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Guest Times: When brands are let down by their business models

How does this impact their relationship with their loyalists and can these brands make a comeback? Karan Kumar, Chief Brand and Marketing Officer, Fabindia, writes

Karan Kumar

When I complained about the chicken calzone being much too salty, the stewardess, with a smile that was empathetic and in a tone that resolute and reassuring in equal measure, replied, “Mr. Kumar, trust me, this is the last time you have had a bad experience. This will simply not happen again. Please be rest assured that just as you expect, you will always get only the best from us.”

A great example of how brands ought to make use of every available opportunity to, on the one hand, reiterate their core promise and, on the other, reassuring their customers that even an adverse exception notwithstanding, the choice they have made continues to be the correct one. Brands doing this with earnestness and consistency more often end up forging stronger relationships – relationships that inspire love and trust – the ‘holy grail’ leading to preference and sustained profit.

But what happens to these relationships when brands are bankrupted and let down by their own business models? Can these relationships survive the storm and are they strong enough to help brands resurrect themselves in versions 2.0? Interesting ones to answer but before attempting that, let us first begin with some examples of iconic brands that were let down by their business models and consequently went under the hammer.  

  1. Fashion lost its language: Roberto Cavalli filed for Chapter 7 bankruptcy in April 2019 while Diesel filed for a Chapter 11 a month earlier, both sighting crashing profitability. J Crew, Neiman Marcus and Nine West among several others too were forced to take a critical relook at their models.
  2. Products found no takers: Toys R Us was the third largest and among most infamous case of bankruptcy. RadioShack went bust a second time in 2017. Blockbuster, a much loved movie rental, and Eastman Kodak, once fifth most valuable company in the world, were forced into oblivion.    
  3. Wings that could soar no more: First Pan Am, the most successful airline in the US, and then Trans World Airlines (TWA) both went bankrupt. Closer home, first Kingfisher Airlines and more recently the iconic Jet Airways, both collapsed being let down by poor business strategy and models.  

Some brands, however, based on their residual equity and the strength of their relationships with their loyalists, have managed to redeem themselves, resurrecting their fortunes in their versions 2.0. Some standout examples for me are:

  1. Technology reinvented: Both Apple and IBM once perched perilously on the edge of bankruptcy were pulled back by Steve Jobs and Lou Gerstner, respectively, aided by the reinvention of their marketing proposition and product design language. Rest is literally history.
  2. No child’s play: A struggling Lego, selling products lower than their cost less than a decade ago, and Marvel, with no superheroes to help, made spectacular comebacks with one striking a partnership with the Harry Porter franchise, and the other starting its own content studio.
  3. Smell the coffee: Starbucks was in a freefall closing around 980 stores in 2008. And then they launched their most successful campaign “Coffee Value & Values”, repositioning the brand as one not just for finest coffees grown but grown with uncompromised principles, nurturing human spirit, one cup at a time.

But is the strength of residual equity and old customer relationships enough to bring brands back to life after they have touched irrelevance and been kissed by obscurity? Or is there more to get right before they are blessed with an opportunity for rebirth? And what could be something that brands could do to pre-empt this situation in the first place? No simple discussion this one but if as a marketer I was to place my wager, it would be on brands that are more conscious about the following:

  1. Brands, especially the more successful ones, must constantly audit their relevance in the context of an evolving society, led both by technology and culture. Given that their consumers cohabit this ever-changing context, it is even more critical for brands to evaluate their ability to meaningfully participate if not lead new narratives. The ones, like Starbucks, who manage to do this, lead the curve and thrive. Others simply fall off the cliff. 
  2. Brands must also closely monitor the relevance and nature of their products and propositions in the context of changing consumer habits and patterns of consumption. When the economy made its move towards a cashless construct, banks, whom consumers most trust with their life’s earnings, were best suited to take the lead with e-wallets. Instead they were caught napping, losing their advantage to start-ups, and playing catch-up ever since.
  3. Sometimes brands get lucky when their out-of-fashion wares attract renewed interest only because consumers have retaken a liking for retro. True Religion and Birkenstock are examples that benefitted. But brands mustn’t wait for luck. Instead they must strive to offer refreshed propositions in response to new realities. With reading giving way to content being consumed audio-visually, Marvel created content production studios, breathing new life into their superheroes.
  4. Nostalgia from old cohorts could prove to be that magic portion that brings back brands from dead. But being brought to life and staying alive are different things. For a brand to stay alive and thrive, its refreshed appeal must reach out and attract new consumers. In bringing music from the 60s back to life, Caravan not only digitised it, but presented it in a form factor that appealed to music aficionados both old and new, making it easy to integrate into active contemporary lifestyles.


In summary, for brands to have that uniquely magical and timeless quality every marketer hopes for, they need to ensure that they continually and objectively audit both their ever changing context and their own efforts at ensuring that their propositions are continuing to attract consumer faith and love. Successful brands can face the storm but like brands, if their business strategies and models also remain alive to the changing context, then perhaps the onslaught of storm can be avoided altogether.

And finally, remember that with great success comes even greater responsibility – for brands and their business models to remain relevant, contemporary and profitable, for the sake of their consumers and enterprise alike.    

(Disclaimer: The opinions expressed in this article are those of the author. The facts and opinions appearing in the article do not reflect the views of and we do not assume any responsibility or liability for the same.)

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