Lazarus brands: Coming back from the dead

Photo: Van Gogh Museum - The raising of Lazarus (after Rembrandt), 1890 by MicheleLovesArt (Flickr)

Another post on the Credit Suisse report: 27 Great Brands of Tomorrow Today's topic: Lazarus brands. Credit Suisse thinks that down-and-almost-out-brands represent a great investment opportunity as long as you can figure out which ones have the hope of new life. Brands like:

1) Nintendo: Nintendo's fortunes tool a turn for the worse when Sony launched its Playstation which out-maneuvered the Nintendo Entertainment System. When its next launch, the Game Cube, also failed, Nintendo was on its last legs. Then came the Wii and now Nintendo is hot again.

2) Apple: It's easy to forget these days but, not so long ago, Apple was struggling. It had a loyal but small following for its PCs and laptops but its other initiatives (in particular, the Newton) had not worked out. When Steve Jobs returned as CEO, he repositioned the company as a consumer electronics brand and, oh yes, launched something called the iPod.

3) Coach: Coach's heyday was back in the 60s, driven by the work of designer Bonnie Cashin. Over time, it lost momentum, its designs became staid and dowdy and its sales started to decline. It was saved from oblivion by the energetic intervention of a new CEO who started a program of serious reinvestment and re-design. The reinvigorated Coach brand shot past all its competitors to become the #1 brand in the U.S. market.

4) Esprit: Esprit also started out in the 60s as the quintessential Californian-born brand. In the 80s, the brand became a fashion phenomenon hitting a peak of about $800 million global sales. Then the founders divorced, the competitors caught up and revenue-enhancing licensing proliferated, all helping start a downward trend, everywhere except Asia where it continued to thrive. After ownership changes, the brand re-emerged from its strong base in Asia to once again expand globally.

What's interesting is considering how these Lazarus brands got in and out of trouble. Nintendo and Apple stumbled when they failed to stay competitive in categories which are driven by innovation. When they finally delivered a product hit, their fortunes improved.

On the other hand, Coach and Esprit fell on hard times when they under-invested and over-expanded which gradually eroded their brand equity. These two companies were saved when they refocused and reinvested.

The Credit Suisse report lists brand failures that can be similarly classified. In the "failed to innovate" camp: Blockbuster, eBay, Saturn, Kodak. In the "under invested/over expanded" camp: Columbia Sportswear, Krispy Kreme, Pierre Cardin, Sears.

If I had money to invest in Lazarus brands, I would start by looking for a sign that the company was really serious about starting over--companies with new leadership teams that had come in and committed to new innovation or focused investment would be of particular interest. With that approach I might have cottoned on to Coach, Esprit and Apple and made a nice chunk of change.

Previous post in the Great Brands series:
1) Great Brands of Tomorrow: How the 27 great brands of tomorrow were selected and Credit Suisse's bullish assessment of brand investing.
2) How imitation is hurting Chinese brand development: Why some Chinese brands will have a hard time breaking into global markets until they start developing some authenticity.

How imitation is hurting Chinese brand development

A second excerpt from the Credit Suisse report: 27 Great Brands of Tomorrow. This time, an interesting question about intellectual property protection (pp22-23):

Is the lack of IP protection in China actually hurting domestic brands more than their international brand competitors?

The thought is that Chinese entrepreneurs are not motivated to develop innovative and unique brands because their good ideas will be knocked-off without repercussion. It's easier for them to adopt a Wal-Tussin-like Private Label strategy and borrow liberally. But just like imitative Private Labels, this means that Chinese brands are limiting themselves. It may not hurt them too much in their home market but their lack of authenticity will hold them back from effective international expansion.

Previous post in the Great Brands series:
1) Great Brands of Tomorrow: How the 27 great brands of tomorrow were selected and Credit Suisse's bullish assessment of brand investing.

Even more on Great Brands:
1) Great Brands Make Great Investments: Landor colleague Allan Adamson celebrates the fact that a Wall Street firm has finally recognized that brand can be a source of competitive advantage.