As a company, brand value and how the consumer and public perceive your company and products is everything. Last year, according to a survey conducted by Gartner of some 253 companies with annual revenue in excess of $500 million, an average of 10.4% of 2012 revenue was spent on marketing (a figure that, according to Gartner, includes salaries as well as traditional and digital marketing). This demonstrates the power and perception of brand value and is all the more reason why companies need to constantly innovate and refresh their brands if they hope to maintain a positive image with the public and increase their sales.
Coca-Cola is one I’ve alluded to often as the company that’s written the book on branding. With more than 90% of global consumers recognizing its logo and Coca-Cola operating in all but two countries worldwide, it has a lock on being the world’s most valuable brand according to Interbrand.
But not every company has been successful in differentiating its brand from the competition. The following five companies could be heading down a slippery slope and appear to be losing their identifying characteristics altogether.
1. Abercrombie & Fitch Co. (NYSE:ANF)
There are plenty of reasons that Abercrombie & Fitch Co. (NYSE:ANF) makes the list. For one, its CEO, Mike Jeffries, has repeatedly stuck his foot in his mouth during his tenure as head of Abercrombie & Fitch Co. (NYSE:ANF). By publicly alienating specific crowds from his stores, Jeffries has put a ceiling on Abercrombie’s sales potential. The wrong products have also doomed Abercrombie & Fitch Co. (NYSE:ANF) many times before. In 2011, the company came under fire from parents for selling padded bikinis to children as young as eight years old. Despite numerous scandals, perhaps the real drawback is its lack of differentiation from American Eagle Outfitters, which is cheaper than Abercrombie & Fitch Co. (NYSE:ANF) in many aspects (pleasing parents), yet offers teens very similar branding and style. If Abercrombie & Fitch Co. (NYSE:ANF) isn’t careful, its brand could fall way behind its teen-retailing peers.
2. US Airways Group Inc (NYSE:LCC)
US Airways Group Inc (NYSE:LCC) was expected to put its mediocre performance, which includes two bankruptcies since 2002, in the rearview mirror when it merged with American Airlines. However, that all came to a crashing halt when the U.S. Justice Department decided it was going to block the merger. Despite appearing cheap by many a Fool’s standards, US Airways Group Inc (NYSE:LCC) has been losing air-cred (yes, I’m making up words now) to regional and deep-discount carriers that have more flexibility than national carriers, which are highly indebted and required to stick to hub-based routes. Not surprisingly, in the annual Airline Quality Ratings report, low-cost and regional airlines regularly ranked higher than most national airlines, including US Airways Group Inc (NYSE:LCC). Without American Airlines, US Airways Group Inc (NYSE:LCC) will lack many of the factors that would have differentiated it from its national airline peers and made it competitive on a cost basis to lower-priced regional carriers.
3. J.C. Penney Company, Inc. (NYSE:JCP)
I know what you’re thinking: “Does J.C. Penney Company, Inc. (NYSE:JCP) have enough brand value to even make it on this list?” The answer is a lenient “yes” based on its less-bad second-quarter results, which showed some level of improvement over the previous quarter. However, it’s really hard to see how Penney’s, which has relied on cost-conscious consumers and coupons to drive sales for decades, is going to get this customer back into its stores after removing sales and reintroducing new higher-price-point store-within-a-store brands for about a year. Penney’s sales were already shrinking because of low-cost brand-name merchandisers like TJX‘s T.J.Maxx long before J.C. Penney Company, Inc. (NYSE:JCP) cannibalized itself, so it’s not like going back to what was “less bad” before is going to be the solution now. There are plenty of places to get a clothing discount these days, and Penney’s simply lacks the brands and the bargains that drive consumers into a retail store.