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3 Big Brands That Innovated Their Way Back From the Dead

By Sean Williams - Apr 14, 2013 at 1:10PM

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Find out which other companies could be next.

It's often been said that innovation is everything when it comes to operating a business. From technology to health care and even food service, fresh ideas and constantly adaptable product and service profiles are needed if a business has any hope of growing and staying profitable.

Constantly innovating, though, is always the tricky part, as it's not as easy as it may sound. Trial and error can often weigh more heavily to the error side, and a business may be written off for dead if it fails to produce a new hit after a couple years. However, occasionally a dying or stagnant brand can be resurrected from the dead because of a hit product, or series of products. Here are three brands that have used innovation as a shot of adrenaline to get their business jump-started once again.

1. Taco Bell
It's been a rough couple of years for Mexican fast-food retail chain Taco Bell, which is operated by Yum! Brands (YUM 1.77%). In early 2011 a scandal erupted over the meat content in Taco Bell's seasoned beef. According to a lawsuit filed in Alabama, research of Taco Bell's seasoned beef indicated less than 35% beef content, which is well below the minimum requirements set by the U.S. Department of Agriculture to label a product as beef. Taco Bell fired back with a scathing assessment of its own, but the PR damage had been done.

But rather than sitting on its laurels, Taco Bell took to the taste buds of millions of Americans and innovated its way out of certain disaster. On March 8, 2012, Taco Bell combined its fast-service Mexican-food brand with PepsiCo's Doritos brand to create the Doritos Locos taco. Sales of Doritos Locos tacos have been phenomenal, with the company selling about 1 million of the delectable morsels every day and accounting for approximately one-quarter of all taco sales. The love for Doritos flavored chips even spawned a second collaboration, with the companies introducing the Cool Ranch Taco last month.

These tacos come with about a 40% pricing premium to standard tacos, providing the margin boost needed to help Taco Bell rise from the doldrums -- not to mention another nice plug for the Frito Lay-branded Doritos owned by PepsiCo.

2. Volkswagen
After powering many people through the 1960s with the small but popular Volkswagen Beetle, the company found its demand waning in the 1980s and 1990s. According to The Wall Street Journal, by 1992, Volkswagen had sold just 49,000 cars in the U.S., total, and had been thinking about pulling out of the region altogether.

However, things changed in drastic fashion in 1998, when Volkswagen reintroduced the Beetle with new, sleek styling and a fresh look aimed at hitting a younger market. The design didn't just fit the bill based on its relatively inexpensive price -- it touched a nerve with consumers who loved the car's style.


Source: IFCAR, commons.wikimedia. 

So far in 2013, with the Beetle getting yet another stylistic update, as well as Volkswagen's offering of a diesel engine option for fuel-efficiency lovers, sales of the Beetle are up 114% over the first quarter of 2012, demonstrating the strength of innovation.

For the company as a whole, it's found success well beyond just the Beetle, which was its jumping-off point. According to its U.S. March sales release, Volkswagen sold 37,704 units, a 3.1% increase over the year-ago period, and also its best performance in 40 years.

3. Apple (AAPL 0.17%)
Perhaps no company rose from the grave, so to speak, more prolifically than Apple, after its introduction of the revolutionary iPod in 2001. A lot of this had to do with the innovative capability of co-founder Steve Jobs, who turned the company into a digital giant that transformed the way we work and play.

One aspect that can't be forgotten about Jobs' tenure as CEO was that plenty of trial and error was involved in the procuring of Apple's success. The Apple III, QuickTake 200 camera, and Motorola ROKR phone with built-in iTunes were all examples of Apple products that flopped miserably.

But for each failure combined, Apple would need but one success to cancel them all out -- and the iPod was the jumping-off point for that success. Through last September, Apple had sold 350 million iPods and 400 million iOS devices (i.e., smartphones and tablets). It is perhaps one of the few tech companies that have an almost cult-like following, with fans who will line up outside its retail outlets to purchase new products when they're introduced. Apple is the epitome of a rejuvenated brand-name company.

Who's next?
As you can see, the importance of innovation cannot be discounted. It can transform a forgotten company into today's news in an instant and completely revitalize a brand. Let me break out my crystal ball and throw a bone at two companies that could be next in line to renew and refresh their image.

General Motors (GM -1.99%)
Having rid itself of the "Government Motors" moniker dubbed after it took a $49.5 billion loan during the recession, which helped it get through a bankruptcy reorganization, GM is turning to its line of trucks to revitalize its image.

The GMC Silverado and Sierra haven't hadn't seen sweeping design changes since 2006, so it was long overdue for a face-lift. GM understood that its new Silverado and Sierra wouldn't have an easy go of things, as Ford's (F -2.72%) F-150 is the king of all trucks in terms of U.S. unit sales, and Chrysler's Dodge Ram was also holding its footing, but a rebound in housing -- which often coincides with strong truck sales -- was too great an opportunity to pass up.

Initial sales would suggest that the company's time and effort spent on branding the new Silverado as both rugged and fuel-efficient are working. In March's U.S. auto sales report, GM's domestic truck sales trumped the competition, gaining 13.8% over the year-ago period, compared with just 9.4% for Ford and a decline of 2.1% for Chrysler. 

NVIDIA (NVDA -2.51%)
The slow demise of the PC with the proliferation of mobile devices has been the straw that broke NVIDIA's back. The company, which makes graphic cards for PCs and now processors for mobile devices such as smartphones and tablets, has struggled to keep up with this transformation. However, two major upgrades in its product line could turn that frown upside down for investors.

For starters, the company's Tegra line of mobile-device chips is turning in the fastest processing speed of anything currently available -- yes, even the Qualcomm Snapdragon processor. Tegra is going to face a challenge breaking into a very difficult-to-penetrate smartphone market, but the early results of 50% revenue growth in its most recent quarter are encouraging

The gaming sector is where NVIDIA could make its presence known and become the new driving force in innovation. The company's well-funded Project Shield is a hybrid gaming system set to make its debut in the second quarter of 2014 and will allow gamers to use the cloud to stream PC and Android-based games onto their HDTVs. Furthermore, Project Shield will be the first mobile and hybrid service capable of streaming a library of 4,000 shows to HDTVs. It's on pace to be a game-changer and brand-rejuvenator for the company.

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Stocks Mentioned

Apple Inc. Stock Quote
Apple Inc.
AAPL
$137.59 (0.17%) $0.24
Yum! Brands, Inc. Stock Quote
Yum! Brands, Inc.
YUM
$111.92 (1.77%) $1.95
NVIDIA Corporation Stock Quote
NVIDIA Corporation
NVDA
$166.94 (-2.51%) $-4.30
General Motors Company Stock Quote
General Motors Company
GM
$35.40 (-1.99%) $0.72
Ford Motor Company Stock Quote
Ford Motor Company
F
$12.50 (-2.72%) $0.35

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