Reeling from struggling earnings and loss of market share, GNC announced a “One New GNC” rebranding initiative, will it be enough to pull the brand out of its slump? If you like our podcast, please subscribe and leave us a rating!Podcast: Play in new window | Download Subscribe: iTunes | RSS
Bill Gullan: Greetings one and all. This is Real-World Branding. I’m Bill Gullan, your host an President of Finch Brands, a premier boutique branding agency. We were very happy to have you, and this is a fun time of year in our industry. There’s a lot happening in terms of new initiatives that clients and others are launching in advance of what they hope is a great year, and also one of the major rituals that brings about a lot of focus on brands and on marketing is the Super Bowl.
Word came down a couple weeks ago, I think, and actually the meat of this was happening between the Christmas and New Year holidays, was GNC, the major, I think they have 9000 stores worldwide or something big like that, maybe 4000 in the US, was going through and really put together an initiative geared toward a rebirth, bringing that chain out of the graveyard, and that may be an overstatement, a little bit reductive, but they’d had some trouble.
GNC’s been in financial trouble, perceptual trouble, and everything else for really 18 months or more, so it was long overdue for management and others to think about what GNC means in today’s commercial landscape, and how the company and the brand can regain some of the momentum that it had for many years before. So, they launched this new initiative. I think it was called “One New GNC” and it included a major store redesign. In fact, I think the entire, at least US store base, closed for a 24 hour period at the end of December to change over from old look to new look.
It also included a revamped loyalty program, and thankfully, an end to the practice of having different prices online and in store. A lot of changes and we know that these will be heralded, we hear at least, through a Super Bowl ad, the first in the company’s history that will design to bring to that huge audience word of the fact that their GNC experience is new and that folks ought to come back and give it a shot. I remember when Domino’s did that a couple of years ago. That’s worked, and we’ll get to that in a minute, but here we are with GNC and there’s a couple of questions that this raises from my perspective.
First of all, every couple years, it seems like a major brand – and Domino’s was one example, J.C. Penney is another example – goes through a spurt of big thinking that is designed to really transform a company in a category. Sometimes they work and sometimes they don’t, but the questions I have related to what GNC is doing is first of all, are they focusing on the right things?
There’s no question that the areas that GNC is addressing are areas in which it has fallen behind. The loyalty program previously was this weird thing – you get triple points on this day and double points on this day, and there were different levels. It was very hard to understand, particularly for a consumer that has been educated to expect, at least at mass interest retail, you get a loyalty card, you get a discount on certain products, you amass points that you can then spend or whatever the case may be.
GNC’s was very complicated. They’re focusing on bringing more technology to the store experience, so that’s good. They want to win back consumers that the company lost to other channels, but the question is does the world need a 9000 unit specialty vitamin supplement store? Its highest interest categories are widely available – they faced and one of the factors most seem to credit to their decline is tremendous competition – online and off, across food, drug and mass, including Amazon, of the basic categories, the vitamins and other things, whey protein that GNC made its name on.
I mean, GNC does have a vibrant private label program with I think it’s Mega Man and other brands that you can only get there, but the sense of their proprietary product excellence, I think it waned considerably. The fact that you could get good or better deals on what the marketplace thinks are very similar items in a variety of different channels. So, the question really is are they focusing on the right things and are they doing enough here that’ll really reverse the marketplace’s … I don’t think there’s hatred for GNC in the marketplace, but there’s a, ‘Meh, this brand isn’t current, relevant, necessary,’ and I’m not sure whether at least these first initiatives are really enough to address the downward trajectory that the brand has been on.
Secondly, and J. C. Penney certainly brings this up is will there be unintended consequences? We remember a few years back when Ron Johnson I think, the new CEO that came from Apple, at J. C. Penney, had a major initiative to really reinvigorate the retailer, and there were a lot of really interesting things. It was going to move more into a bazaar, a store within a store concept. It was going to be really interesting on the store design perspective, etc. But one of the things that led to this really flaming out quickly and the board having to respond, and to what the plan was, was that the company changed without much warning to its couponing structure. The company at J. C. Penney at least had really convinced and educated their marketplace to respond to a particular promotional approach.
