Losing brand value

Chuck Martin’s On the Mind column in the latest issue of Darwin Magazine had an interesting story on how to lose brand value. He talked about the difference in service between his local Mercedes-Benz dealer and his Ford dealer. As you can probably guess, the Mercedes dealer showed a complete lack of interest in customer service:

Even while some companies can focus on creating and delivering great products at the right price, all that effort can be wasted if not properly handled at the local level. This is a version of the concept of thinking globally while acting locally.
The relationships and the competition in each marketplace can be totally different, requiring different approaches, as appropriate. The same holds true for delivery and service of national products at the local level. And the irony is that actions at the local level can impact perceptions of the global brand, at least within a given market.
As a small example, when I had my Mercedes-Benz serviced at a local dealer over the course of a year, most service visits required a second or third visit to complete the repairs. It negatively impacted the brand, at least at a local level.
. . .
By contrast, when I had my Ford serviced at its local dealer, virtually every service experience over the course of a year was positive. I was greeted by name, the service was completed on time and the price was as quoted.

I guess I am not very surprised at the local Mercedes dealer’s lack of understanding of the value of his brand. Too often companies (and local dealers) fail to understand the fluid nature of brands: the top brands today can quickly become yesterday’s also-rans and the lower tier brands can leap to the top. The example of Samsung is a case in point, as we discussed in an early posting.
As Chuck points out, the rise of hype-fast communications networks (not just the Internet, but phone text-messaging creating “smart-mobs”) raises the stakes for brand management. Look at what happened to the value of Coke stock globally after an isolated incident in Belgium.
But the issue is more than just how a local perception affects a global brand. Maintaining brand value is a constant struggle between upholding universal standards (corporate HQ “total control”) versus localization of the product and service. McDonald’s has always been the old text book case – a standardized product (reinforced by training at McDonald’s University) with permitted local variations (non-beef patties in Hindu India, use of peanut oil for fries in SE Asia). If the local variations are not allowed, then the brand risks local irrelevancy. This loose-tight organizational dynamic is one that every company needs to master, especially as the services part of the value-creation equation becomes more and more important in this intangible economy.

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