Christine Kittinger/Brand risk matters

May 2018

Christine, we have talked about the GfK Marketing Intelligence Review (GfK MIR), the Marketing magazine of the GfK Verein, and its concept before. Today, let´s concentrate on the latest topic: Brand risk. Why do you focus on risks in brand management? Is it actually riskier to manage brands now, compared to maybe 10 or 20 years ago?

Yes, definitely. AON, one of the largest insurance brokers worldwide, lists “damage to reputation/brand” as the top risk emerging in its recently published biannual global risk assessment survey. And just think of some very recent incidents which have played a big role in social media: H&M came under severe attack for an ad that featured a black child wearing a sweatshirt with the words “coolest monkey in the jungle” etched on the front. The scandal drew public accusations of racism and in South Africa stores had to be closed because they were literally attacked by protesters. The VW brand suffered from its cheating in emission tests and Facebook from being unable to handle data privacy issues. In our interview branding expert Patrick Marrinan lists more examples and explains in detail why brand risks have grown substantially in the last decade.

A brand´s reputation seems to be much more vulnerable in social media times. Are there other factors that have caused increased brand risk?

In their article, Susan Fournier and Shuba Srinivasan from Boston University, the guest editors of this issue also list as a risk enhancing factor the need to keep growing even if markets themselves don´t. Brands might be stretched into remote categories, thereby risking loss of meaning and uniqueness and as a result, loss of brand capital. Also, they discuss the politically charged environment as a source of additional risk. In increasingly polarized societies it is almost impossible for brands to remain untouched by ideologies. Often being right for half of the people means being wrong for the other half.

What can brand managers do to keep their brands out of trouble and to protect their brands from these risks?

Marketers need be become more aware of the increased risks. Typically, brand building is associated with big opportunities, higher returns, and increased shareholder value. This is what brand managers have historically been trained for and talked about. Marketing as a discipline has tended to leave the risk focus to finance and accounting control. If marketers want to proactively manage the specific risks that brand management decisions involve, they need to understand the nature, sources and dynamics of these risks. Managers need to focus more on threats, weaknesses and vulnerabilities than on short-sighted opportunities that drive top-line results. This requires a broad minded managerial mindset, additional skills and the willingness to be self-critical. Conventional wisdom might not always hold. In the world of risk, brand awareness can be harmful, brand extensions can destroy brand assets and brand risks may not diversify through a mixed portfolio strategy.

Any highlights in the issue that you would like to recommend?

In fact, each single article is worth reading. Beside the introductory article by our guest editors and the interview that I have already mentioned, you find a piece on the specific risks of person brands like Calvin Klein or Martha Stewart. Also, it is interesting to read how being well known as brand can be negative because consumers hardly “unlearn” bad brand associations. Finally, I find our GfK-research article on the importance of critical brand relationships, especially during a crisis, very enlightening.

 Thank you for your time!


This is the link to the homepage of our Marketing magazine GfK MIR: