Grow Your Business

Declining sales is a sure indicator that your brand is eroding. If  you review shows no growth or even a decline, you must look carefully at why that is happening, by asking these questions:

1. Does your product or service need to be improved?

2. Does your visibility need to be upgraded?

3. Do you need to get the attention of your consumers more effectively?

4. Does your pricing need to be changed?

5. Do you need to change your packaging or pack sizes?

By doing these steps, and asking other relevant questions you can think of, you can spot any problems early and adapt one's brand strategy to cope.

Brands dominate our lives. Everyday, we are exposed to hundreds of brands, from the items we use to the advertisements we see everywhere. A brand is basically any symbol, name, phrase, or design used to distinguish one’s business or product from its competitor.

Entrepreneurs should take to heart, however, the world’s second-level meaning: brand is the image of the product in the market, and its success or failure depends on whether the product fulfills all that it promises in the consumer’s experience.

Brands are often developed over time, and eventually build its own character that affects how people look at it.  It comes to stand for something in the eyes of consumers.

It can be difficult to change that perception and make it stand for something else, especially when a brand’s image has become deeply embedded in the minds of its users or, more important, its non-users.

Often complicating things is the logistical and organizational impact of repositioning a brand to address a new need. “This results in brand stagnation, where sales flatten and then decline, which reflects consumer demand,” says Bernardo Cid, chief brand adviser for Mansmith and Fileders Inc., a marketing and sales consultancy firm.

Causes of Stagnation

There are many causes for brands to stagnate, but Cid says that they include a “weakening value proposition” that results in reduced product awareness. The brand’s competitors could also have introduced a much better or more innovative product or marketing campaign.

Alternately, the brand may have stopped innovating, or product quality may have deteriorated, tarnishing the brand’s image. Finally, consumer preference may be moving in a new direction away from the category in which the brand participates.

Though brand stagnation normally occurs with established brands, Cid says that this can also happen to startups and healthy brands. This is especially true with businesses that are expanding, with signs of brand stagnation going unnoticed by the entrepreneur.

“It is important to remember that your growing total revenue number can hide the early signs of coming decline,” says Cid.

Prevention

One way to spot early signs of decline is to look at sales in older, more established sales territories or older stores.  It often happens that declines in those areas are hidden by increases coming from new territories or new stores.

Thus, sales in those older spots must be studied to determine if the decline is starting to set in, says Cid.

Declining sales may be due to reasons that are not really big problems, such as your new stores in neighboring areas naturally taking some business away from your older stores.  In that case, you need to adjust the locations of your stores in order to preserve healthy sales in all areas.

However, look out if the sales decline is due to the growth of your competitors or the loss of your first customers. It is important for the companies to analyze the revenue performance of each and every store, Cid emphasizes.

“Big companies do this analysis routinely, which is why you often see American retail chains  reporting their sales on a same-store basis; they are eliminating the effect of new stores in their assessment of sales growth so they get a clean reading of growth performance,” he says.

Advice for Startups: Focus

For startups, preventing brand stagnation is even more important, as they rarely have the resources needed to resuscitate a stagnating brand.

To prevent it from even occurring, Cid says a “proactive approach marked by innovation” is needed in areas deemed critical by consumers.  Additionally, it is very helpful for a small brand to focus on a very narrow range of benefits so it could more easily stand for something.

“If at the start, your ‘best sellers’ are not really selling well, then focus on developing one or two strong sellers with strong value propositions instead of a wide range of so-so products,” he says.

Areas where a brand can innovate, according to Cid, are in terms of better performance in the key of features of the product. Additional product benefits—like something as simple as training one’s staff to smile when serving customers—can also be offered.

Convenience in terms of use, manufacture, accessibility, and distribution are also plus factors that help define a brand. Later, as the business and employee base grows, you can consider more products or benefits. But even then, you must periodically review your product line and kill off those that don’t offer enough growth potential and acceptable profitability.

“It will always be difficult to make a donkey a lion. So leave the donkeys before they waste too much of your time. Focus on growing the lion,” says Cid.