What do Apple computers, Betamax tapes, 8-track tapes, Prada sunglasses, and Beanie Babies have in common? If your answer was, “they’re all boxed up in my basement,” that might be true, but it’s not the answer we’re looking for here. The thing that they all have in common is that while they may have been innovators when they first came out, they all toe (or fell right over) the line between becoming legends and footnotes.
Steve Jobs probably wouldn’t like you to remember this (in fact, he’d probably prefer you distract yourself with something shiny), but there was a time when Apple was doing very poorly with its finances, almost to the point of bankruptcy.* And part of the reason that it was getting trounced so thoroughly by the PC had to do with the company’s business plan and corporate practices. Basically, Apple charges developers to create software for its systems, then takes a percentage of the profits, much like it does with iPhone apps. But when other operating systems offered free development without taking a hefty chunk of product sales, many companies stopped making Apple software entirely. In fact, this is why analysts are predicting that Android phones will overtake the iPhone to establish a permanent dominance in the smartphone field.
Basically, this is what happened to Betamax – Sony kept such a tight lid on restricting who could do what with the tapes in terms of sales, complimentary products, tape content and manufacturing that they eventually lost out to lower-quality VHS cassettes. Sony has since learned from this mistake to become the winner in the High Definition Optical Disc Format War with their Blu-Ray format, which handily defeated the HD DVD.
What Apple did to almost kill its business (and is still doing, to a degree) and what Sony did to the Betamax are the same thing: they kept too much control on their brands, placing too many rules and restrictions on what people could do with what they were given. Rather than encouraging experimentation, development, change and growth, they created a series of rigid standards to protect their core products. By attempting to control every aspect of the flow of information, they closed more doors than they opened, leaving room for competitors to step in.
You cannot control the flow of all information; doing so will result in an exodus of some of your biggest supporters.
8-track tapes, now a punchline that goes along with shag carpeting, wood-paneled TVs, and swingers’ parties, offered portability at a time when the only other way to control the music that you listened to was through a record player. Good sound quality, innovative packaging, and (limited) track selection made them a hit with consumers…until the cassette tape came along. Smaller, cheaper and more adaptable, cassettes solved the issues that buyers had with the 8-track, leading to its demise.
8-track tapes were set up for failure from the beginning: there was no way that they could adapt quickly enough to competing products like cassettes. Both the manufacturing and functionality were more limited, leaving the format out in the cold to die. By keeping their brand and product stagnant, the manufacturers of the 8-track tape lost the race before it had even started.
If you cannot adapt quickly, you’ll soon go extinct. People crave innovation.
Clothing and other fashion accessories, like handbags, can be forged somewhat easily. While the brand names might attract a hefty price tag, the truth is that the mass assembly of these items is done at a few specific places. In fact, a few specialty companies make most of these products for almost all brands – especially sunglasses. So in addition to making the real things, they make the cheaper knock-offs too.
The larger the manufacturer, the larger the business of fakes. In countries like Morocco and China, where many specialty companies house their operations, some streets are lined with replicas so close to the real thing that you have to look carefully to spot the differences. While this is a good way for consumers with less disposable income to achieve their luxury brand desires, it costs the companies millions of dollars in sales.
It doesn’t matter how distinct the look of an item is; since the manufacturing of the original and knock-off products happens at the same locations, it’s easier for those involved to make the replica when they’ve got their hands on the original blueprints. While legislation to protect designers from forged fashion has been an industry topic for years, it’s difficult to determine an appropriate response.
A few luxury brands, like Armani, have come out with spin-off brands (Exchange, in this case) to appeal to people in other income brackets. However, this comes at the cost of brand degradation - the spin-off can cheapen the original brand. But as long as there’s a market for knock-offs and designer names at a discount, the problem will persist.
If you make something well, someone else will always try a way to make it cheaper. Trying to compete on their level makes your original brand and items look worse.
Trends for kids seem to go in waves: they’re popular at first, then the market becomes over-saturated with similar products, then they become uncool, then, as adults, the original consumers bring the trend back in a wave of nostalgia. Everything from tie-dye shirts to snap bracelets to Hush Puppies have had at least one resurgence, while others, like Tamagotchi, Tickle Me Elmo, and pogs haven’t been so lucky. But perhaps one of the biggest and hardest “thuds” to be felt by a trend comes from Beanie Babies.
A craze if there ever was one, the small beanbag/stuffed animal hybrids once went for tens of thousands of dollars each for the rare editions, despite only costing consumers $6 or so each. At one point, a teacher of mine took time for the class to call around to local stores to find out which (if any) of them had the toys in stock. And although they were successful due to low supply and high demand, an over-saturation of clones and fakes caused the market itself to implode. Much like the tulip mania of the Netherlands, the market for the toys almost overtook the toys themselves. Beanie Babies that once commanded the GDP of a small nation now were only worth their original retail price.
Though one may assume that the company that produced them ended up doing quite well financially, the fact that they still produce the bean-filled fluff things almost a decade after the boom faded speaks to the company’s attempts to revitalize the line. Although “cut and run” may not seem like the best business plan, Beanie Babies are far from their halcyon days of having magazines and conventions devoted to them. Rather than admitting defeat, the company seems to holding out that one day, they will come back into style, reviving the trend. But in the meantime, they are continuing to saturate the market with their own products, earning and manufacturing far less than they once had.
Not all brands are eternal; some burn bright and fade fast, while others die a slow death. Failure to recognize when a brand is deteriorating can lead to more losses than gains.
Whether you’re branding personally or professionally, there is always the risk of it ending. Sometimes, it’s through internal decisions and practices, external influences, or an unfortunate combination of both. But by learning from the mistakes of those that failed before, we can learn how to save and sustain the reputations that we build. It’s unfortunate when something loses its appeal, but in the cycle of business and life, one must learn when to keep something out on display, and when to move it to a box in the basement.
* Skim the Wikipedia article for further details
