Tuesday, January 06, 2009

Reaping What They Sowed

In case you think that I've spent too much time recently berating Starbucks for diluting its brand, I'll throw in another example. Yesterday it was announced that the British manufacturer of crystal and china, Waterford Wedgwood, was filing for bankruptcy. Sounds like another case of a company overexpanding in the neverending chase for financial success, only to hit a wall when the market becomes oversaturated and demand falls.

In fact, I'll use another example, that of Krispy Kreme. As an article by Kate Sullivan in CFO Magazine states:
"In its quest for growth, Krispy Kreme also squandered some of its mystique. "They became ubiquitous," says Jonathan Waite, an analyst for KeyBanc Capital Markets in Los Angeles. "Not just in sheer numbers of restaurant units, but also roughly half of their sales started going to grocery stores, gas stations, kiosks. Anywhere that consumers could be found, you could find a Krispy Kreme."

I'd brought up a quote by Issy Sharpe of "trust being a company's emotional capital" previously. This trust needs to be extended to both employees and customers. If a customer chooses a brand based on how it is promoted, only to find out that these claims no longer hold true, then where is the trust? If Wedgwood and Waterford are steeped with British and Irish history, but most of the porcelain is produced in Jakarta and crystal in eastern Europe, then the brand isn't living up to what it has been promising.

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