Is brand equity at risk?

Oreo cookies versus President's Choice. Coke versus a no-name cola. Consumers increasingly are opting for the lower prices and good quality of private labels. Have brands simply been mismanaged or have people changed fundamentally how they value brands? CEOs debate the fate of brand equity and what must be done to restore the perception of value.

Some say brands are a tax paid by the final consumer for quality assurance and image. The amount of the levy varies from product to product. Consumers are increasingly reluctant to pay this tax for a host of reasons, only some of which involve brands themselves. Part of this trend is fueled by two fundamental forces. First, there is a revolution in manufacturing. With quality a given in today's product marketplace, why pay extra for a brand name? (Some argue that in some product categories, quality is actually better in private-label or store-brand products.) Second, the distribution revolution has turned everything upside down. Retailers today have the whiphand. Once accustomed to callingthe marketing shots, brand manufacturers have become mindful that shelf space is at a premium and that retailers - armed with real-time information feedback - know more about customer tastes than they do. As a result, stores are taking back their margins, or at least trying their best to do so. Today, even Procter & Gamble has to be extra nice to traditional retailers, which, in turn, face competition from nontraditional channels of selling, such as Wal-Mart's Sam's Club, QVC, catalogs, and warehouse outlets.

Wal-Mart, by virtue of its distribution and market power, is thought to have accelerated the trend toward private labeling, given its emphasis on Sam's American Choice and its own house brand, Great Value products. While national brands are the store's main resource, Wal-Mart CEO David Glass thinks "the American consumer has begun to change. In the 1980s, the label and the store in which you bought the item were important. Today the customer says, 'I don't care where I buy it or what the label is. I just want a lot for my money.'"

This phenomenon initially occurred in food, beverages, and tobacco. In the early 1990s, aversion to store brands and private labels began to diminish. In 1993, supermarket label sales in the U.S. increased to 23.5 percent of sales from 22 percent. That same year, Philip Morris slashed the price of Marlboro cigarettes, arguably the most famous brand in modern advertising, to protect it from cheap generics. Granted, the trend has abated somewhat: For the first time in five years, the growth rate in retailers' own brand grocery products last year dipped below 5 percent. But brand makers have heeded the wake-up call. Once complacent brand makers such as Coca-Cola and Procter & Gamble have retaliated with special advertising and value-pricing of their own.

What does all this mean if your product is built on something as intangible as brand equity? Former Weston Foods CEO David Beatty says, "If you're not gold; you're gone." In effect, this means if a company's brand is not gold-plated in the buyer's mind, it is vulnerable. None of this suggests a complete erosion of brand equity, only that brands no longer carry unquestioned supremacy on store shelves or in people's minds. Thus, more than brand management is in flux. Basic notions of marketing in a new age of improved manufacturing and distribution must be redefined.

This roundtable, held in partnership with The Dial Corp and Landor Associates, explores these new developments and how they fit with customers' increased cynicism about products, quality, image, and other forces that influence their relationship with a product or service. Participants differ over the vulnerability of brands themselves. Some point to poor brand management, while others see a continuing fragmentation of consumer tastes and preferences. As Star Market Co.'s Henry Nasella observes, consumers can be emotionally attached to a brand and still buy a cheaper product if they think they're being overcharged.

PLAYING PATCH UP

Clay S. Timon (Landor Associates): Our founder, Walter Landor, used to say: "A product is made in a factory, but a brand is created in the mind" - the mind of the consumer, that is.

Consumer purchasing really revolves around a price-quality equation that equals some perceived value the end user puts on a brand. Some people have said that consumers have gotten smarter; they're walking away from national brands and looking elsewhere for this perceived value, thus causing the market to be in flux. In reality, I believe the confusion is more a result of the mismanagement of brands over the years.

Brands proliferated in the 1950s, prompting companies to think they could charge anything they wanted, because the customer would pay for the name and quality associated with their brands. Prices escalated, and consumers began to balk.

In response, manufacturers turned to coupons and promotions. Customers were bombarded with products bearing big yellow splotches that boldly proclaimed, "New Lower Price." New this. New that.

