Corporate brand by any measure is very important to contemporary organizations. Corporate brand has become a valuable asset for a company, which some times have value beyond the book value.
To answer the question stated above it is important to explain what a corporate brand is. It is then also important to look into the issue how a corporate brand is beneficial to an organization. What kind of financial benefit it can give to an organization and to what extent it helps organizations to gain competitive advantages over its competitors.
There are several definitions of corporate brand presented by different authors and scholars. Some of the defamations are as follow:
David A. Aaker defined corporate brand as “As the brand that defines the organisation that deliver and stand behind the offering, the corporate is defined primarily by organisational associations. In particular, a corporate brand will possibly have a rich heritage, assets and capabilities, people, values and defined, a local or global frame of reference, and a formance record. ”
(Brand portfolio strategy by David A. Aaker, California management review vol46 no3 spring 2004.)
According to Balmer (2003) the corporate brand is seen as a sixth identity type referred to as the covenanted identity, which is viewed as independent and distinct. Balmer (2001) developed the mnemonic C2ITE (Cultural, intricate, tangible, ethereal and commitment), this opposing the corporate brands unique attributes and helps understand key characteristics of the corporate brand.
While Lawer and Knox (2004) state that a corporate brand is a way to conceive, manage and communicate corporate brand values in order to guide managerial decisions, actions and normative firm behavior. It can then state that brand is generally the name of a product or mark of ownership.
So being able to express its self truly and openly and then communicate the message to its consumers clearly.
“The corporate branding philosophy, at it's core, represents an explicit covenant between organizations and it's key stakeholder groups, including customers” (Balmer & Grayser, 2003)
Corporate branding can be defined as “Corporate branding refers to the practice of using a company name as a product brand name. It is an attempt to leverage corporate brand equity to create product brand recognition.”
The keeping of an organizations promise can lead to corporate brand equity; This is when consumers hold favorable, strong, and unique associations about the corporate brand in memory (Keller 1993). There are many advantages of corporate branding as corporate brands represent the class and well known by every body, for example once David Beckham said, “I can't even imagine using any nothing else then Adidas”. Though he is the contracted model for Adidas but at the same time it reflects that Adidas as luxurious and expensive item and also a status symbol. This made sports people with money buy that item. Rolex watches can also be an example for this, Rolex are known as the watches for high-class people. This makes people with money buy the Rolex watches to show the class. This is the brand equity of Adidas and Rolex.
Brand equity can be transferred to other products as well. This can be seen in the case of VW buying the Skoda. Before VW took over Skoda's sales were declining but in recent years Skoda has improved and its sales has gone up as well due VW's transferred its brand equity to Skoda. GM motors have also bought different corporate brands such as Daewoo and Volvo and have transferred the brand equity to them brands.
This does not stop here there are so many other benefits an organistaion can have by having a corporate brand. Newman (2001) suggests that success rate of a new product or service can increase by twenty percent if it has a corporate brand behind it. Also costs could be reduced when launching the product or service than if it did not have a corporate brand supporting it.
This is due to the trust and credibility build by the organizations. Consumers prefer to stay with the organization they have dealt with before. When Mercedes build the 4 * 4 people have bought the vehicles even though it was the first time Mercedes has launched a 4 * 4 vehicle. Mercedes has achieved this through due to the string branding and consumer trust on them.
Corporate brand has a longer life as compare to other resources with in the company. For example Coca Cola the brand is much older then the plants and location used to make it. It is also older then the human resources those make the product. Grant (1991) stated that the corporate brand tends to decay slowly, and strong corporate brands can decrease the competition in the market. Products have shorter lifecycle so corporate brands are preferred over just product brand.
A corporate brand is an intangible asset so it is difficult to copy as it is not a product from a production line. Corporate brand represents a logo or a slogan that is protected by laws, which are in place. Slogans or logos are more secure then the product it self as it is easy to copy a product but it is nearly impossible to copy a logo.
Corporate brand helps achieving the economies of scope, which means it is less costly for a firm to produce two separate products than for two specialized firms to produce them separately. For example Nike has a slogan of “Just Do It” across the globe and through its advertising Nike can promote its different products and services.
Due to advancement in technology and in communication world is becoming a small community. Consumers are more knowledgeable then ever. Globalization is common between all the big organizations. Corporate brand is important for the globalise organizations to show that their core value is the same wherever the product is.
