Avoiding Death and Taxes

It is said that in life two things are certain: Death and taxes. While that axiom plays out for people, businesses can shield themselves from both. Tax avoidance practices of American corporations was the focus of Congressional hearings last week. I’m a marketer, not an accountant, so we will set aside the taxes issue and focus on brand “death.” Brands can live in perpetuity, not inherently susceptible to aging or deterioration. However, brands can and do die. A list published by 24/7 Wall St. predicts the demise of 10 brands in the coming year. The list is provocative but likely will prove not be very accurate. The veracity of the list is not the issue; thinking about the contributing factors to a brand’s demise is worth the effort, however.

At Death’s Door?
The current list by 24/7 Wall St. contains some surprises and some brands whose vulnerability is not news:

1. JCPenney
2. Leap Wireless
3. LivingSocial
4. Martha Stewart Living magazine
5. Mitsubishi Motors
6. Nook
7. Olympus
8. Road & Track magazine
9. Volvo
10. WNBA 

There is a difference between a brand in difficulty and a brand in decline- JCPenney is experiencing difficulties as its “fair and square pricing” model failed to catch on and the company is reverting to a heavy promotion schedule to appeal to customers. In contrast, brands like Living Social and Nook are fighting for their lives as entrenched competitors make it difficult to maintain market share and successfully differentiate their brand. Of the 10 brands on this list, I see LivingSocial and Nook as the most vulnerable.

The Brand Deathwatch Checklist
The list of brands predicted to die in the next year is insightful because it forces us to ask what factors make a brand susceptible to becoming endangered. Here are three factors that stand out:

1. Business model is outdated – Martha Stewart Living and Road & Track find themselves on the list largely because the traditional magazine publishing industry has been turned on its head. Digital distribution and the availability of free information coupled with costs to produce a print product are serious blows.
2. Competition is formidable – Brands can become endangered when competition is fierce in terms of power or number. Nook and its parent Barnes & Noble are reeling under the weight of Amazon and Apple. The market leverage and profitability that these companies have enjoyed make it difficult for a firm with less resources to do battle. LivingSocial is threatened by the sheer number of competitors- major brands like Groupon all the way down to a sea of local market deal sites. 
3. Lack of differentiation – This factor can make any brand vulnerable to competition and becoming irrelevant in customers’ minds. Without a clear point of difference that is valued by consumers, brands are living on borrowed time. At best, they become commodities.

Don’t Write Them Off Yet
The 24/7 Wall St. list is interesting and provocative, but it is not necessarily a harbinger of what is in store for these brands. The 2012 list of 10 dying brands correctly predicted the demise of three: MetroPCS, Current TV, and Suzuki. A fourth brand, Research in Motion, retired its name in favor of its product brand, Blackberry. The other six brands still are kicking. Brands have been known to come back from the brink of extinction, and some of the brands on the list could gain new energy. Their fate depends on how the three factors on the “brand deathwatch checklist” play out.