While the vitamin/supplement category is large and mature, GNC’s position is volatile given this competitive dynamic, so the previous loyalty program was a strange concoction. It was, as noted, based on discounts, certain days, etc. The new iteration is much simpler, it makes much more sense, but there are some consumers, their core market, who are still big GNC customers who have been educated by GNC to shop a certain way, and now that’s changing, and how are they going to react when their patience or discipline or just basically the rituals that they’ve created around that loyalty program, when those are gone or rewarded differently?
J. C. Penney’s coupon clippers rebelled several years ago and it led to overthrow of the CEO and the company basically in a scared way saying, ‘Okay, okay, okay, we’re going to back to where we were.’ I’m not sure whether these unintended consequences will also befall GNC. I think there’s a strong likelihood that they will, because this is a struggling brand, but a big brand nonetheless and there’s millions of people who’ve been educated to shop a certain way and now they’re being told to shop differently, and we’ll see whether that takes hold.
Thirdly, just the fundamental question, is GNC a brand for this moment in our culture and in our commercial life? We noted that the category that they serve is large and mature. They may not be growing very fast, but there’s billions of dollars of business to be won and to be expanded upon in vitamins and supplements, but GNC is facing competitive pressures like never before, so in addition to the food, drug, and mass, there’s a ton of direct businesses that have proprietary approaches and really unique, or at least marketed as unique kind of product offerings.
The company, GNC, has stood for engineered nutrition, yet the data suggests that many consumers are heavily scrutinizing ingredient panels. They’re very skeptical of synthetic processes. So, in short, GNC’s still selling the power of science while the consumer culture seems to be all about the simplicity of nature. There’s a real question as to whether or not those eccentric rhythms of what consumers define as healthy accommodate GNC’s historic brand definition of what it means. Now, a ton of vitamins and supplements are always going to be bought, so it isn’t about the industry or the category going away. It’s about whether or not GNC can grow within it.
My three questions here, and they’re critical questions, is one, is GNC focusing on the right things? Is it a big enough change to right the ship? Two, are there unintended consequences that will compromise their efforts? Then three is, is GNC really just a brand for now? 9000 stores worldwide, 4000 in the US, and is that the right size of a business here that is facing crosswinds both of their making and not of their making? As noted, every so often this major company shifts direction. Sometimes the changes are too big, too fast, like J. C. Penney. Sometimes they get it right.
We mentioned at the beginning that Domino’s offered a multifaceted initiative that touched the product, it touched the promotion, and it touched the marketing, and Domino’s has had a tremendous resurgence. Sometimes the changes aren’t big or deep enough, and Sears and their many false starts is an example of this.
My fear is that GNC might at least at present, and it’s very early, my fear is that they may be falling into that category of changes that are welcome but not fundamental enough to reorient the trajectory of the brand and the business. As always, it’s very easy for me to sit here and sound off without either the dataset to illuminate these opinions, nor the responsibility to execute.
The management team in Pittsburgh is there, they’ve had their heads down, studying the business, talking to consumers, and so they deserve a chance to see what happens here. Yet, my sense is that GNC plan is more cosmetic and the issues are more fundamental. The CEO of GNC admits that the model is ‘badly broken.’ I’m not sure this ultimately is a big enough fix for a retailer with fundamental problems.
So, we’ll leave it right there. That’s One Big Idea for this week. We’re so glad that you’re with us, and we’ll sign off from the Cradle of Liberty.
In this week’s episode, Eric Sugalski speaks about the recent rebranding process that took his company from Boston Device Development to Smithwise. We examine the nuances of rebranding in practice and discuss best practices. If you like our podcast, please subscribe and leave us a rating!Podcast: Play in new window | Download Subscribe: iTunes | RSS
The post Rebranding in the Real World: Eric Sugalski, Founder and President of Smithwise appeared first on Finch Brands.
