Gateway Computers – The April Fools of Branding?

Apr 12, 2004

By D.
Wendal Attig

How could a company that built a track record of excellence in early brand management continue to fail so miserably, both financially and as stewards of the Gateway brand?

Here’s a company who built a “we-care” profile in the marketplace based around the work ethic of the Midwest that became synonymous with the black and white cow-spotted box. Then,
failing to realize the value of that synonymy, moved the company away from the Midwest and change the cow spots to a new logo that its own employees dubbed the “G-spot”.

This is also the company that built distribution around the customer’s ability in many markets to take the computer in for service “to do business with real people when the hard
drive hit the fan,” a serious comfort zone even for customers who never used the service! Many of those customers ordered their computers by phone or online, never entering the
store, but understanding it was there if needed for service, many more believing it would continue to be a source of software training which was sometimes bundled with the deal
on a new computer.

Perhaps it isn’t ironic then that the company “merged March 11, with e-machines” announced another branding snafu on April Fool’s Day — the closing of all 188 retail stores.

It’s true that the company was poorly managed at the retail level. First hand reports from colleagues suggest this was mostly due to inept but over-staffed regional supervision
(not direction), which kept store managers and trainers from creatively responding to on-site customer demands. Profits seemed to track in the same direction.

In an era of instant gratification, the company continued too long to show demo machines on the store floor yet require custom ordering with delayed delivery.

Ultimately, management closed or reduced the training function in many stores to make room for an inventory of computers configured for the masses. Too little, too late.

One former Gateway software trainer tells of the many customers who admittedly bought second and third computers from Gateway because of the comfort of the familiar black and
white cow-spotted box and what that represented to them. Trust. (Not to mention extending the life value of the customer.)

Gateway service departments have always remained busy. Whether they have stood alone as a profit center is undetermined, but certainly their impact has allowed Gateway to flounder
in other areas and still survive as a viable brand in the minds and hearts of many customers.

So if we agree that Gateway is such a lousy retail operator yet continues to make great computers and serve a definable target market, then why is closing the retail stores such
a branding snafu? (No I haven’t forgotten that the acquisition of e machines provides distribution through Best Buy and the big box office supply chains.)

Brand management is about managing the customer’s trust in the relationship, something it would appear Gateway has forgotten.  

If I could be so bold as to jump into the mind of the customer for just a moment, let me suggest some simple truths;

  1. “I bought this computer because I thought you would be there for me when I have trouble. I chose not to buy another brand because my only service option would be to box it
    up, ship it off, and hope nothing is damaged in transit that creates worse problems than I already have, not to mention an aggravation over the additional loss of time and computer

  2. “Now that you’ve changed the game, Gateway will no longer be distinguished from the pack in my mind. The basis of my loyalty has vaporized.”

  3. “I trusted you enough to exchange my money for perceived value. I will now mistrust your company on current and future offerings based upon my perceptions —the only perceptions
    that count when it comes to spending my money.”

If Gateway was managing by brand, they might well continue with their plans to close the retail purchase option, but retain the service centers. This decision would require reducing
floor space, but wisely attempt to keep the look and proximity of familiar locations when possible and retain the technicians who understand the product nuances and deliver quality

These decisions would support hard-earned trust in the brand, potentially extend the life-value of customers, and further reduce the costs of customer acquisition and retention—which
in the end is the essence of brand value.  

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