Brand Shift

A blue chip Company into consumer goods having various brands found that as per recent market survey its products' brand expectations in the market were shifted unexpectedly during the last year. The Managing Director of the company called for an urgent meeting of its senior managers to seek an explanation but failed to find any major problems with the current management of the business which may have caused it.

The confused Managing Director approached a boutique business advisory firm for the solution. The boutique business advisory firm started with analysis of its business performance and the factors attributing. After few weeks of analysis, the initial hypothesis set by the advisors proved correct that one of its investment centers was not working on multiple performance measures causing the problem for the entire business.

An organization having multiple goals cannot motivate the manager to consider those goals with a single performance measurement. It was found out that the Company had entered into business of an ancillary product two years back, which was facing quality problems.

The managers of this business had been evaluated on basis of their profit and ROI targets and thus to reduce cost, the managers had reduced the quality of the product compared to the quality expectation of the customer. Over time, consumers came to learn of the lower-than-expected-quality of the ancillary product. The business managers of the ancillary product although had exceeded their short term target profits, but the market had lowered its expectation of quality for all the products of the Company.

To control any future problems, the senior managers were advised to continually monitor the quality of all the products including ancillary products to ensure that they meet the Company's quality standards. The investment centre managers should be constrained in terms of quality of products that they can sell and the market niches that they can enter. The reasons for these constraints prevent these managers from demeaning the firm's brand reputation.

It was further advised that the firm should disassociate itself from the disreputed ancillary brand to reduce the impact on its other major brands. It was an eye opener and The Managing Director had realized the strategic connection of business performance with the management accounting and importance of having multiple performance measurement. Eventually, the Company sold the business of the said ancillary product to some private investors.