The Value of Branding During Times of Recession

The value of brands diminishes during times of recession. People tend to be more focused and interested in value, properties, features and benefits of a product, meaning that buying decisions are more driven by logic than impulse or feeling.

Branding in B-to-C means often to spend money on feel-good images and aspirations, rather than on highlighting actual benefits and useful properties of a product at least since the 1920s when Edward Bernays invented Public Relations.

This type of “branding” is usually not done in the B-to-B segment, because feel-good images tend not to solve actual business problems and fulfill business needs.

Customer service, sales support, technical support, supply chain compliance, distribution are the things that are focused on, the things that B-to-B customers actually care about. Nothing of that is called branding, but the matter of fact is that it is. If people say about your company that it has great technical support instead of they made good experiences with your tech support when they had issue X, then it is branding. Your name is associated with a good property that is important to your customers. This increases the likelihood to finalize a deal. If an important aspect for a B-to-B transaction is not brought up by a potential customer, it is a good sign that your brand or reputation answered this question for the customer already.

As a consumer brand can suffer because of association with something bad, a business brand can suffer as badly or worse, if it loses the association with a good characteristic or gets associated with a bad one.That’s why should it be also important to a B-to-B Brand to protect itself. If you have a brand in the business sector and consumer sector as well, damage to the brand in one of the sectors can damage your brand in the other sector as well. Here is a good example:

I hate to drag out my own issues out to this blog, but sometimes your own negative experiences are better examples than something that was made up.

Real life issues also tend to be more accessible and easier to relate to by readers than anything that is pure hypothetical, which looms somewhat cloudy in the back of your head as a possibility in an “If then” scenario and therefore hard to get a grip on. It also feels somewhat alien and mysterious.

Often is there no practical advice to extract from it, because it is hard to give advice on something that you have never done or experienced yourself. Okay, here is the example that is based on my own experiences:

Gateway Computers is a consumer brand and used to be a business brand as well. They sold computers to individuals and corporations until 2007 when they sold off their business segment to a company called MPC Corp (which I had never heard of before).

I bought in 2006 a tablet PC from the Gateway business unit via their web site Gateway.com. With that computer I purchased a 4 year warranty, which included second business day on-site support, parts and labor cost covered. I just got a case now, which was the reason for me to get the expensive warranty in the first place. I bought the computer and warranty directly from the brand and manufacturer Gateway, because I felt sure that I will be covered in the case that I need it. I was obviously mistaken.

On the Gateway.com website is a news article published about the sale of their business unit to MPC and a FAQ for Gateway clients about what that means for them. There it states:

“Q) What can I as a Gateway pro customer expect of MPC?
A) It was important to Gateway that we find a good home for our valued professional customers. Like Gateway, MPC takes pride in a history of excellence, as it has routinely won industry awards and accolades for the quality of its products and services. The collaboration between Gateway and MPC over the first year will further assure that the transition is smooth for Gateway’s pro customers. And, because Gateway’s pro sales and service people are moving over to MPC as part of the merger, you can expect virtually all your company contacts to remain the same.”

They obviously made a mistake, because it was not finding a good home at all. The company they sold their unit and brand name to filed for Chapter 11 just 1 year and 1 month after the acquisition, which is about one week ago from now.

It took me over one hour to get anybody from customer support on the phone. I was troubleshooting the issue myself already and knew exactly the part that was faulty and was also able to exclude a software issue as the cause. All I needed was a spare part and a technician to replace the part for me.

The person who I finally got on the phone could not help me at all and seems to me just a person whose job it is to pick-up the phone at all, because nobody else who could help me was left. I got an email to contact, what I did, where I didn’t receive an answer since I sent my email last week on Friday.

The computer is still a Gateway and has the Gateway logo all over it. So I decided to contact Gateway, who was the manufacturer after all. They also make PCs today. I also got the warranty from them and not some third party.

The automated system sent me to a pre-recorded message telling me what I already knew, with the difference that I knew already more than that system, for example the fact that I won’t get support by dialing the proposed phone number.

I played stupid and did not provide any IDs to be able to get through to a person. That person was not much of help of course, because the first level of customer support is not authorized to do any decisions of their own. The supervisor was not much of help either, but that’s not the supervisor’s fault, since he does not understand the dynamics of branding, customer satisfaction and their impact on sales and the company’s overall business success. I was diverted to the Gateway support site, where I am currently attempting to break through the initial line of defense to get to somebody with a better understanding of the underlying issue of this case.

I also wrote a snail mail letter to corporate headquarters and management here in California where I tried to illustrate the problem that they, company/brand Gateway now have on their hand since they seem to have sold it to the wrong company who is not only having problems itself, but causing active damage to the Gateway brand as well.

If Gateway cares about its own brand image at all, they should step in and actively protect it by delivering what they promised themselves to former customers of them. I don’t care about MPC and consider it a Gateway problem that Gateway can only solve in two different ways.

