A brand exists in the hearts and minds of consumers, not on a shelf.
The Hawks looking to squeeze profits out of their business were clearly clueless about that little fact, and have squeezed the life out of their brands in the process.
3G Capital, the Brazilian investors in once legacy food and drink giants such as Kraft Heinz, Bud Light and Restaurant Brands Inc (Burger King, Tim Horton’s and Popeye’s) relentlessly slashed their way to improved margins. Over the past decade or so 3G perfected and popularized “Zero Based Budgeting”, which is financial wise guy terminology for gutting a company to the core with a meat cleaver and leaving nothing but an bloody emaciated carcass on life support. Closed factories. Thousands of layoffs. A $15.4 Billion write off in the Value of Brands which have endured for longer than most of us have been alive. It made a few fat cats even fatter along the way. “We bought Brands and we thought they would last forever”, said 3G Co-fat cat Jorge Paulo Lemann. But as much as Jorge thinks Brands are tangible, inanimate objects, they are actually intangible and animated only in the imaginations of people. And how do they get there? Ah little Jorge… that’s what you are missing. You will hear many theories that explain why Oscar Mayer (for example) is no longer the Bologna of choice. Dramatic shifts in consumer tastes, focusing on natural and organic ingredients, more modern flavors, less brand loyalty and squelched innovation, they’ll say. “We were able to challenge the entrenched methodologies that were burdening these companies, but we weren’t thinking about what would come next”, said a 3G budgeting consultant. You mean to say that reigning in steak, cigar and strip club expenses wasn’t enough and that all you needed was to invent soy based cold cuts? That’s a bunch of, well… you guessed it… bologna! Let me give you a hint as to the real reason for the bad taste in their mouth:
“My Bologna has a first name, It’s O-S-C-A-R.
My bologna has a second name, It’s M-A-Y-E-R.
Oh I love to eat it every day, And if you ask me why I’ll say,
Cause’ Oscar Mayer has a way with B-O-L-O-G-N-A!!!!”
Anyone? These are the lyrics that the Oscar Mayer kid sang on TV, seemingly every day, way back when. You can’t save your way to prosperity, and the one area they seriously skimped on was marketing and advertising…. namely the Mass Media type.
The problem was 2 fold:
A) They relied more on short term attribution models of “cost effective” online advertising.
B) They ignored the long term effects of (more expensive) Mass Marketing to the detriment of overall effectiveness.
Man did they learn the hard way. Kraft Heinz made a spending shift by recently pouring $300 Million on developing and marketing its products, including a Planters Nuts Super Bowl commercial. But regaining that real estate in our minds, once it’s faded, is very, very difficult. We have short memories. We’re easily distracted. Out of sight, out of mind. Someday, someone will commission a very expensive study but all it takes is a dumb blogger to put 2+2 together. The investors who don’t know a thing about advertising and marketing thought that they could purchase the good names of brands and that they were big and well established enough that they could survive all by themselves and that they could shift marketing spend to a miracle media with low CPM’s and increased effectiveness (yeah, right).
I guess they must not have realized how those brands became so big and well established in the first place.
