Companies’ attitudes to brands are changing – should they adopt a single-brand policy or penetrate markets from several different angles (multiple entries)? Some have decided to concentrate on a small number of international brands, which does not prevent them from promoting strong, local brands in their countries of origin – as l’Oréal did with Dop.
Some have concentrated on a single brand (Philips), while others have changed from a single-brand policy to a real portfolio – as in the case of Michelin, the world’s leading tyre manufacturer. This last case is extremely interesting.
Initially, Michelin found it difficult to accept the need for a brand portfolio. The company’s success was based on the fact that it focused on research in the interests of quality, under a single name – the name of the family that had created a set of values and the means to achieve a valid long-term policy.
Culturally speaking, everything at Michelin revolved around the Michelin name. Of course other brands existed, but they were often found in the basket of factories bought locally to penetrate the market – there are 80 Michelin factories worldwide. These factories did not receive any form of innovation or marketing support – they were purely tactical brands.
The problem with this is that the market is segmented. In the US automobile market, for example, there are certainly customers who want the best quality in the world, but there are also customers who want a major brand that offers good value for money, and those who only have US $100 to buy a set of tyres.
There are also the 4 × 4 and pick-up drivers who are conscious of changing fashions and want customised tyres. For these drivers, the Michelin brand is too staid. A single brand cannot meet such a diverse demand, whereas a group can. This is why BF Goodrich is positioned as a sports brand in a flourishing market that pays little attention to price, namely the 4 × 4 market.
In the United States, Uniroyal targets the cost-conscious customer and is referenced by General Motors. This market segment is serviced by the Kleber brand in Europe where, following a series of mergers and the restructuring of groups, Uniroyal is still managed by Continental, Michelin’s German competitor.
In China, the role is fulfilled by the local brand Warrior, which has the largest market share. Distributor requirements also have to be taken into account since distributors are now demanding a quality tyre with their own brand name. Michelin has two policies in this respect. The first is to supply a tyre with the distributor’s brand name, according to the latter’s specifications.
Thus, Michelin manufactures tyres for the Liberator brand, sold exclusively by Wal-Mart in the United States, and for Norauto in Europe. The second is to supply the distributor with a brand that belongs to Michelin. Thus Warrior, positioned as a middle-range brand in China, is used as the name for low-cost tyres in the United States and Europe. The same applies to the Japanese brand Riken, the Hungarian brand Taurus and the Czech brand Kormoran.
Michelin’s global strategy aims to encourage customers to move from mass-produced products to middle- and then top-of-the-range products, with the different brands making it easier to emphasise perceived difference. Second, it involves adapting to the market. For example, the Chinese market was for a long time small and elitist because of the high proportion of top-of-the-range vehicles.
Michelin’s major share in this market was aided by the ill will created by accidents in Formula 1 racing that were linked to quality defects in the tyres produced by the Japanese group Bridgestone-Firestone. As the Chinese car market becomes increasingly democratic, there is a need to offer new buyers quality tyres, since those produced locally are dangerous at the speeds that can now be reached on the new Chinese motorways.
The Michelin group must therefore provide a response to the middle range and the economical segments (if not it will be marginalised), but without endangering the reputation of Michelin as the world’s number one brand for quality. The acquisition of the leading local brand Warrior has enabled it to complete its brand portfolio in this segment. In Japan and Korea, there is also a segment of clients demanding products ‘made in the United States’. This demand has been satisfied by the acquisition of the US company BF Goodrich.
The last aspect of Michelin’s global strategy, required to complete the picture, is that, because tyres are relatively inexpensive to transport, the tyre market is truly global (unlike the car market). Today, the group’s Chinese factories manufacture tyres for distributors’ brands (private labels) in the United States, and will soon be producing Uniroyal and BF Goodrich tyres for Michelin North America. One day, they will also be making Michelin tyres.
Furthermore, the globalisation of production makes it possible to circumvent customs barriers. For example, Japanese car manufacturers cannot export cars to the United States unless they include a minimum percentage of parts made in the United States, which is why these manufacturers fit their cars with Michelin tyres made in US factories. This has enabled Michelin to penetrate the reputedly nationalistic and closed Japanese market through this, as yet, fairly low-key distribution.
This example illustrates the flexibility and adaptation made possible by a brand portfolio – from local brands through middle-range brands to life-style and top-of-the-range brands, not forgetting the connection with the distribution networks via distributors’ brands. All this adds up to global segmentation and the logic of globalised product platforms. Even so, as has been seen for the Michelin group, the branches are totally independent and the positioning of the brands is completely different in aviation, agriculture, the truck division and the car industry.
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Strategic Brand Management Tutorial
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Brand And Business Building
From Private Labels To Store Brands
Brand Diversity: The Types Of Brands
The New Rules Of Brand Management
Brand Identity And Positioning
Launching The Brand
The Challenge Of Growth In Mature Markets
Sustaining A Brand Long Term
Adapting To The Market: Identity And Change
Growth Through Brand Extensions
Handling Name Changes And Brand Transfers
Brand Turnaround And Rejuvenation
Managing Global Brands
Financial Valuation And Accounting For Brands
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