facebook
Are you an Employer?
List of Topics

Corporate brands and product brands


Corporate brands and product brands

For years, companies have hidden behind their brands. Through prudence and fear of being affected in case of brand failure, company names have been separate from those of the brands. Thus Procter & Gamble remain unknown to the public while their brands are the stars (Ariel, Pampers). In fact, it is this that allowed the company to keep its turnover stable when the rumour of it being linked to a sect raged through the United States.

Thebrands, autonomous from the company itself,  suffered no setback. Nevertheless, such instances are rare and the tendency is more towards transparency due to communication obligations. Also, the public wants to know, in larger numbers than before, who are the actors behind the brands. Journalists want to disclose who is the ‘brand behind the brand’. This also explains why so many companies have taken on the names of their most famous brands (eg Alcatel-Alsthom, Danone).

They get more visibility and acknowledgement. This helps the stock exchange investor also, in cases where he is not an expert or very well-informed, to understand better what he is buying. It may also create a beneficial confusion for the brand itself. After it bought Audi, Seat and Skoda,Volkswagen Group is now co-leader in Europe  on a cumulative basis. However, many people mistakenly speak of Volkswagen as a brand being the number one in Europe.

The trend towards greater visibility of corporate names also has other causes. Distribution is one of them. Distributors, multiple retailers and hypermarket chains are not very interested in brands. Their fundamental relationship is with corporations, not with brands. It is a business to business relationship. The name of the powerful corporation is therefore a potent reminder of that relationship.

Only corporate names can endow brands with stature, an extra dimension calling for respect. Would Audi have succeeded in its remarkable recovery had it not been known that Audi belonged to the Volkswagen Group? The same holds true for Seat and Skoda. Nissan’s status will change because it is now part of the Renault group. As long as car makes are only brands and not part of a larger and more dynamic corporation, they arouse perceived risk among consumers and do not guarantee a long-term presence.

Many companies sell in industrial and commercial markets at the same time. Here, there is the problem of having to choose between the use of product brands or the use of the corporate reputation to support the products. This depends on the quality of the company’s endorsement and the degree of visibility that it wants to acquire. In practice, the respective weight to be attributed to the product brand and the corporate brand depends on a case-by-case analysis of the returns brought by each of them on the many targets concerned. Table below presents the outline of such an analysis.

Shared roles of the corporate and product brand

At ICI three kinds of brand policy were used (see Figure below):

Corporate and product branding at ICI

The first policy is the classic umbrella brand where the products keep their generic names and are signed with the corporate name. Most often this concerns raw materials and undifferentiated products where the company guarantees a certain quality and the differentiation is essentially commercial (ie special conditions offered to the client on a case-by-case basis). An example would be ICI polyurethanes.The second policy is that of the endorsing brand. The company puts its name beside the product brand and this confers a status of high technology and reliability to the product. Thus, Dulux paints are accompanied by the ICI logo.The third policy makes exclusive use of the product brand. Tactel is one of the most widely sold fibres but it never mentions ICI.

The product is sold to the textile industry and to the fashion world, and it is feared that the mention of the ICI name may alter the positive images linked to Tactel. Similarly the insecticide, Karate, which is sold throughout the world, also does not make any mention of ICI. Does this have anything to do with not wanting to step on ecological toes and avoid the possibility of blame regarding the harmful effects of pesticides on ground water? This situation is not only changing through time, but it also changes according to the company.

Decis, the world leader in pesticides, makes a reference to Roussel Uclaf (Agrevo division)  on its packaging. Similarly, to benefit from its innovations, Du Pont de Nemours mentioned clearly ‘Lycra by Du Pont’ on all its communications for Lycra, the fabric that has revolutionised women’s lingerie.

Product innovations generally provide an ideal occasion to ask fundamental questions about the branding policy. How to name these innovations? Let us suppose that the Lafarge Roofing Division decides to launch a radical innovation in roof maintenance and rebuilding, associated with a guarantee for 10 years or more: an ‘all in one approach’, service oriented instead of technology oriented. How should it be called? Would a name like Lafarge Roofing Total Solution be better than a new specific international name for that innovation?

It is surely an occasion to demonstrate the ability of the group to deliver more than cement, its core symbolic product and star (which in this sense means offering high growth and high profitability). However, roofing is a high involvement decision, with both a high perceived risk and dimensions of emotion.

It may be hard for the corporation ego to recognise it, but would a Lafarge name be able to evoke the sufficient emotion needed in all real brands within a realistic timespan? Wouldn’t it be better to use it as a guarantee, and let a specific good commercial name foster the benefits, tangible and intangible, of this total solution, against the small local companies with which it will be competing?

Strategic Brand Management Related Practice Tests

Strategic Management Practice Tests