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Are brands for all companies?


Are brands for all companies?

The brand is not an end in itself. It needs to be managed for what it is – an instrument for company growth and profitability, a business tool. Does branding affect all companies? Yes.

Are all companies aware of this? No. For many industrial companies or commodity sellers, the concept of the brand applies only to mass markets, high-consumption products and the fast-moving consumer goods (FMCG) sector. This is a misconception. A brand is a name that influences buyers and prescribers alike. Industrial brands have their own markets:

Air Liquide sells to industry, Somfy sells its tubular motors to window-blind installers and fitters, Saint Gobain Gypsum and Lafarge sell to companies and craftspeople in the construction and public works sectors, and the William Pitters company is famous among retailers for the quality of its trade relationships.

Nevertheless, these companies are affected by brands in a variety of ways:

 Stock-exchange-listed groups have to manage the widened recognition for their products. Their corporate brand is the vehicle for this recognition. Stock exchanges operate on anticipation. By definition an anticipation is not rational, but can be influenced by emotive factors. Worldwide groups should be asking themselves whether it might not be time to complete their transformation into worldwide buyers and distributors in order to consolidate their local operators under a single name.Chinese or Indian groups should be asking themselves how to get rid of the status of low cost supplies and take a larger part of the high margin segments in developed countries: to do so they need a global brand. Producers should be asking themselves whether the brand is a differentiating factor in any sector threatened by commoditisation. For this reason, it is noteworthy that BPB chose to retain the Placoplatre product brand – a local brand which had become synonymous with the product itself, and indeed a leader in its own markets. Similarly, it is significant that the industrial Air Liquide company asked Mr Lindsay Owen-Jones, the CEO of l’Oréal, to sit on its board of directors. Having worked its way through hundreds of product names and legal trademarks for these names, Air Liquide realised that it had still failed to create any real value. What it needed was to restructure its range of high-tech products under several megabrands, as l’Oréal had done.Producers of intermediary goods should be asking themselves whether it might not be time to sell to their clients’ customers, not through direct sales, but by instilling a brand awareness in these customers.

In this way, Lafarge – a world leader in construction materials – invested several million euros on informing the general public about the advances made possible by its innovations, in order to create a demand for its products among people who would live in the flats or work in the offices built by its clients. In relationships with intermediaries and distributors, the brand is an instrument of power.

Another typical example is Somfy, a world leader in motors for window blinds and openings for home use: this leadership has been earned through changing its OEM business model and refocusing the brand on the end user, just as Intel, Lycra, Woolmark and others have successfully done. After all, what do you say to a window-blind dealer for whom the Somfy motor makes up 35 per cent of the product cost and who is threatening to source the part from China at half the price? Somfy fears being relegated to the role of a mere OEM player: hence its increasingly high-profile public ‘Somfy powered’ strategy.

Strategic Brand Management Related Practice Tests

Strategic Management Practice Tests