Are you over-investing in your corporate brand?

Rajeev Batra | Updated on August 28, 2014 Published on August 28, 2014

Tata Group Chairman Cyrus Mistry (in picture) could play more aggressively in sectors where the perceived risk of purchase is high

The answer is no, if your company identifies with any of the following situations

There is an obvious imperative today to be as honest and transparent as one can be. And also to do as much as feasible to build a reputation as a good corporate citizen. There is also no doubt that in a time where it is increasingly vital to attract and retain the finest human talent, you need to become a really strong employer brand. And for that you need to build a really strong corporate brand.

However, if you believe in investing in your corporate brand without reservation, you will end up putting more money into building your corporate brand. That money could have otherwise been used to build your product brands.

These are six situations in which I think it does make sense to move branding investments from the product brand level to the corporate brand level.

Cross-selling:It’s why business-to-business companies such as GE do a lot of corporate brand-building. It’s also the logic behind Procter & Gamble’s investments in campaigns like its Olympics ‘Thank You, Mom’ commercial. 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.

High risk:When the category or culture is one where the perceived risk is high and the need for trust and confidence is high, consumers look for the reassurance of a trusted corporate brand. I have done an experimental study that shows this phenomenon very clearly. When the perceived risk goes up, the corporate brand plays a much bigger role in product purchase decisions.

So in B2B, financial services, medical services or technology it makes more sense. I am actually surprised the Tata Group is not playing much more aggressively in these spaces, because that’s where its reputation for trust and integrity would really help it.

This varies not only by category but also by culture and consumer segments. That’s why P&G has done more corporate branding for years in Japan, Korea and China. It may also matter more among less knowledgeable and more fearful consumer segments everywhere.

Social issues:When a particular consumer segment cares so deeply about a particular issue that it deliberately rewards or penalises brands because of the corporate behaviour on that issue. But one needs to separate myth from reality here.

Unilever may believe young consumers in polluted China will give it more business because of its sustainability mission, but in a recent study, we found no evidence that Chinese consumers actually did this.

Brand extensions:When the meaning of the corporate brand can help it expand into other categories by way of brand extensions. For instance, a reputation for terrific customer service can help corporate brands such as Amazon or Zappos expand into other product categories.

Positive rub-off:When a corporate’s reputation for honesty and authenticity or high standards is very relevant to the main businesses under the corporate brand. For example, in the restaurant business or food retailing, the image of the corporate brand in this case might connote higher quality and safer ingredients or produce, which is a very relevant category benefit.

Reputation matters:When everything else at the product or product brand level is top-notch, but the corporate brand reputation in something critical to business has taken a hit. For example, in the US, the retailer Target well-liked for its products, stores, prices and even its profit contributions to schools lost out because the company proved to be careless in securing consumer credit card information.

There are also at least four situations where I think it is not such a good idea to invest heavily in your corporate brand.

When your company is going after multiple consumer segments with very different attitudinal and value priorities and needs: Naturally, this is where companies use the brand architecture of a House of Brands – The Walt Disney Co with many of its different brands such as ESPN and ABC TV; The Coca-Cola Company which sells the adrenaline of its energy drinks while also selling the optimism and happiness of Coke; Microsoft and its X-Box brand; or Unilever which simultaneously claims that it believes in women not beautifying themselves for men with Dove, at the same time that it shows both men and women playing a mating game with the help of Axe. In India, there is Fair & Lovely. As markets such as India show increasing fragmentation and segmentation, investing more in corporate brands rather than in carefully targeted product brands may not make a whole lot of sense.

When the type of meaning you end up giving to your corporate brand is too broad, abstract, bland or non-distinctive, such as the usual claims about quality, social responsibility or quality of life: Many Asian companies do this because of their cultural origins and heritage and I don’t think it gets them much payoff. When you are deciding whether to buy a LG smartphone instead of a Samsung or an Apple, I doubt that the claim that LG stands for Life’s Good really plays any role in that decision.When the type of meaningyou end up giving your corporate brand is less relevant and less motivating for a particular product category or important segments within it: So the Tata Group’s reputation for trust and integrity may not help it much in most of the domestic passenger car market today where more consumers are ramping up its expectations about sophistication, styling, fun and excitement.

When a corporate brand positioningis likely to meet with a lot of understandable scepticism, such as the environmental claims of a lot of oil companies (BP comes to mind), widely perceived as green-washing, or the anti-obesity campaigns of companies such as The Coca-Cola Company, so-called lean washing.

Rajeev Batra is the Kresge Professor of Marketing, Stephen M Ross School of Business, University of Michigan. These are edited excerpts from his recent talk in India to celebrate 15 years of branding consultancy Chlorophyll.

Published on August 28, 2014
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