Then came "Marlboro Friday," when Philip Morris slashed the price of a pack of cigarettes. Why? Because the company was losing share to other brands that had a different price-quality equation. Procter & Gamble and others went to everyday lower pricing and began eliminating promotion monies in an attempt to regain consumer confidence.

J.P. Donlon (CE): Do you believe that if brand managers simply managed brands better, consumers would shift their loyalties back to brands?

Timon: I would love to say yes. Unfortunately, consumers are very smart. They've been jilted more than once, and they don't forget. It will be a long time before consumers return to the table. And I don't think they will ever bring the same loyalty they had in the past. It's a Humpty Dumpty situation: You can patch him up, but he'll never be whole again.

Of course, some brands have managed to survive the crisis. The American Express name, for example, has sustained itself through tremendous changes in the marketplace. And airlines have cut costs to the bone - to the point that they give first-class passengers peanuts for a meal on a two-hour flight - but their brand equities are strong enough to carry them through difficult times.

David A. Poldoian (Eagle Snacks): Keep in mind, though, that while most of us in this room might like more legroom and meal service, a big flying public out there is incredibly price-sensitive. The airlines realize they can fill seats by offering a low price, but to do so, they have to cut their costs somewhere. The question is, can you be all things to the broader public?

Stephen B. Timbers (Kemper Financial Services): I don't think it's possible to create a super brand that appeals to everyone or crosses all segments. As time goes on, certain segments of the population that are defined by age or even region have different values and different ways of looking at things. For instance, we just did a survey of retirement attitudes across generational age groups. We found that people aged 55 and older were interested in retirement and how to save for it. The yuppie generation was interested in making a lot of money quickly without any effort. And those in their 20s were interested in retirement saving. It wouldn't be easy to design one product to appeal to all three generations.

John J. Dooner Jr. (McCann-Erickson Worldwide): I agree. You need what I call a "reservoir of imagery" that's drawn for the brand name. And then you need different product offerings to maximize your total package. These are specific things geared to a target audience that create an umbrella for you. Now, selling the umbrella will not automatically sell the individual products - obviously, people buy products, not concepts. However, they should be founded on some essence or core belief that comes from a corporate point of view, or the brand point of view, that either is fed by these brands or product offerings, or vice versa. That creates an architecture.

Today, maximum quality and good price value is the cost of entry. Differentiation comes in creating emotional brand value, in establishing and maintaining the relationship brand names have to consumers' minds and hearts.

Coca-Cola has done this. How do you know? Consumers rejected Coca-Cola's New Coke before it even hit the shelves. I asked some people when they last had a Coke. They answered, "Not since I was 19 years old." But they were too attached to the classic brand to accept the new one. Here, the quintessential Coca-Cola brand transcended the market. New Coke was successful in Canada, because there was no historic relationship with consumers.

Henry Nasella (Star Market Co.): I don't think companies are successfully fostering that relationship by researching and understanding their customers' needs. Particularly in the food and office-supplies industries, the problem is not so much the brand, it's the fact that companies have not fundamentally shifted and changed features to suit their consumers. People are eating healthier, so ice cream consumption is down substantially, but low-fat or yogurt-based ice-cream sales are soaring. Seeing opportunities or niches, understanding what is going on in the marketplace, and then quickly responding to it is critical. Unfortunately, that doesn't happen enough today.

When I was with Staples, the Japanese were the only vendors who visited us two or three times a year to tell us about their potential new products and their accompanying market research. Then they asked us what we thought. They went to our customers and our retail stores. I was overwhelmed with their level of detail and their desire to understand what both the retailer and consumer wanted.

On the flip side, Duncan Hines and Betty Crocker, for example, are wonderful brands, but they're still offering traditional, 1950s or 1960s baking products. And cereals are the most overpriced products in the marketplace. The manufacturer's solution to consumer unhappiness is to create more jingles and fancy packaging, put in more air and less product, and offer coupons.

Dooner: That's not entirely fair. They are responding to customer needs.

