The Perils And Payoff Of Changing A Brand

It has to be the most overused phrase in marketing: "New and improved!"

But in business new isn't just a selling point, but it's a mantra. Companies walk a tightrope to balance the need to be the newest, the freshest; the best while staying stay true to the product that put them on the map.

For example, the packaging for a Cheerios box has changed, but what's inside the yellow box is pretty much the same as it was back in 1941, when General Mills launched "Cheery Oats."

"An iconic brand like Cheerios, or Green Giant, or Pillsbury are brands that people — that have brand champions — what we call brand champions — people who cannot live without the brand," General Mills Marketing Chief Mark Addicks told Sunday Morning correspondent Joie Chen. "People who identify with the brand and people who wear the brand like a badge."

Consistency can pay off. Since 2003 Cheerios has been the number one breakfast cereal in the United States. Companies that make the best loved brands know that sometimes "new and improved" can prove a big risk.

"We don't like change very much," said Jack Trout who wrote a book about the perils of corporate change called "Big Brands Big Trouble." "To change an attitude about a brand or whatnot, you really have to change the attitude on which that — the belief upon which … that idea was. And people hate to change their beliefs"

For example, Trout said the classic business failure was when Coca-Cola tried to build a new Coke.

"People said, no, no, no, no, no," Trout said. "I mean, you're the classic. I may not change my mind about you. You are what you are. And of course, that was also a disaster."

On the other hand, even the most iconic brands sometimes resist change at their own peril. For more than a century, the Eastman-Kodak company was photography: Kodak cameras, Kodak film; capturing those "Kodak moments." If you wanted to take pictures, there was only one name to know.

"Film was everywhere. It was a part of everything that we did," Kodak Vice President Betty Noonan said. "We had film rolls in our drawer at home. We had pictures on the counter. We had massive photo finishing locations at retail outlets. I mean, the brand was ubiquitous. The brand today is different."

One reason Kodak has changed was the invention of the digital camera in 1975. It changed everything about taking pictures: no film, no developing, and no waiting. Kodak stopped short of fully embracing the new technology, even though the guy who invented the digital camera was a Kodak employee.

"Many companies have these kinds of inventions," Trout said. "'Cause they're very bright people … And guess why it — they never get anywhere? Because they challenge the mother load. Now, this guy's invented something which is gonna undermine film. Do you think that's a happy idea inside of Kodak? No, sir."

Whatever the thinking was at Kodak, digital photography took off and Kodak's share of the photo business began to fade.

The turning point at Kodak came in 2004 when the CEO told investors in the world's pioneer film company that "film was in secular decline." Translation: make the transformation to cutting-edge digital technology or die.

Kodak finally got the message: the company is now in its third year of a transition to digital technology. These inkjet printers are only a fraction of a new product line that includes an array of digital cameras. Making the change has been painful: more than 24,000 jobs have been eliminated so far, but the company has learned to live with the new reality.

An in-house release called "Winds of Change" is a video pep talk for Kodak employees. For one of America's most iconic companies, it's a clean break with the past. Even the attitudes here are "new and improved."

"People want more digital things…ways to bring their pictures into the 21st century," the actor on the video says. "Well, Kodak is doing it. You thought they were just hiding out waiting for this digital thing to blow over, didn't you?"