In recent years, Zenith Electronics Corp. has slashed its marketing budget to nearly nothing, endangering the goodwill the company has built up over a lifetime.
"It has a very high quality perception level and esteem, but it isn't seen as being differentiated," says Stuart Agres, manager of corporate research for Young & Rubicam, New York, citing information gathered for the agency's Brand Asset Evaluator study.
Zenith no longer has an ad agency and last year spent just $1.8 million on advertising (vs. the $24 million spent by rival Thomson Consumer Electronics on the RCA brand and $18 million spent by Philips Consumer Electronics on Magnavox).
Last year, Zenith dropped to the No. 3 brand in TVs, from No. 2, passed by Magnavox, and its share of the TV market, continuing its downward slide, dropped to 10% from 14.5% in 1987, according to Televi. In the same period, Magnavox saw its share double to 10.25%. (Zenith contends the numbers are flawed.)
The company's current problems with consumer perception are ironic, because it has much to talk about.
"Zenith has an enormous amount going for it. It is a true innovator, but nobody knows it," says Jim Johnson, president-CEO of image consultancy Ansbach, Grossman & Portugal.
Zenith invented much of the stereo FM design; it had a major hand in developing the soon-to-be adopted U.S. HDTV standard. And though it assembles some products in Mexico, it still is the last of the U.S.-owned consumer electronics companies. Also, Zenith had some of the first flat display screens, and it leads the industry in making TVs for some interactive uses.
Instead of crowing about those advantages, Zenith has virtually stopped marketing itself.
Mr. Agres says the lack of advertising may be doing almost the opposite
of what Zenith is seeking. Instead of making Zenith products more affordable, it is turning the Zenith name into a commodity and its products more susceptible to pricing.
Zenith concedes it has been underadvertising-a strategy it attributes to financial pressures that last year resulted in the company reporting a nearly $100 million loss.
"It's difficult to invest with that kind of financial result," says Jerry McCarthy, president of the Zenith Sales Co. division.
He says the pressures seem to be easing, and that this year the company is making its biggest advertising investment in years as part of a joint advertising effort with StarSight Technologies.
Spots from StarSight agency Stein Robaire Helm, Los Angeles, broke on the Emmy Awards; Garfield Lynn & Co., Chicago, handled some related items.
And Mr. McCarthy promises more advertising ahead.
That's a good thing. As image expert Mr. Johnson puts it: "What they need to do is take charge. The financial community doesn't count. The customers do."