As the old adage has it, you can have Speed, Quality and Price, but only two of them at any one time. Some leading brand-owners seem to have forgotten that eternal verity and attempted to have the best of all worlds at once – with disastrous results, according to a thought-provoking article by Jack Neff that appeared in Advertising Age this week.
The gist of Neff’s thesis is that a number high-profile brand catastrophes over the past year – such as those afflicting BP, Toyota and Johnson & Johnson – are essentially attributable to management’s decision to spend too much on marketing and too little on quality control. He contends that the savings on so-called “operational efficiencies” and slashed R&D budgets are ultimately suicidal, because disasters of the above magnitude can undo – overnight – years of patient brand-building, perhaps irrevocably.
Not everyone (by any means) agrees that the fundamental cause of these disasters was the diversion of necessary funds from product enhancement to the marketing budget. For example, J&J’s baffling series of product recalls, and the corporation’s manifest incompetence in righting them swiftly, arguably has more to do with the acquisition of pharma giant Pfizer in 2006 and the botched restructuring that followed than the rechannelling of excessive funds into marketing.
Nevertheless, the article poignantly highlights the limits of marketing when unaccompanied by due managerial diligence.
BP spent five years, and colossal sums of money, building itself into “Beyond Petroleum” – the greener alternative among oil companies – only to cause one of the world’s worst man-made disasters. How much managerial incompetence was at the root of the disaster remains to be assessed, but the suspicion is plenty.
Toyota, which built its brand reputation upon reliability and quality, has now had to recall over 9 million vehicles. It has lost ground, perhaps permanently, in consumer brand quality rankings and done great damage to its corporate integrity by engaging in a series of unappetising cover-ups designed to hoodwink its customers out of legitimate redress.
J&J was once a byword in textbook crisis management, after it brilliant handling of the 1982 Tylenol cyanide scare. Today, it faces federal hearings over its mismanagement of much lesser recalls. Its shiftiness in addressing an avalanche of quality problems has been a gift to the own-label OTC drugs, personal and household sectors.
These are merely some of the most prominent examples. Procter & Gamble itself has been experiencing a significantly heightened number of product recalls (albeit not of the same order) at a time when its main response to intensified competition has been to increase the global marketing budget by a massive $1bn to $8.6bn. Wall Street was not amused by the announcement.