Great Brands Continue to Find Relevance - IBM, Schwinn, Continental Airlines reinvent their brands - Brief Article

The stunning recent admission that Jack Welch retracted General Electric's requirement of being No. 1 or 2 in any market is a perfect example of how companies must continue to reinvent themselves and their brands in the face of changing market conditions, shifting customer needs and hyper-competitive brand landscapes.

Welch recognized that by insisting on a No. I or 2 position, G.E. was potentially missing out on high-profit, sizable opportunities it could compete in very credibly

Similar to G.E., Schwinn, Continental Airlines and IBM all faced major competitive issues 10 years ago, none bigger than the risk of becoming irrelevant in the minds of their customers. All three had to reinvent their business and brand strategies, and create relevancy in dramatically different ways.

Fast-forward to today and not only have they rediscovered their brand relevancy but, in fact, enjoy leadership positions, just like G.E does. How did they do it?

Schwinn, which was the No. 3 brand in America in 1970 (behind Coke and United), had to stop focusing on the dying 10-speed category--the Collegiate, Varsity and Continental--to finally embrace the world of mountain and trek biking. To be competitive, they could no longer be about "Bing Crosby and his family bicycle. "They could no longer hope that mountain biking was just a passing fad, but had to take an irreverent stand in a category that was passing them by.

After Schwinn filed for Chapter 11 bankruptcy protection in 1993, management took note that Schwinn historically stood for the industry's highest quality bicycle, regardless of type, and its history was filled with moves into new and exciting categories (whether it was exercise or tandem styles).

Thus, a move into mountain bikes that stood for the highest quality, was consistent with what Schwinn had been doing for 100-plus years. Management's goal in 1994 was not just to build mountain bikes, but to take the category to the next level and ultimately own it. The latest Sport Marketing Survey notes that Schwinn dominates the Independent Bike Dealer market as the No. 1 and No. 2 best-selling brand in both mountain and BMX bikes.

In the early 1990s, Continental was consistently at the bottom of customer service rankings among airlines. But as competition increased, service was becoming a bigger point of difference and more important to purchase criteria than ever before. At the time, Continental did not even come close to holding its own against stalwarts like United and "newer" more relevant brands like Southwest. Sales plummeted and Continental filed for Chapter 11 in 1990 and set out to reinvent itself.

Under Gordon Bethune's leadership, Continental refocused on invigorating its employees to deliver world-class service. Bethune's goal: to become nothing less than the dominant airline brand in overall customer service.

Continental just posted record earnings for the sixth straight year, was named Air Transport World's Airline of the Year for 2001 and ranked No. 1 in customer satisfaction by both Frequent Flyer Magazine and J.D. Power & Associates. It also jumped to No. 18 on Fortune's most recent "100 Best Companies to Work For" survey.

IBM had to move beyond its 1993 headline of "IBM posts record loss of $8 billion" and reinvent itself relative to how customers wanted to do business with the company in the future, not as they had in the past. Lou Gerstner determined the IBM brand was massively under-leveraged.

Gerstner and others quickly saw that IBM was the only industry player to have all of the parts customers desired and the power to unite them under one uniquely valued brand umbrella. IBM, in a relatively short time, was then able to become the most credible provider of expertise-based solutions, leveraging its services, state-of-the-art products and technologies with its historic brand.

IBM had record revenues and earnings for 2000 with global services accounting for nearly 50% of profits, a dramatic shift from its dependence on the low-margin hardware business in the early to mid-1990s.

These stories reflect how businesses need to reinvent how they go to market to stay competitive and consistently bolster profits. G.E. has figured out how to remain relevant. Schwinn, Continental and IBM are all great examples of companies learning to do so again.

Scott Davis, managing partner at Prophet's Chicago office, is the author of Brand Asset Management: Driving Profitable Growth Through Your Brands (June 2000).

COPYRIGHT 2001 BPI Communications, Inc.
COPYRIGHT 2001 Gale Group