Brand Management Dilemma: Grow, But Don’t Kill the Core

I think, in retrospect, we may have tried too hard to attract new guests. That left some of our fans shaking their heads, asking ‘What happened to Applebee’s?’

Patrick Lenow (VP Communications and Public Affairs, DineEquity – August 10, 2017)

That’s an eye-opening, unusually direct assessment. There’s even more blunt analysis from Applebee’s president.

First, let’s set the stage with some framing thoughts on brand management.

A Quick Primer – What To Do and Not Do

It’s a constant dilemma and challenge: how to expand the appeal of brand x and/or position it for growth without alienating existing customers and destroying the core business.

Depending on the type of product or service, many actions can be implemented, such as: product upgrades, promoting secondary usage, launching new products, stimulating growth of the overall category, expanding distribution channels, developing brand refresh/renovation tactics, or even complete repositioning.

JCPenney failed.

Domino’s seems to have had success.

Hardees/Carl’s Jr. is trying to reboot their image and brand positioning.

Effective brand management requires smart discipline. To borrow from Ringo Starr, it don’t come easy.

► Building brands is a process, which requires steady, disciplined hands at the helm. It can take time and money. Unfortunately, steady discipline, time and money can be in short supply in CEO suites and boardrooms where results are measured short-term in weeks and quarters. Plus, marketing teams themselves can fall victim to a lack of steady discipline on occasion.

► A particularly dangerous brand management pitfall is that once a brand is established, there may be a tendency to give it the job of appealing to all potential customers. The reality is that a brand cannot truly resonate with everyone at the same time. You cannot effectively target all segments with the same brand. That’s just the opposite of what a brand is all about.

► A related tendency is to over-extend a brand into new categories. The same problem applies.

► Hence, the need for a multiple brand strategy. But, then we get back to the discipline, time and money requirements. You can see how a vicious cycle can spin out of control.

► The last point in this overview discussion is that the process of changing what a brand stands for, called repositioning, is difficult and sometimes dangerous to execute. Ideally, you don’t get to the point where a brand needs a full repositioning. Instead, the goal, and challenge, is to implement a strategic, disciplined process of regular brand refresh and renovation. For instance, think about your home. You update the kitchen. You don’t knock down the house and build a complete new one. A current refresh/renovation example is fabric and craft retailer Jo-Ann.

Credit: DineEquity.

Let’s return to Applebee’s, a restaurant brand owned by DineEquity, Inc.

The business is not healthy.

2016 domestic same-restaurant sales declined 5% (per 2016 10K report). 2017 sales continue to decline, forecasts have been revised downward, and projected restaurant closings have jumped to the 105 to 135 range, up from the 40 to 60 range.

As tough as that news is, that wasn’t what jumped out from Applebee’s 2nd Quarter financial presentation on August 10th.

What really stood out was the tough, hard situation analysis from Applebee’s president, John Cywinski:

“Over the past few years, the brand set out to reposition or reinvent Applebee’s as a modern bar and grill in overt pursuit of a more youthful and affluent demographic with a more independent or even sophisticated dining mindset, including a clear pendulum swing towards millennials.

In my perspective, this pursuit led to decisions that created confusion among core guests, as Applebee’s intentionally drifted from it’s what I’ll call, its Middle America roots and its abundant value position. While we certainly hope to extend our reach, we can’t alienate boomers or Gen-Xers in the process. Much of what we are currently unwinding at the moment is related to this offensive repositioning.” (transcript via Seeking Alpha – emphasis added)

Wow. Maybe that’s all true. In fairness, it would be a surprise if the company’s recent business archive did not contain an equally strong reason for why those “offensive” changes needed to be made in the first place.

So, what’s next for Applebee’s?

A focus on core users, according to Cywinski:

“Moving forward, we’ll primarily focus on two target segments. The first we categorize as routine traditionalists. They like CDR Chain restaurants; that’s important [CDR = casual dining restaurant]. The other equally important group is value seekers, not surprisingly. These folks also like CDR chain restaurants. However, they tend to be brand switchers, searching for the best deal rather than a specific menu item. Together, these segments are predisposed to like Applebee’s a lot and they make up a meaningful percentage of our core guests and revenue.”

Harvey Chimoff is a versatile marketing and business team leader who believes good marketing sells. Contact him at StratGo Marketing, a plug-in marketing department resource for company leaders.

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