Nasella: But not necessarily satisfying them. Consumers can have an emotional attachment to a brand and still buy another product if they feel they are being overcharged.

Dooner: Then those manufacturers will fail. General Motors once introduced a technologically superior car. Consumer research told it that customers like dial instruments, not analog ones. The Japanese took that into account. But not Detroit. GM said consumers will learn to like analog because that's what's in. Of course, GM couldn't sell two of those cars.

Nina Henderson (CPC Specialty Markets Group): Consumers' needs constantly change. Sometimes we're so busy trying to price the product right, give value, tug on heartstrings, and all this jazz, that we forget to step back and ask, "When are customers buying it? When are they using it? How are they using it?" And beyond that is the question, "Is this product/brand still valid to the way people are living?"

Timon: Probably the most difficult thing in branding is keeping it alive. Look at Pepsi Cola. Pepsi positioned itself as the "New Generation." That New Generation is now 30 years old. And yet the company still manages to survive and keep the brand fresh. Brands such as Ipana toothpaste, Babbo scouring powder, and Pan Am couldn't do that.

Leo Liebowitz (Getty Petroleum): However, simply managing the brand properly won't keep the corporation alive. Pan Am died because the company was mismanaged. Even the brand could not sustain it.

WHO GOT IT RIGHT?

William E. Mayer (CE/University of Maryland's School of Business): What brand in the last 10 years has been managed the best?

Rochelle (Shelly) B, Lazarus (Ogilvy & Mather North America): I think Saturn is a brilliant example of rapidly building a brand from nothing and maintaining the momentum.

Nasella: Saturn went beyond making a quality car to making the process of buying an automobile less than the usual ordeal with exemplary customer service. Saturn made sure the quality approach ran throughout the distribution cycle, from how the product was made to how it was sold and serviced.

Dooner: Saturn manufactures a maximum quality product at a maximum price value.

Marvin B. Hopkins (Hunter Douglas): What is maximum quality? Every consumer has a different perception of what quality is, and it's not a static thing. What's maximum quality for Saturn may be totally different when related to another industry. In the long run, it means meeting or exceeding what your customer expects or desires.

McDonald's to me isn't maximum quality, but it's consistent quality. You always know what you're getting: mediocre food, fast. [Laughter.] For some consumers, then, the value is in the convenience and consistency, not the food.

Liebowitz: For gasoline customers, convenience is the single biggest factor for Mobil, Shell, and Exxon, but all other things being equal, consumers probably go where they have a credit card for that brand. While the unbrandeds sell for a lower price, most consumers are reluctant to use an underperforming gasoline in one of their most valuable possessions.

Harry E. Gould Jr. (Gould Paper Corp.) Nevertheless, with all the layoffs, personal bankruptcies, and credit-card debt in the last 10 years, I think price plays an increasingly important part in a consumer's decision to buy most products.

For example, Kodak finally decided to lend its name to photo albums. Two companies have a 50 percent market share in that area. The public company got a license and established a price point. The private company decided to match the look and the feel, and price it 40 percent less. Kodak now is changing the price point. The sales were not there. The Kodak name certainly has value, but it's marginal in this economic climate; the consumer is only willing to pay a certain premium.

Poldoian: The Kodak name going on a photo album strikes me as an abuse of the brand, because it didn't add any value to that album. Why should I pay 40 percent more for something that says Kodak? On the other hand, I'd be leery of buying private-label film, because I want my pictures to have the quality promised by the Kodak brand.

Dooner: If Kodak spent some money on R&D to develop a photo album that had some special, value-added features and marketed it as such, it probably could charge a reasonable premium.

PRESIDENT'S CHOICE VERSUS OREOS

Donlon: John, you have said that this talk of brand versus private label is something of a hoax, that consumers will return to brand products when they feel the recession is over.

John W. Teets (The Dial Corp): That's an overstatement. However, I do believe that if the brand itself is managed properly, there's no reason for a private label to exist. The problem is getting the execution right. Today, if a branded company isn't providing value, the retailer probably will put its own brand on the shelves.

