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| The fishbowl world - the Internet has substantially increased the speed at which brands and reputations are a risk |
| Corporate and Consumer Brands: friend or foe? |
When someone buys a product, they are increasingly unlikely to distinguish between the item itself and the company that produces it. Consumers are happy to try new products from a company they respect, and will refrain from buying goods from a company that has lost their trust. But this consumer view is often not reflected by the way in which most corporations manage the interaction between their product brands and corporate reputations.
Different divisions, different cultures
Historically, brand and corporate reputations have been built and protected by different organisational functions. Product brands were conceived and built by brand management specialists, who often congregated in marketing departments. On the other hand, corporate reputation and brands have been the hallowed prerogative of CEOs and corporate affairs directors.
 | The transfer of goodwill or damage across the corporate and product brands is a dilemma for chief executives and heads of finance and marketing. |  |
Both functions have very different audience responsibilities too, marketers talk to consumers, and the corporate chiefs focus on employees, investors, government and other opinion formers. Both functions had different cultures which attracted different types of people, which exacerbated the divide.
Modern world forces greater synergy
The modern world is forcing a much greater synergy in the way companies operate. Marketers now need to take care that their activity does not attract bad perceptions of the company (who can forget the Hoover free flights promotion) and marketing decisions can have an immediate impact on share prices. Product brand decisions cannot now be made in a vacuum.
The transfer of goodwill or damage across the corporate and product brands is a dilemma for chief executives and heads of finance and marketing. So how are companies addressing this challenge?
The architecture of brands
There are a number of models for conceptualising a company's portfolio of brands, or brand architecture. Essentially, they define the relationship between the corporate centre and its operating divisions or brands. At one extreme is the umbrella brand model, where the company itself is the dominant product brand and products are created though innovation and fashion.
At the opposite end of the spectrum is the transparent brand model where the corporation is mostly invisible to the consumer. There are in-between models where the relationship between company and brand is more intricate. There is a transfer of 'goodwill' between the brands, there's also an increased risk.
Managing equity and risk transfer
It's cheaper to build one master brand. But if the company's reputation is hit hard, all the product brands are damaged. It may be more expensive to create a transparent or interactive model, but damage tends to be retained within one division of the business. Decisions about brand architecture are complicated, taking into account business potential, future revenues, customer synergies and risk management. It's this last aspect that concerns communications professionals, as three key trends drive dramatic changes in consumer behaviour:
- "I gotta believe in something". People's level of trust in institutions is eroding. But in a confusing and time-short world they are searching for simplicity and meaning. Consumers trust authentic brands and express themselves through their brand choices. This puts a personalised premium on a brand's level of trust.
- The fishbowl world. The Internet has substantially increased the speed at which brands and reputations are exposed to risk around the world.
- The cost of building and protecting a brand. Advertising media planners talk about the 7%/4% phenomenon: while the number of people an ad reaches is decreasing on average by 7% a year, the cost for that space is rising by 4%. In five years, the cost to reach the same audience will double, thanks to the proliferation of media channels.
So what effect will these factors have on the challenge of brand building and corporate reputation?
The first development is the simplification of brand portfolios. Gone are the days of huge conglomerates managing businesses as diverse as steel and yoghurt. Organisations will align their brand architecture to their corporate strategy and seek emotional synergies to build their portfolios.
One of the best examples of a company that has lived this over the past decade is Unilever. Once the home of more than 1,600 brands, it has now been rationalised into 16 billion-dollar global brands plus a few local jewels, built on two core competences: food and home & personal care.
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| We are also seeing a shift from sequential to holistic brand management. |
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| | We are also seeing a shift from sequential to holistic brand management. It's no longer about researchers finding market gaps, a new product being developed, and marketing creating a brand. Now, specialists in brand, reputation and innovation are working much closer together from the outset. This collaborative approach recognises the premium on innovation as a critical factor in retaining customer loyalty and future revenue. But it is a shift in the way that brands are built that is the most encouraging and exciting for public relations practitioners.
A unique third way to build brands?
In the classic mass launch model, TV advertising drives awareness, promotion drives trial, and the company buys its share of the market with sound creativity from its agencies. At the other end of the spectrum, cult brands achieve mainstream status through the innovator/adopter model.
Now we are seeing the development of a third way to build brands, balancing the objectivity of the former with the authenticity of the latter. It takes key learnings from political campaigning and involves building a brand from the ground up by infiltrating the infrastructures of consumers’ interests and passions.
Before even thinking about advertising on television, the brand earns its authentic stripes by creating grassroots campaigns in relevant cultural areas, including sport and the arts.
By permeating people's lives in this way, companies and products earn trust, and create the stories and myths that fuel consumers’ love of their favourite brands.
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| By Bert Moore, head of strategy and creative, Weber Shandwick in Europe
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