Benefits of the Corporate Brand
There are several benefits from employing a corporate branding strategy which a corporation can exploit. First of all, a strong brand including a corporate brand is no less or more than the face of the business strategy hence portraying what the corporation aims at doing and what it wants to be known for in the market place. The corporate brand is the overall umbrella for the corporations’ activities and encapsulates its vision, values, personality, positioning and image among many other dimensions. Think of global banker HSBC which has successfully implemented a stringent corporate branding strategy. They employ the same common expression throughout the globe with a simple advertising strategy based on the slogan “The world’s local bank”. This creative platform enables the corporation to bridge between many cultural differences, and to portray many faces of the same strategy.
A corporate branding strategy creates simplicity as it always will stand on top of the brand portfolio as the ultimate identifier of the corporation. P&G has notoriously been known for a multi-brand strategy (partial brand portfolio pictured above) and yet again, the corporate brand P&G is still what encapsulates all activities by the company. Depending on the business strategy and the potential need for more than a one-brand architecture in the case of P&G, which markets many different brands under their umbrella, a corporate brand can very often assist the corporation and the management to focus in on the core vision and values. Once this overall platform has been established and implemented, it serves as a great stepping stone for revisiting any other brands in the corporations’ portfolio and to have a new approach and look at their various brand identities. This ultimately will lead to the final brand architecture of the corporation and set the strategy for how branding and brands will play an important role to achieve the corporate objectives.
When the corporation decides to implement a corporate branding strategy, some cost efficiencies can often be achieved as opposed to a large multi-brand architecture where the corporate brand plays a smaller or insignificant role. Today, there is a general requirement for high level of investments to maintain efficient production capabilities and scale in many industries (for example technology and pharmaceutical), and to stay competitive in R&D for new products and services. Product life cycles are getting shorter and shorter for many industries and products, and corporations have to seek solutions to recover their development and marketing costs within the shorter life cycles. These factors combined are forcing corporations to evaluate their cost structure, and a corporate branding strategy can help the management achieve their goals by bridging across product categories and services as opposed to a multi-brand strategy.
There are obvious cost efficiencies in terms of reduced marketing and advertising spending as the corporate brand replaces budgets for individual product marketing efforts. Even a combined corporate and product branding strategy can often enable management to reduce costs and exploit synergies from a new and more focused brand architecture. The Apple brand has established a very strong position of being a design-driven and innovative company offering many types of products and services. Their corporate brand encapsulates the body and soul of the company, and the main messages from the company uses the corporate Apple brand. Various sub-brands then help to identify the individual product lines.
But one should carefully avoid the potential trip of stream-lining the brand portfolio just based on a raw cost perspective as secondary effects can play a significant impact of the overall revenue stream and on the stakeholders image of the corporation. The basic guideline is based on revenue contribution of the various brands. If profit contribution can be enhanced by reducing the number of brands, the portfolio is too big. Reversely, if the overall profit contribution can be enhanced by adding new brands, the portfolio is too small. Hence an individual wish for strong corporate branding must be evaluated carefully and all factors taken into consideration.
In the last couple of years, corporate brands have become very strong drivers of financial value for corporations. Corporate brands by themselves have become valuable assets on the company balance sheet with market values very often much beyond book value.
The founder of SONY, Akio Morita, once said: “I have always believed that the company name is the life of an enterprise. It carries responsibility and guarantees the quality of the product”. Therefore, a strong and well-balanced corporate brand orchestrated throughout the corporation by a passionate CEO and his team can lead to very successful and sustainable financial results.