Corporate branding is also very useful when organizations want to enter into a new market. This can be seen when Samsung entered into the mobile communication market, Samsung did not have much experience in mobile market but their recent mobile model Samsung D500 has outclassed Nokia and Motorola's models. This is gain mainly through innovation but brand equity played its part as well. Samsung is brand which consumers can trust and is known for a time.
According to Balmer (2001) a corporate brand is seen as a rare entity due to brands unique pattern of development. Companies with corporate brands have competitive advantages over those that do not have corporate brand. The brand name, logo plays a vital role in awareness and it also provides the peace of mind to customers. Olins (2001) classed Manchester United and British Airways as organizations with corporate brands. Reason that these organizations have corporate brands is because that's how they presented their brands through marketing such as TV advertising, Billboards and other marketing campaigns. These companies have spend millions of pounds on advertising to have a corporate brand, as organsiations with corporate brand believes that this will give them a competitive advantage. It can be stated by considering Olins statement that corporate brand is important for the organizations.
Davis suggests corporate brands are not required by some companies, for example those that may have a portfolio of brands such as Unilever and Proctor and Gamble, tends to use the branding of products rather than implementing a corporate brand. This issue of importance of having a corporate brand has not been taken by these major organizations in past for example surf is a product by Unilever. Unilever's general emphasis is on product branding as compare to one corporate brand. But the importance of a corporate brand has been explored on these big companies.
Balmer stated in his journal of general management “Mighty proctor and gamble who traditionally espoused the idea that their brands should stand on their two own feet, have realized the importance of managing Proctor and Gamble as a brand. The company chief executive decided that in the future the company would be presented as the ultimate corporate brand. ”
(Corporate Branding and Connoisseurship by Balmer JMT Journal of management Vol 21 no 1 autumn 1995.)
From statements above it can be stated that corporate brand provides loyalty which means that consumers will only stick with one brand and will not choose any other product. This can true in the case of products like Rolex or Mercedes but when it comes to ever day's essentials such as milk and bread corporate branding is in that important, as we will not travel an extra mile to get a Safeway milk. Many people will just go to a nearest corner shop or a service station to get a bottle of milk.
Organizations are now dealing with the much bigger challenge in term of branding. It has discovered that corporate brand has complicated and difficult rapidly changing fundamentals. Balmer (2001) states that corporate brands are cultural as they reflect the organizations subcultures. Consider the example of Mercedes its corporate brand stands for high class, luxury and high performance and it can be clearly seen in sub culture of C-class S-class and M-class.
The key question arises here should organizations adapt the concept branding? Corporate brands have generally longer life cycle then the product brand. There is a bigger drawback attached to corporate branding as if a company gets a bad publicity of its corporate brand it will affect its all the products. Balmer (2003) describes corporate brand as having the role of a driver for many residents, therefore highlighting the increasing importance of corporate branding. Olins suggested that the organizations with no understanding of what are they about tend to fail in long-term.
Corporate branding must be used properly and organization with strong Corporate branding must not take advantage of strong branding and keep the promises and behave in an ethical way. Coca Cola has used the advantage unethically when first introduced its water Dasani in UK and it was later discovered it was nothing but tap water from general water supply. It can also be seen in McDonald's case that they portray themselves as an organization that care about its customers by offering them clean food but there have been occasions when some of McDonald's outlets were forced to close down due to supply of unhealthy food. It is important for the organizations with strong corporate branding such as Coca Cola, and Mercedes to stick with the values they present.
Essay above suggests that the corporate brands are created to obtain the significance awareness in a competitive market. Corporate brand have impact both externally and internally. Corporate brand have many benefits such as gaining the competitive advantages over its competitors and achieving the economies of scale. Organization must manage their corporate brands effectively and efficiently in order to get the maximum benefit.
It can also conclude from the authors mentioned above that many organizations without a strong corporate brand will face difficulties in coming future. So organizations without a corporate brand such as Proctor and Gamble and Unilever have to work towards achieving one strong corporate brand.
Effective and strategic support of a corporate brand can make it easier for organizations to do business. Corporate brand is stronger then the quality and price of a product but to make it successful right strategies are required.
So as John Stewart, former CEO, Quaker stated, “If this business were split up, I would give you the land and bricks and mortar, and I would take the brands and trademarks, and I would fare better then you.”
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