Option one would be to provide the support that they promised and restore their brand image that they are providing excellent support and service for their hardware.

Option two would be to go out of business themselves or stop making computers and make something else instead, like dishwashers or toasters or something like that.

Any other option would be killing their brand, at least for me and maybe the people who encountered the same issues like I did, plus probably a number of people who just heard about those cases and now also don’t trust the Gateway brand anymore. Gateway still sells PCs to consumers, but there is no technical difference between my tablet-PC purchased via Gateway business than to the one that was sold via Gateway for consumers.

Does Gateway expect me to trust the consumer brand Gateway after this or making any recommendations to get a computer from them to friends, family members or any other person I know and talk about where to buy a computer and which make?

Unfortunately is it not that easy for notebook computers to simply go and buy a spare part yourself elsewhere and replace the faulty one yourself or with help of a friend or independent technician. The part is not much more expensive though and should not matter to you, if you have it flying around anyway, as they do in the case of Gateway. If it would be a desktop PC, I’d go to Best Buy, which is 2 blocks from here and buy a new card for $100 bucks and the problem would be solved.

Then I could spend all the time needed in the world to discuss the reimbursement of my cost, which should have been covered by the warranty. I don’t have this option and the damage to my business is getting much higher than the cost for the part needed and labor to install it.

That was the reason for me to get the warranty and to choose a trusted brand like Gateway. They are now proving that this trust was ill founded.

In a time where product and service properties and especially qualities and flaws of them become more relevant even in the consumer market, companies should be twice as careful to avoid any damage to their name, or brand values. Values that were created via the hard work of their staff in the real world and not by selling feel-good images. Those values are becoming invaluable in times of recession, because only if those values still exist, does your business have a cutting edge over the competition, when nothing else separates you from them, including the price.

Cheers!

Carsten Cumbrowski
Internet Marketer, Entrepreneur and Blogger
Cumbrowski.com Internet Marketing Resources

A quick update on November 24, 2008.

Over one week has passed now. Despite the second business day on-site support agreement, my computer is still not fixed.

I found out that it has the most problems if it uses the 3D acceleration via Direct 3D, so I pretty much disabled it for now, which has impact on some of what I am doing, but I was able to move those kind of tasks to one of my other PCs that I have here. That bought me time to deal with the issue.

Gateway sucks!

I turned around and asked their support, who was constantly pointing me to MPC, who is currently unable to help me, if it would be possible to proceed with paid support to get the thing fixed and then worry about the “who pays what” part later with MPC.

Notebook repairs are always tricky. You cannot just walk into the next computer hardware store and buy a spare part. I don’t know where to get the broken part from and also I do not know how to replace it. Memory, HD, CD/DVD etc. would have been a different story. They didn’t even want to help me then, even when I offered them to take my credit card information to make sure that this is covered and not …blah …blah. Can you believe that? It’s the freakin’ manufacturer himself and not some clueless third party.

They still did not help me and pointed to MPC. Then to some hardware websites, who sell Gateway notebook parts, but the part I need wasn’t even listed. The stuff that came closest was out of stock.

I also don’t know the exact part name/number/specs to do a search by that part number. I asked for this information, but they pointed me to some support documents that list multiple possible parts for my notebook model. None of them had the specific properties that mine has. I upgraded the GFX card to a 256 MB Name ATI Mobility Radeon X1400, the largest possible. Standard is usually 64 MB and all spare parts that I found were either the 64 MB and in a few cases a 128 MB version.

I will try calling MPC again this week and see, if I can make any progress there.

That was the last time in my life that I bought a Gateway computer, for business or for home.

This is what you can expect from Gateway nowadays. Not much of a difference to a shabby and unknown ”import/export” shop in Hong Kong, operated out of a garage by some dude, except for the part that involves the stealing of money in addition to screwing you with wrong/overpriced cheap hardware parts that fall apart when you start to really use them.

Gateway obviously does not care about its brand anymore and is willing to flush it down the drain. I don’t know if that is such a smart decision during times of recession. A few repairs of notebooks, even if they don’t have to “legally” would have gone a long, long way. Being cheap and not even helpful, if being offered to get paid for the help is money saved (and/or ignored) on the wrong end. That savings will be offset by damages that by far exceed them.

About Carsten Cumbrowski

Internet Marketer, Entrepreneur and Blogger. To learn more about me and what I am doing, visit my website and check out the “about” section.

Twitter: ccumbrowski

2 Responses to The Value of Branding During Times of Recession

  1. I posted a (long) update. Conclusion: Gateway Sucks! Don't buy it, ever!

  2. Jeremy DAvis says:

    Just so you know, they are not much better on the consumer side. I will never purchase another Gateway again, or at least not trust their warranty. I will probably purchase an extended warranty from Best Buy next time. It was never a question for them to fix my last laptop.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>