December 1999
 
Consumer Insights: Monthly Column from McCann-Erickson
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Branding Asia.com is edited by Dr Paul Temporal from Temporal Brand Consulting Rod Davies from Orient Pacific Century, providing brand strategy, research and management services to organizations operating in Asian markets.

Email: basia-enq@brandingasia.com

Paul Temporal's Asia Branding Tips: November 1999
The Trend towards Corporate Branding

December 12th 1999

Paul Temporal


One of the questions that many companies grapple with is which level of branding they should use. The main choices are:
  • Corporate branding (sometimes referred to as Umbrella or monolithic branding)
  • Product branding
  • House branding (sometimes referred to as Endorsement branding)
Procter & Gamble made product branding, where each individual product has its own brand name and resources, famous, with products such as Tide washing powder. With this strategy, the company name is either totally or virtually absent. It gives each brand the opportunity to have unique values, personality, identity and positioning. As a consequence, this approach implies that every new product the company brings on to the market is a new brand, and can be positioned precisely for a specific market segment. P&G have always taken the view that unless a product cannot stand on its own, then it does not deserve to get launched. Product branding makes it easier for the company to evaluate brand performance and worth, and makes for better resource allocation decisions. Moreover, if the product is a flop, or is involved in a marketing disaster, the bad news does not attach itself to the company name. Product branding is costly though, as advertising and promotion costs cannot be shared, and its success depends on the product itself having a sustainable competitive advantage and clear positioning in the marketplace.

Product branding can lead into product line branding if the product takes on line extensions, as is the case with Future Tide, another example being the Follow Me line of hair shampoos. It can also go further to product range branding, where a number of products or services in a broad category are grouped together under one brand name and promoted with one basic identity. An example here would be Intel's Pentium and Celeron ranges of microprocessors. Whilst generating some economies of scale in advertising and promotion, care must be taken to ensure that the extensions do not step away from the central proposition of the main product brand, and that they do not cannibalise its sales.

Corporate branding is where the corporate name is the brand, and here the products tend to be described more in alpha numeric or letter terms, and not have distinctive brand names. Such is the case with BMW. Corporate branding gives each product the strength of the corporate brand values and positioning, and saves a great deal on advertising and promotional spend. It builds up the strength of the corporate brand and its financial value. Corporate branding is very appropriate to those companies engaged in service industries, as their products are more intangible in nature. When consumers cannot see the product, the company brand name helps give them an assurance of quality, heritage, and authenticity. Many Asian companies have taken this route because the commitment and longevity of the company are judged to be of great importance in their countries. One of the great proponents of corporate branding has been Sony Corporation. The late founder and chairman of Sony Akio Morita was quoted as saying, "...I have always believed that the company name is the life of an enterprise. It carries responsibility and guarantees the quality of the product...".

House or endorsement branding uses both ideas, and the corporate name is placed alongside the product brand name, as is the case with Nestle's Milo. This allows the product brand to assume its own identity and positioning, but draw strength from the values of the corporate brand, and give consumers the assurance, in many cases related to quality, of the corporate brand. There are a variety of ways in which this can be achieved, with the corporate brand in lesser or greater prominence. House branding also gives some economies of scale in A&P, and helps with the introduction of new products, where it can be very difficult to break into mature markets without the endorsement of a strong and credible corporate parental brand name. One possible disadvantage is where the product is not favourably received and causes damage to the parental brand name.

The three methods described above are not discrete. They are actually part of a continuum that can be made use of in the branding process. The unmistakable trend, however, is towards the corporate brand end of the continuum, where with every communication the company gets double messages across, and leverages on the value of both corporate and product brand names.

This review of corporate branding is reproduced from the book 'Strategic Positioning' by Paul Temporal, published by Oxford University Press, September 1999.

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