In this week’s episode, Bill examines the differences between a brand refresh and a fundamental rebranding, as well as the reasons why a rebrand may or may not be right for an organization. If you like our podcast, please subscribe and leave us a rating!Podcast: Play in new window | Download Subscribe: iTunes | RSS
Bill Gullan: Greetings, one and all. This is Real-World Branding. I’m Bill Gullan, President of Finch Brands, a premier boutique branding agency. This is One Big Idea. Today’s topic is rebranding. In fact we’ve titled it, ‘Time to Rebrand?’. No up talk there, it really is a question. It’s an important question that many companies face. Often, they come to us to help them assess the strengths and weaknesses of the moment for rebranding and whether or not it’s the right approach to take.
Obviously, if they do decide to take it, we’re often called in to manage the process. If they don’t decide to take it, we’re called in to manage other things within the framework of the existing brand. The reason I say that is because there is a fundamental difference between a brand refresh, which is primarily about either contemporizing, or in some way evolving the look and feel of a company, or of an institution and a full rebrand.
We’re going to focus primarily here on why not to rebrand even though you may have an itch to think about rebranding. The reason why we want to focus on the negatives and the reasons to think very, very seriously before doing this is because it’s much more than a brand refresh.
Companies that may come to us and just feel like they’re looking out of date, or they’re sick of it frankly, or any other reason, aesthetic, or otherwise, a brand refresh, which may even rise to the level of identity, name, logo, things like that, often is a way to bring a little bit of energy to the way that a company promotes itself.
A brand refresh is one thing, a rebranding process is fundamentally deeper and fundamentally different. It represents a meaningful enough shift in the company’s target, mindset, culture, product line, or method of going to market that needs to be addressed through nothing short of a full re-imagination of what a company’s called, how it’s organized, what it values, etc.
When folks come to us and the topic is should we rebrand, we really spend a lot more time talking about reasons not to. In fact – and this may be, in some ways, self-defeating, at least from a new business perspective – we really adopt a default position of, no, you shouldn’t until you’ve met a pretty significant threshold for a rebrand being the right path to take.
Five major reasons not to rebrand, or things to think about as you decide whether to rebrand or not. These five things are to be taken very, very seriously.
First, is that many brands have what we could call hidden brand equity. Whether that is a heritage of happy clients, whether that’s a logo or a name that’s pretty recognizable and pretty well-known.
Even if there’s some baggage, even if there is some concern that there’s a pretty significant level of negativity, or confusion in the marketplace, often even imperfect brand equity is preferable to starting out, or starting over.
The first reason to be very skeptical and cautious about rebranding is that there is likely some degree of hidden brand equity, if you’ve been doing this for a while, that you can’t easily port over and you do not want to sacrifice. In the case where such equity exists, maybe again a brand refresh is a better course than a full rebrand.
Secondly, rebranding is emotional and it’s hard. There are two ingredients from our perspective to a successful project. There’s content and there’s process. Content always needs to be great no matter what it is whether it is rebranding content, new name, logo, positioning, vision mission, whatever it is.
Process in the case of a rebrand is often just as important and rises to the level of importance. Because brands are built from the inside out as we’ve discussed in a previous episode of One Big Idea, a rebranding process has to start and has to, in many ways, be co-authored by a company, the entirety of an employee base, or at least a large segment of it.
You need to think long and hard about enrolling folks on the team into a process. A. because they have genuine insight from their functional responsibilities, being close to the customer in many cases and B. because the ‘small p’ politics of this is such that they’re really going to need to be on-boarded on the back end for the rebrand to be as successful as you want it to be.
That’s the hard multi-dimensional part of rebranding. The other thing in this second reason to be cautious about is that it’s emotional. It absolutely is. You’re dealing with properties that many folks have never not known. That’s all they’ve known; formed various attachments.
It can feel sometimes, when re-thinking a name, or a logo, or deeper fundamental beliefs that rebranding is turning away from the past, which it is in some ways. That process is very, very difficult particularly when you’re dealing with subjective elements. What are our values? How should our Vision / Mission be written? What should our name be? Etc.
If a culture cannot accommodate, or you think ever get past or through the emotional quality of this and the difficulty of galvanizing the entire team around it, it might be best not to approach a full scale rebranding.
The third is that often times, depending on what the company is facing, rebranding does not address the fundamental issue that is leading the company to a time of really deep introspection. Sometimes the reasons to rebrand have to do with very negative equity and the need to escape from that, or massive changes to the market, or whatever it is.