But that can backfire. The private President's Choice label from Loblaw Cos. failed in Arizona. As soon as our local grocery store, Smitty's, converted 75 percent of its store to President's Choice products rather than national brands, my wife quit going there, because she couldn't get Oreo cookies.

Nasella: I agree with you on the execution, but 25,000 new consumer products are introduced to us every year. We couldn't carry all those items, and even the items that do get on the shelves sometimes fail. Who ultimately pays for that? Consumers.

Teets: But now we have computer systems that tell us what shelf space is available and how products are doing there. And retailers are telling suppliers that if a product doesn't produce a profit in that space, they will throw them out. That's the way it should be. You're automatically weeding out those manufacturers whose products aren't selling and who aren't supporting their brands with advertising.

Nasella: Keep in mind that even though we are making major investments in item-transaction technology to find out what customers are buying or not buying and why, it's still difficult to predict consumer behavior with any certainty.

Dooner: Not to mention the fact that there's something of an adversarial relationship between manufacturers and retailers.

Poldoian: That's true. Retailers are looking to maximize their profit. They rent shelf space and can favor one manufacturer over another, one brand over another, their store label or a private label over the branded product. They have the power over where products are positioned and what promotions are done. We talk about the emotional relationship a manufacturer has with a consumer, but the retailer is another factor in the equation.

Arnold B. Pollard (CE): How has the evolution of information technology changed brand strategy?

Teets: From the manufacturer's point of view, the difference is overwhelming. Publix, a grocery chain, has gone from 11 warehouses to one, and from 11 buyers to one. We have less than one week's supply of inventory load with Wal-Mart coming in on its capacity. But it commits to us over a three-to-six-month basis on every program. This is where consumers will get lower prices, and more money will be made.

Publix can tell you, by store, what it's selling by category just from the data compiled in its cash registers. And as the company gets that knowledge, it passes it on to us, the manufacturers.

Donlon: Will retailers use this knowledge to create their own store brands?

Dooner: Perhaps, though I think most retailers recognize the financial value of premium brands versus store brands.

Donlon: I'm not saying premium brands are going to disappear, but that retailers will push their own brands to make better margins.

Dooner: Not necessarily. If they can make a better margin with premium brands, there's no reason to go to store brands, which are capital-intensive.

Nasella: Obviously, retailers want to make as much money as they can, but that just isn't possible in every category.

Poldoian: Isn't one of retailers' objectives to gain market share, implicitly presuming that will improve their profitability? If so, they have to differentiate themselves from their competition. Aside from service and price, one way to do that is providing private-label goods that aren't available everywhere else.

Timon: Ironically, many major private labels now are becoming brands in their own right. Today, if you look at the private-label lines in a Safeway or Sainsberry's, the quality of the packaging is equal to that of national brands. Sainsberry's has even launched private-label brands, advertising and promoting them as if they were manufacturers' brands.

Interestingly, the prices of those private-label products generally have increased. They're still below the national brands, because they have been able to manage both the sellers' and manufacturers' margin. But the gap has narrowed.

Our business in private-label packaging has increased a thousandfold. Private-label manufacturers now are trying to do more than knock off the category leader; they are creating some elements of their own, so their products will stand out.

Teets: I just flat out haven't seen that in people coming in selling private-label goods.

Timon: I'm talking about store brands.

Donlon: The superstore brand killer has a bigger margin. To what degree will retailers be pushed in that direction, by virtue of their own internal dynamics?

Nasella: We have to move toward customer profitability and vendor/supplier profitability. Otherwise we will go out of business. We have to get suppliers and retailers working together on strategies consistent with each other's objectives and those of the customer.

Dooner: So would you lean more toward private label and low-cost value or premium?

Nasella: It depends on the category. In some instances, such as the fax machine, customers paid the premium when it was first invented, because there was no alternative brand. We sell a private-label aspirin for $4.50 less a 100-count bottle than a brand name. When Staples first started selling copy paper for $19.99 at a time when the normal street price was $50 or $60, there was a revolution. PaperMate pens retailed for $5.89, but Staples sold them for 79 cents. A customer doesn't have to see these types of disparities too often before he or she says, "This is a rip off."

