Corporate branding

In 1998 I was asked to act as Chairman of the Marketing Week Corporate Branding Conference in London. These were my opening remarks.

Good morning.

Before we start, I thought I would just say a few words to set the scene. The theme of the conference today is ‘Building and strengthening your corporate brand to maximise market share’. But, what exactly is a corporate brand? And, how does it differ from a product brand? And what if any, should be the relationship between the two?

A corporate brand is, of course, the brand or a corporation or organisation. For many years now, manufacturing companies have viewed their product brands as being among their most important assets. Some even view them as the most valuable assets. Product brands are nurtured, promoted, protected, valued and placed on balance sheets. And, they change hands for impressive sums of money. Ford, for example, paid 2.5 billion dollars for the Jaguar brand – far in excess of the traditional book value of the business. But, many companies have avoided linking their product brands to their company names – their corporate brands. These companies have deliberately remained hidden, so that they would not be damaged if problems were to arise with a particular product brand. But, despite the dangers of a company being damaged by a tarnished product, we have in recent years, seen a marked trend towards the raising of corporate profiles and the development of stronger corporate brands. One indicator of this is the increased corporate advertising activity we see today.

There is also evidence that today people do not just buy products; they want to know about the company that stands behind the product brand. Customers want to deal with successful, well-known companies; they look for a good corporate reputation and reliable after-sales service. Investors will have an interest in a company’s ethical and environmental policy, as well as its financial performance. All this is driving companies towards building better corporate reputations through stronger corporate branding. We see a marked trend towards the selling of the company, not just the product, and in some cases, not even the product. We see companies shedding product brands and focusing on the company name and fewer core products.

For some companies the corporate brand is, of course, exactly the same as the product brand. Coca-Cola, Nokia, Shell are all company and product brands. And, their audiences are necessarily wide and include customers, employees, investors, and the communities in which the companies operate. For other companies, the corporate brand represents the holding company only, with little or no visual or verbal link to products. In these cases, the corporate brand is the name of a share, a portfolio manager and little else. And, consequently, this kind of corporate brand has a much narrower audience group – the financial community mainly. But, even though it may not be used directly on products, a corporate brand can be as significant as a product brand. Just as a product brand communicates product values and brand personality, so a corporate brand can embody and project corporate values, quality standards and corporate culture.

So, what are the benefits of corporate branding? Well, there is evidence from a growing number of studies by academics and practitioners that corporate branding influences corporate reputation, which, in turn, has an impact on sales performance, financial performance and stock performance. More companies see the benefit of a stronger link between the corporate and the product brands. By linking itself to its products, a company demonstrates ownership of successful products and ownership of valuable brand assets. The association raises the corporate profile and heightens the reputation and understanding of the company.

For the product, the visible corporate brand can act as a guarantee of quality to customers and can enhance the product brand. Nestlé and Henkel are just two examples of companies that display their corporate brands in direct association with product brands on packaging and in advertising. In this way, they are actively seeking to enhance their corporate brands, at the same time as adding value to their products.

And, here is another benefit of corporate branding. As product life-cycles become shorter, as they do in, for example, consumer electronics where a product is barely launched on the market before it is replaced by a new model, the corporate brand can provide much needed continuity in a fast changing market. It can provide the platform for the launch of new products and, even, the launch of new brands. And, when everything else is equal, the corporate brand can be the tie-breaker. It can be the one thing that tips the balance in favour of a sale, or persuades an outstanding job applicant to work for a company.

Corporate brands, like product brands, can become highly valuable assets. For example, AT&T believes that the AT&T corporate brand is the most valuable single asset it owns.

But, a successful corporate brand isn’t simply built through a company name and logo in. Advertising, public relations, investor relations, internal communications, as well as all areas of corporate design, including the design of working environments, brochures, workwear, and products have a vital role to play. Companies in which all these communications disciplines support each other in a seamless, integrated and coordinated process, to convey a single, compelling brand idea, are the ones with the most powerful and valuable corporate brand identities.

 
John David Lloyd:
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