Company behind the Brand
The Company behind the Brand. There has been a great deal of interest in the concept of the parent or master brand and its relationship to its product brands over the past few years. The research we did recently on this topic put a stake in the ground by declaring that the two are interdependent and the parent brand was no longer the stepchild of the product brand. A recent article in Hindu BusinessLine asked the question of how companies would know if they were over-investing in the corporate brand at the expense of the product brand. The author Rajeev Batra, professor of Marketing at the Stephen M Ross School of Business at the University of Michigan, says there are six situations where it makes sense to invest more in the parent than the product brand and four situations when it makes less sense.
Makes Sense to Invest in the Corporate Brand
1. When it comes to cross-selling — it makes sense if you want the consumer to buy another one of your products and the parent brand provides assurance that it is a wise choice. Using a P&G example, the author says: “The logic is that if the average US household which currently buys five P&G products can be induced to buying a sixth by virtue of it being a P&G product, it will lead to a 16 per cent increase in sales.”
2. When it comes to high risk — your consumer might not know who you are and they wonder if they are taking a risk by selecting your product or service? The parent brand acts as a guarantee that they they are in good hands by selecting your product. High risk selections might occur when selecting an airline, a bank, pharmaceutical or medical procedure.
3. When it comes to social issues — your company wants to attract a segment of customers who already care about particular social issues such as sustainability, obesity, etc. and you want to guarantee that your parent brand is having a decided impact on society and the environment. What your company says and does about social issues matters increasingly today in product consideration.
4. When it comes to brand extensions — if your company wants to introduce a new product or extend the products it already has, the parent company can make that happen more easily by adding its reputational luster to the extension.
5. When it comes to having a positive rub-off — the halo from the parent brand can often work magic on a product brand. Consumers who see a corporate brand as standing for high quality, integrity and transparency make the leap in their heads that the products are made with the same attention to intangibles.
6. When it comes to reputation overall — having a good reputation can help a company recover faster after a crisis or mishap. Investing in a company’s good name now has tangible benefits, especially when you might need it tomorrow.
Batra also lists four situations where it might not make sense to spend your dollars on the corporate brand at the expense of the product brand.
Makes Less Sense to Invest in the Corporate Brand
1. When it comes to appealing to many diverse consumer segments that sometimes clash or conflict with each other. As he says, this is the House of Brands concept where each product brand might do better standing alone. For example, If a company’s product brand appeals to less healthy eating behavior for teens and another company product appeals to an organic ingredients offering, it might not make sense to overinvest in the corporate brand. Let’s just say it is hard to imagine Disney having a high risk theme park in addition to its parent-friendly ones and trying to position the Disney brand well under those circumstances.
2. When the corporate brand image is too broad and diffuse that it is not distinctive enough. We have all seen examples of companies that communicate empty and meaningless promises. The intense focus on innovation in recent years where many companies are calling themselves the most innovative ones in the world has baffled me.
3. When the meaning given to the parent brand is not relevant to the consumers it is trying to capture. Yes, sometimes companies miss the mark.
4.. When the corporate brand positioning is not believable and invites skepticism. This is the example we are all familiar with when a company says one thing (i.e., societal- or environmentally-wise) and behaves to the contrary. Do I dare say BP.
The four examples Batra gives as to why investing in the corporate brand might not be an efficient use of resources are quite valid. However, my belief is that if investment in the corporate brand is done right, it nearly always pays off and can actually provide the necessary filter for leaders to make better decisions about what products should be invested in or what acquisitions to make. There is no reason why companies should not be able to identify their relevance to all customers, even if their products vary. Narrowing down that corporate positioning to its core essence is what companies are supposed to do to build enduring reputations that last. Understanding what your company stands for is more critical than ever and the corporate brand reputation should serve for something all encompassing that guides customers and inspires employees. Research is important in helping deter companies from marching off in the wrong direction. In a world where the Internet is at everyone’s finger tips and word of mouth is all around us, it makes perfect sense to build the corporate brand so that it is infused with meaning that matters to all its brands.