Sometimes there’s a product deficiency. Sometimes the company’s culture is not strong enough. Sometimes there may have been a mass migration, or attrition in the employee base. So, ‘Now’s as good a time as ever to think about that brand differently.’
That may be true, but if the issue with the company is a management issue, or is a cultural issue, or is something along those lines, there’s no guarantee that rebranding is going to solve that. In fact, the vast percentage of the time it doesn’t. Rebranding is about renewing the compact that you make and have with your team, with your employee base, and taking advantage of opportunities through product and through evolutions in the culture, whatever it is.
If your fundamental issue, when effectively diagnosed, isn’t really related to something that rebranding is intended to solve, you should focus on the issue and resolve that. Do not necessarily just launch yourself into a rebranding process because ‘new would be better,’ or it papers over whatever the other weaknesses are.
Fourth, and not surprisingly, rebranding can be very expensive. Not only in enlisting the help of incredible firms like ours, or whatever, but all of the things that need to be re-done. They don’t have to be done all at once, but over time. Often, clients step back from the abyss when they realize the impact on that year and the next year’s marketing budget.
The dollars that it takes to re-do every touch point, all the way to simple things like re-printing business cards, to sales brochures, whatever it is, these are things you don’t want to be out of date. It reflects the fact that the company may be operationally weak if it’s presenting this multi-faceted face to the market.
I would certainly, as one embarks upon a rebranding process, game out the financial impacts of this, particularly for larger organizations. For example, when we were doing the Liberty Property Trustrebrand, they are a big company, real estate company. Which meant tons of signage, tons of sales materials across the nation and the world.
To their credit, they thought through brand migration with a financial perspective and built a really concerted plan against how to execute that. It involved prioritizing different markets and different properties where priority 1 or the ‘A’ bucket was going to get rebranding materials first. It was going to be done over a multi-year period. It was very smart, the approach they took and that we helped them with. The expense of a rebrand is a reason to pull back, or at least to study and go in eyes wide open.
Lastly, fifth and final of what I’m sure are many more, but fifth and final that come to mind here is that there is more to rebranding than you think. This is related to some of the other points. There may be more process-wise than you think. There may be more financially than you think, but when you think of operational and IT stuff like domain name and what the ‘@suchandsuchcompany.com’ email structure, there’s a ton of stuff in the operational realm.
There’s also, as noted, a ton of stuff needed to align, and educate, and inspire the internal team in addition to their participation in the process. There is a huge need to think through, with a very clear eye, and a lot of energy, the strategy of communicating this to the customer base. Putting a little notice in a billing statement, or putting something up on social media does not suffice as a customer communication strategy around rebranding.
Often, as noted on our previous One Big Idea, where we talked about M&A Branding best practices, in terms of thinking through the brand, it sends a signal. Often times while the intended signal is progress, the future, and focus, there is a signal sent to the customer base of a company going through a rebranding. It indicates that there was something fundamentally broken. It indicates that the company’s going through a process of figuring itself out.
While all of these things, we all know, are healthy and important processes to go through from time to time, there’s no guarantee that all the customers are going to go with you. There’s no guarantee, particularly if you don’t build a strategy that is multi-faceted, that enables enough time and that the company can execute against.
Five reasons to say no. In a future episode, we’ll talk about reasons to say yes, or reasons why it might be the right time. Just to reiterate those five:
1. There may be hidden equity that you really can’t sacrifice in exchange for something that doesn’t exist. You don’t know how well it’s going to catch on.
2. It’s emotional and it’s hard.
3. It may not address fundamental issues that are constraining the performance of the company as well as everyone’s satisfaction within the culture.
4. It’s expensive, or it can be expensive and often has to be accomplished in pieces for that reason.
5. There’s often more operationally, as well as culturally, as well as in terms of market face and communications, more than you think.
That’s One Big Idea for this week as we spring forward on Sunday night. As someone who has small children, not looking forward to this, although walking home with light out is going to be nice too. All the best. Signing off from the Cradle of Liberty, a wonderful day to all.