Timon: Discounters are the guys who knock the price-quality equation out of whack, and they will pay for it, if not today, then tomorrow.

AT YOUR SERVICE

Donlon: We've been talking about consumer products for the most part, but does the brand phenomenon apply to services, as well?

J. Michael Cook (Deloitte & Touche LLP): Certainly. Like manufacturers, service providers must offer a presumed base level of quality. Beyond that, they must differentiate on value and competitive pricing.

Donlon: Have audits become commoditized?

Cook: To an extent. We can make speeches all day long about how our audits are a value-added service, but we ultimately have to convince consumers that they couldn't get the same service down the street.

Mayer: I have spent most of my life as an investment banker. That industry is in an analogous situation to accounting. We spent an enormous amount of time trying to differentiate ourselves from Goldman Sachs and Morgan Stanley. We tried to attack it in terms of the importance of the product to the customer. That's what led us into mergers and acquisitions and equity new issues. Suddenly we found we didn't have a clear image of the marketplace, and thus, didn't know exactly what we stood for.

Pollard: Mike, where your core business is getting more commoditized, are you trying to extend the brand to other services that have more of a growth potential?

Cook: The basic market is relatively stable. There will be some consolidation, but it probably won't grow. We must be price-competitive. We're now expanding into other areas related to consulting services.

However, extending your basic brand to things you don't do traditionally is difficult, since you are facing new competitors who have been providing that service longer and better than you have. You don't want to tarnish your reputation in your traditional business by not succeeding in the extended one.

Arthur J. Mirante (Cushman & Wakefield): Price competition has been fierce in the service industry. Prices for our business services have actually gone down substantially, 50 percent to 25 percent, depending upon the market and service. The result has been industry consolidation. The challenge on the quality side has been to manage the new opportunities in the international marketplace. As in the retailing industry, partnering is very important to us as we move into multiservice opportunities.

Timbers: What's interesting about this discussion is the similarities between service businesses and supermarkets, for example. No matter what, the distributor and the manufacturer have to work together, and both have to feel they are getting a fair deal. For example, Fidelity, which in its early years distributed through traditional channels of broker dealers, spent a lot of money to allow customers to buy funds directly. Now it does both. You can buy that Fidelity fund directly, perceiving you're buying it for free, although you are really paying all sorts of annual fees. Or you can buy it through a distributor who marks it up, so he had better give you some added value, since you think you can get a better price buying direct.

Essentially, if the equation gets too far out of whack, the consumer has other options.

BRANDS ON THE ROCKS?

Donlon: Is brand equity at risk? And what - if anything - will you do differently in managing your brands?

Teets: There's no simple answer to your question. Brand equity has to be developed by category, some of which could be at risk, particularly commodity categories. When people buy a bar of soap, for example, they figure it costs a half a cent to take a bath or a shower, and it's a very personal decision. No matter how good the store brand is, they probably won't trade down. But in other categories, such as detergents, the consumer might not see any discernible difference between the brand or private-label product.

Cook: Our definition of brand equity in services is different from that in consumer products. We're talking about a high-cost, high-priced professional service.

Teets: Really high-priced. [Laughter.]

Cook: But very high quality. We would be wise to think our brand equity is at risk every day and behave accordingly. We must maintain the highest quality standards. If we lose that, pricing won't matter.

Timbers: Brand equity is always at risk. The key to preserving it is execution. The downside is that if you execute wrong, you have nothing.

Lazarus: I don't think brand equity per se is at risk. I think catchy slogans, slick advertising, and seductive packaging aren't going to cut it anymore. Brands must deliver on their promise by providing value to the customer.

Henderson: Brands represent a fragile bargain between manufacturer and customer. The key is keeping pace with the changing ways in which people select products.

Mirante: Brand equity is at risk every day, but having the brand gives you an advantage. We have to capitalize on it and continue to improve our market share in the equity we have.

Edward M. Kopko (Butler International): The important thing is keeping an eye on product innovation. Without that, you lose your brand equity real fast.

