Brand dilution – tales of a brand missing the Mark

During my 24 hour visit to NYC last weekend I read the sort of news report that described such staggering incompetency that you have to read it again, and again. It still did not make sense and, judging from the reaction by commentators, I was not alone in my opinion.

The report ?

Marker’s Mark, a bourbon whiskey of considerable popularity, had misjudged their supply and demand (remember this is an aged spirit unlike a vodka which you can essentially sell and then make !) and so to avoid running out would reduce the strength / proof-age from 90 proof to 84. Oh, and get this, their tasters hadn’t been able to discern the difference so nor should their customers.

As if the decision was not bad enough they seem to have not considered how to communicate this with any flair.

It did not have to be like this. Those of us who have had the privilege of managing brands which are finite know the pros and cons of building a brand where we are not in complete control. Demand outpaces supply. Customers could go somewhere else, You may lose a listing.

However for an imaginative, disciplined and ethical manager this sort of situation represents a golden opportunity to both protect and build the brand that you have guardianship.

(1) The marketplace understands that your brand is not free flowing. That’s why it commands a price premium. Reduced volumes and out-of-stocks are frustrating but they also communicate scarcity. Brands without this narrative would kill for it.

(2) You are running a business not a charity so use scarcity to increase prices. The marketplace understands this. If you are pricing a product which people value they will understand.

(3) Never. Ever. Ever. Never. Dilute the brand either in terms of ingredients or packaging. If you do then (1) and (2) become irrelevant. Marker’s Mark have broken the fundamental rule. Taken a very established brand and sacrificed it for short term needs. It does not matter that people “won’t taste the difference” you have still removed value from their eyes and you’re questioning their palates.

(4) Use product innovation to fill any physical volume gap. (You have already addressed the profit gap via price increases). A new product can be established without risking the parent and may even attract a new customer.

The Macallan Single Malt is a text book example of all of this (using price and an entirely new range to manage explosive demand) and I was honoured to be a part of agonizing decisions to make sure that two truths would always be maintained – being faithful to the whisky and those who make it AND being open and honest with the customer.

Sometimes I wish that corporate conference rooms contained ‘Black Box Recorders’ so that when a brand disaster like this happened we could all learn from understanding who said what and why – and why the crazy decision to dilute a brand was taken.

Cheers.

PS. On Sunday Maker’s Mark issued a statement saying they were reversing their decision in the face of customer reaction. Better late than never.

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