for a short walk only to find a new, and at the time, first Starbuck's in the country. Every seat was filled inside and out, there was a line at the counter and it looked like every other Starbuck's I have ever been in -- brand nervana. All of the others you mentioned, dead on.

VPK

January 12, 2007 10:06 AM

It's true - businesses often do a good job of making customers UNhappy. The simple but inescapable reality seems to be that - sloganeering about the customer being King notwithstanding - for most businesses, the customer just occupies a very low position on the mental map. As a result, companies are just poor at seeing things from the customer’s point of view. An example: I recently received a long letter from a senior executive of the bank whose customer I am. The letter spoke glowingly of the bank’s dedication to customer service,and extolled the product quality etc. I was quite impressed, until I saw the designation of the executive who had written it: Head - Retail Liabilities. It was only then that I realized that holding a savings account with that bank makes me a “liability” to them! Now, I am sure if they paused to think about it for a minute they can come up with a perfectly good title such as Head - Retail Banking or whatever. It’s just that it has probably never occurred to them that customers may not relish being thought of as “liabilities”!

Rich

January 12, 2007 6:16 PM

Maybe the answer to your question “What’s going on?” lies in the fore mentioned “…Biggest and Best Brands.”

It seems as though we are moving out of the realm of manufacturing and shifting our talents towards the service sector. But, are we in fact already abandoning our customer service mindset to focus solely on branding and marketing? The companies you mentioned are perfect examples of great branding. Is Toyota falling into a trap? Maybe they’re shifting their competencies from quality to image and perception.

David Carlson

January 13, 2007 12:34 PM

I think people are suspicious to big brands. It is difficult to make your shareholders happy at the same time as you should please a 15 years old kid on the street. And of course, if you on top if this forget your brand DNA, what made you or someone start the business, then you are lost.

Don James

January 21, 2007 3:59 AM

I'm not convinced that these companies are really becoming disconnected from the customer base. I believe its more of a brand vs. change problem. Companies now more than ever are feeling the brand and style competitiveness that wasn't as important as features and function in the past. Starbucks, Seth Godin and his Purple Cow and Target have made 'cool' chic and in the process have elvated style to the point that if your brand is not in style you begin to lose market share. Apple has figured this out with the iPod and upcoming iPhone. They know that style and core function outweighs general usefulness (do businesses use iPods? will they turn in Blackberrys for iPhones?)

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Want to stop talking about innovation and learn how to make it work for you? Bruce Nussbaum takes you deep into the latest thinking about innovation and design with daily scoops, provocative perspectives and case studies. Nussbaum is at the center of a global conversation on the growing discipline of innovation and the deepening field of design thinking. Read him to discover what social networking works—and what doesn’t. Discover where service innovation is going and how experience design is shaping up. Learn which schools are graduating the most creative talent and which consulting firms are the hottest. And get his take on what the smartest companies are doing in the U.S., Asia and Europe, far ahead of the pack.

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