Dooner: For our brands to grow and prosper, they need love. Love means diligently focusing on product quality and monitoring price value.

Timon: I don't think brands will ever go away. What's at risk is traditional brand management practices. They must change.

Poldoian: Many brands are at risk, mainly because there has been such a proliferation of them. And many of them are "me-too" brands that do not deliver value. I foresee real consolidation. Only the brands that offer a differentiated product or service will survive.

Hopkins: Brands are more at risk overall than they were years ago, because consumers are much more savvy. In addition, the retail scene is changing dramatically with the rise of discounters such as Home Depot and Wal-Mart. We have to find an efficient way to give customers both good service and low prices.

Liebowitz: I agree with everyone. However, in the oil and gas industry, I don't believe brands are at risk at all. If anything, more independents are converting to brands.

However, that doesn't mean we could not be at risk. No matter what, we still must provide good service, value, and quality. The first time you stop fulfilling those criteria, you've irreparably damaged your brand. And customers will never come back - not only to that particular outlet, but to any other outlet carrying your brand.

So you have to be alert all the time, you have to protect your brand, and you have to work at sustaining it. Brands can't - and won't - survive any other way.

A Who's Who Of Roundtable Participants

J. Michael Cook is chairman and chief executive of Deloitte & Touche LLP, a $2.2 billion accounting, auditing, tax, and management consulting firm based in Wilton, CT.

John J. Dooner Jr. is chairman and chief executive of New York-based McCann-Erickson Worldwide, a $7.2 billion advertising agency.

Harry E. Gould Jr. is chairman and president of New York-based Gould Paper Corp., an $830 million paper distributing company.

Nina Henderson is president of CPC Specialty Markets Group, a $400 million food manufacturing unit of CPC International in Englewood Cliffs, NJ.

Marvin B. Hopkins is president and chief executive of Hunter Douglas, an Upper Saddle River, NJ-based window-coverings company with $500 million-plus in revenue.

Edward M. Kopko is chairman, president, and chief executive of Butler International in Montvale, NJ, a $450 million provider of business services to the aviation, telecommunications, technology, and automotive industries.

Rochelle (Shelly) B. Lazarus is president of Ogilvy & Mather North America, a New York-based subsidiary of advertising agency Ogilvy & Mather Worldwide, which is a subsidiary of $2.2 billion WPP Group in London.

Leo Liebowitz is president and chief executive of Jericho, NY-based Getty Petroleum, an $800 million petroleum-products company.

William E. Mayer is dean of the University of Maryland's School of Business at College Park, and chairman of CE.

Arthur J. Mirante II is president and chief executive of New York-based Cushman & Wakefield, a $234 million real-estate company.

Henry Nasella is chairman, president, and chief executive of $850 million Star Market Co., a Cambridge, MA-based grocery-store chain.

David A. Poldoian is president of Eagle Snacks in St. Louis, a subsidiary of $13.7 billion Anheuser Busch.

John W. Teets is chairman and chief executive of The Dial Corp, a Phoenix, AZ-based consumer-products and services company with $3.5 billion in revenues.

Stephen B. Timbers is chairman and chief executive of Chicago-based Kemper Financial Services, a $500 million investment-services firm with $63 billion in assets under management.

Clay S. Timon is chairman and chief executive of Landor Associates in San Francisco, the $45 million-plus worldwide identity consulting and design subsidiary of Young & Rubicam.

RELATED ARTICLE: BIG SIX BRANDING: THE POWER OF PARTNERSHIP

When the mother of all brands, IBM, stumbled in the mid-1980s, and the vacuum was filled by leaner competitors and a host of catalog discounters, the sequence seemed to knock the pins out from under brand recognition across the board. Today, with private-label goods draining brand sales in household products, food and drink, cigarettes, cosmetics, and fashion - and with financial services, airlines, and telecommunications brands also under fire - the message seems clear: No brand, however well-established, is invulnerable.

Nonetheless, some industries and companies are doing better than others. Despite the rise of a spate of smaller, boutique auditing and accounting firms, for example, Big Six brand recognition seems to be more powerful than ever.

