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The Purpose of Corporate Branding

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[Photo of Apple]The competition in the global business environment is tough and achieving a unique position and competitive advantage becomes more and more difficult and expensive. Especially for the small and medium enterprises that have limited resources to invest in high tech production capabilities or in intensive R&D activities, branding provides an effective answer. Even though small and medium sized enterprises (SME) do not compete with the global companies head on, building strong brands would provide them with a sustainable competitive advantage and facilitate not only profitability but also long-term growth.

Global corporations and SMEs alike are increasingly becoming aware of the enhanced value that corporate branding strategies offer them. Branding in the classic sense is all about creating unique identities and positions for products and services hence distinguishing the offerings from competitors. Corporate branding employs the same methodology and toolbox used in product branding, but it also elevates the approach a step further into the board room, where additional issues around stakeholder relations (shareholders, media, competitors, governments and many others) can help the corporation benefit from a strong and well-managed corporate branding strategy.

Not surprisingly, a strong and comprehensive corporate branding strategy that would guide the company into the future requires the direct attention of the top management of the company.

Corporate branding is often, but wrongly, referred to as an exercise where the company logo, the design style and color scheme are changed. Naturally, these are important elements to evaluate and potentially change at a later stage once the strategy has been decided upon. It is often accompanied with a new corporate slogan, and then everyone expects results to occur during the project. Corporate branding is a serious undertaking which entails more skills and activities than just an updated glossy marketing facade with empty jargon.

A robust corporate brand would allow a company to create a strategic blueprint for the company based on the corporate brand identity. This process would not only differentiate the company in the highly competitive SME industry sector, but also facilitate value addition by allowing the company to charge price premiums and  lateral expansion. This focus on creating a corporate brand would also imbibe in the company a culture of aligning innovation and leadership around the overall brand identity.

A corporate brand also allows SMEs to motivate and internalize the vision and aspirations of the company with the employees. Hence a corporate branding strategy can enable SMEs to further leverage on its tangible and non-tangible assets leading to branding excellence throughout the company.

There are thousands of unique corporate brands. Companies like Microsoft, Intel, Singapore Airlines, Disney, CNN, Samsung, Mercedes and many others are good examples to think of. The global financial powerhouses HSBC and Citibank have both in recent years acquired a vast number of companies across the globe and adopted them fully under their international corporate brands with great success and within a surprisingly short timeframe.

A strong brand is about building and maintaining strong perceptions in the minds of customers. This takes time to establish and many resources to keep, but no one remember what the local banks used to be called, and HSBC and Citibank have managed to transfer the brand equities from the acquired brands into their own corporate brand equity.

An ancient and famous Indian proverb says: “If you don’t have a goal, how can you know when you have arrived?” In order to establish and grow a corporate brand successfully, the management team has to track and measure the strength of the current corporate brand and the entire brand portfolio. Research can help understand the business landscape in more depth and serves as a foundation for the future corporate brand strategy. Modern research tools have become very sophisticated and at the same time easy to employ. There is no excuse for not trying to get a market and customer driven perspective of the brand portfolio  including the corporate brand.

What are the Benefits of a Corporate Brand?

There are several benefits from employing a corporate branding strategy which an SME 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 SME 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 again of 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 encompass all the activities of an SME. Once a corporate brand has been established and implemented, it serves as a great stepping stone for revisiting any other brands that an SME operates and to have a new approach and look at their various brand identities. This ultimately will assist the SME in resource allocation – both financial and managerial – and set the strategy for how branding and brands will play an important role to achieve the corporate objectives.

When an SME decides to implement a corporate branding strategy, some cost efficiencies can often be achieved as opposed to a large multi-brand system 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 companies in general 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 an SME 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 all the brands 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 by a passionate CEO and his team can lead to very successful and sustainable financial results.

print ed: 02/08


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