In a recent survey of controllers and chief financial officers of companies with annual sales between $5 million and $199 million, conducted by the New York-based market research firm, Novak Marketing, four of the Big Six scored 100 percent in name awareness: Arthur Andersen, Deloitte & Touche LLP, Ernst & Young LLP, and Price Waterhouse. KPMG Peat Marwick and Coopers & Lybrand followed close behind, at 98 percent and 97 percent, respectively.

Among larger companies - those with annual revenues of $200 million or more - the brand blanket is even more absolute: Andersen, D&T, and KPMG scored 100 percent awareness, with the others posting 99 percent. Given the 300 overall responses to the telephone survey, margins of difference of 3 percent and below are statistically insignificant.

"The level of awareness the Big Six have in their markets is equivalent to that you would see for a Coca-Cola or a McDonald's," says Gregory Novak, the firm's president. "The Big Six are so much in demand, particularly among big companies, that they are practically the only game in town."

What's their secret? Can corporate America replicate it?

Yes and no. Some of the Big Six's success simply is the product of marketplace trends, allows Peter Horowitz, a marketing specialist for Price Waterhouse. With compliance becoming ever more complicated, for example, few corporations wish to risk a misstep caused by an inexperienced auditor. On that count, size and global extension help, too. "In consumer products, generic and private-label goods have diluted the market," Horowitz says. "There's no small company planning an IPO that's going to use Brand 'X' to support that effort."

But that raises another question: If economies of scale and marketplace trends are critical, what's behind brand collapses in computers? Or in banking, an industry almost directly comparable to accounting? That's where the power of partnership comes in, Horowitz says. "There's no new product development or marketing whiz kid who's going to come into a Big Six company" and turn things upside down, he says, adding, "Partners have a sense of being a caretaker for a heritage." That's likely one reason why Goldman Sachs - the last major private investment banking partnership - remains perhaps the most respected firm on Wall Street, and one of the most recognized, Horowitz acknowledges. Indeed, in a recent conversation with CE, Goldman Senior Partner Jon S. Corzine said he counts partnership as an important source of competitive advantage.

Meanwhile, the Big Six also have better branding focus than most companies outside the accounting industry, Horowitz says. "In the huge number of products that have been introduced into the marketplace - in all those line extensions - there comes a point where the water gets muddy. What does Procter & Gamble stand for? What does General Motors mean? Is it a Cadillac, a Pontiac, or a Chevrolet? By contrast, Horowitz says, any activity or branch of a Big Six firm builds brand equity for the parent firm. "It's the Big Six that provide the service," he says. "There's never any mistake about that. And most of the Big Six have a well-defined market: We don't try to be all things to all people."

If that's true, then we may start to see some chinks developing in the Big Six armor, Greg Novak says. As Big Six firms seek to expand their consulting operations, many are rushing to build all-purpose businesses providing end-to-end solutions that offer everything from strategy to information systems.

"You have to look at a brand as a big tent, and you need to ask yourself: 'What belongs under that tent and what does not?'" Novak says. "Line extensions are not necessarily bad, but there was a time when some Big Six players were talking about getting involved as travel agents, stockbrokers, you name it. If you do things inconsistent with your core product - in the case of the Big Six, that's information, analysis, and independence - then you're more likely to set yourself up for a fall."

Joseph L. McCarthy

RELATED ARTICLE: BREATHING NEW LIFE INTO OLD BRANDS

Funny how KFC (formerly Kentucky Fried Chicken) should dig up its deceased founder to hawk a new food line. A series of commercials run not so long ago featured Colonel Sanders, resuscitated through an eerie blend of celebrity impersonation and digital creativity, giving his blessing to the fast-food giant's inauguration of Rotisserie Gold chicken. The idea was considered silly in some circles and tasteless in others. But according to the logic of retrobranding, it made perfect sense.

If life itself isn't more complicated today, consumption certainly is. So many brands are available to consumers, it's often hard for them to build associations of quality and trust with products. Though the future is heralded with millennial anticipation, authenticity is found in the past, when everything seemed to work better.

Thus, Coca-Cola's bottle returns, and the dairy industry rolls out marching, '50s-style snacks. Package designs of yore turn up again, along with old advertisements vaulted away long ago. Evoke a more innocent time, and you bring value back from the dead.

Few understand this better than Jeffrey S. Himmel, chairman and chief executive of New York-based Himmel Group, and chairman of its parent, Himmel Holdings. He has taken the retrobranding concept a step further than anyone by reviving not just deceased marketing techniques, but the near-dead products themselves.

His father, Martin, started the business 35 years ago and reintroduced Topol tooth polish, Doans Pills, Porcelana fade cream, and Lavoris mouthwash - products that, his son says, possess a point of difference in their markets. Since his father's death in 1991, Himmel has kept the company's focus on point-of-difference brands, mining the terrain of classic consumer goods that still survive (despite retailers' growing reluctance to stock slow sellers) but need a boost. Among the revitalized are Gold Bond medicated powder and Ovaltine.

Developed by the Rhode Island Medical Association in 1898, Gold Bond sales lagged at $1 million when Himmel bought the rights in 1991. Taking the itch and rash reliever national, he built sales to $35 million in 1994. By touting its century-old standing and medicinal uniqueness from moisture-absorbing skin-care products, he has renewed enough interest in Gold Bond to diversify the franchise with a baby version, an extra-strength formula, and a cream. The latter's growth potential particularly enthuses him.

"Our objective is to make Gold Bond the standard of itch relief," he says. "What I'd like to do is turn it into what Neutrogena is - a skin-care company offering several products."

Though the names and reputations endorsed by grandmothers for years stand beside him, Himmel knows nostalgia alone does not a comeback make. The products he deals with still must have validity in modern times.

Ovaltine milk additive, acquired from Sandoz Nutrition Corp. in 1991, met his criteria enough to merit a foray into the food category.

"We'd never been in the food business before," he says. "But we saw something unique in a product that withstood the test of time."

Though the malted milk additive was a firmly entrenched part of childhood not so long ago, it was in a state of decline when Himmel picked it up. His investment in advertising "to tell the Ovaltine story" produced, among others, a commercial paying homage to radio action serials and the products that sponsored them.

But equally a part of its tested identity, along with the sentiment it inspires for yesterday, has been the fact that Ovaltine is not bad for growing bodies. "It has a heritage as a nutritious food," Himmel says. Unlike competitors such as Nestle Quik, Ovaltine touts the phrase "vitamin fortified" on its label.

Sales have risen from a pre-Himmel state of $15 million to $30 million today. Its market share now stands at 26 percent, over a previous 11 percent.

"Sales of $15 million to $20 million is small in the food category," Himmel admits. "But we believe we have the opportunity to grow the business tenfold over the next five years, because we have the brand awareness of the franchise, and it's extendable."

Himmel is betting Bromo Seltzer, purchased last year from Warner Wellcome Consumer Healthcare, shows similar potential. Developed in 1888, the effervescent antacid is steeped in tradition. "Gimme a Bromo," the familiar slogan went. At one time, its blue glass bottle was ubiquitous in the medicine cabinets of America. Himmel wants to tap into that 107-year equity, but he knows sweet memory alone will not be enough.

In 1993, sales of the granulated stomach reliever were at about $1.7 million, roughly 100th of what leaders such as Maalox, Mylanta, Pepto-Bismol, or Tums sells. But Bromo's point of differentiation, Himmel says, is that it's always been ahead of the times. Unlike the original Alka-Seltzer, a combination of sodium bicarbonate and aspirin, Bromo Seltzer uses acetaminophen, the ingredient found in analgesics such as Tylenol. Hence, it is gentler on the gastrointestinal tract, and, Himmel hopes, more appealing to today's more health-conscious shoppers.

However, the market for relievers of stomach and hangover pains is not what it used to be, with the rise of more moderate lifestyles. Undaunted, Himmel wants sales to reach $50 million or more in the next five years, a goal that may not seem terribly far fetched. After all, time is on his side.

Steve Wilson