2. •Brand hierarchy
Stand-alone intimacy brands
The most precise way to develop brands is to have each brand supported by a
stand-alone set of trademarks that will build a special relationship of intimacy
with the target customer, as well as one of trust that will build over time. In this
way, the brand stands or falls on its own merits, without putting any other brand
on the line as its guarantor of quality and trust.
This approach has clear advantages. There is less confusion over what the
brand stands for than where a customer-specific intimacy brand is backed by a
trusted house brand. There is also less risk to the house brand - often the name
of the manufacturing corporation. The role of the brand is clean and
unadulterated.
However, there are also disadvantages. It is rumoured that Proctor & Gamble,
the company most associated with the "one brand per proposition" approach,
estimates that it costs around US$1 billion to establish a global stand-alone
brand in a consumer market. It is therefore no coincidence that the most
aggressive of the Internet brands, such as Amazon, AOL, Yahoo etc., have
invested some 75% of their total expenditure in brand-related marketing
activities.
3. Combination brand architectures
So, unless you are ready to bet the company, there are other
options:
•multiple trademarks with the same trademark-root, e.g. Nes
+café, tea/quick etc. for Nestle
•a combination of trademarks, e.g. Ford + Sierra, often followed by
a series of descriptors of engine size, performance and possibly
special edition, all of which may not be, or cannot be, trademarked
Many companies combine approaches. Ford has "the Ford
Corporation" to describe the company, "Ford" as the house brand,
stand-alone intimacy brands such as Aston Martin, Jaguar and
Volvo, and car brands such as Focus, Sierra, Ka. Nestle operates
in a similar way. Sometimes it uses the Nestle house brand with
different logos, at other times it uses a trademark-root brand, such
as "Nescafe", and sometimes it builds stand-alone intimacy
brands, such as "Carnation".
4. The extent to which customers associate the different brands will vary. Jaguar is
not officially endorsed by Ford but, at a guess, most current and prospective
Jaguar owners are aware of Jaguar's parentage, and appreciate it as a
guarantee of quality. Not everyone will associate Nescafe with Nestle, but many
will. They may or may not know that Carnation is a Nestle brand.
The objective of supporting a customer-specific intimacy brand with a trusted
house brand is to transfer the equity between the two. When you are building a
new brand, supporting it with a trusted house brand will give it a kick-start. At a
later stage, the new brand may add freshness and vitality, or another angle, into
the house brand. This is what British Airways intended to do with Go, and KLM
with Buzz. Go stands for a new way of flying cheaply (in competition with
Easyjet), BA guarantees that the plane will stay in the air. The danger is that
one brand will adulterate the other. Is Go quite so fresh when associated with
BA, and what happens if the Go proposition starts undermining the BA pricing
structure? This apparently troubled the business team within BA for a long time,
and for good reason - it is a question of calculating the trade-off. Easyjet in its
turn has started to use the trademark-root approach, taking the word and styling
of Easy to make the same proposition for car rental under the name of Easycar.
5. It is all a trade-off
Much of business is a trade-off, and branding is about business. Ideally, each
brand would make a clear proposition and, if you want to make a slightly
different proposition (perhaps because you have developed a new technology),
you would create a new brand.
Many established companies have used this approach in the past, ending up
with many thousands of trademarks aspiring to be brands. But in branding
terms, this approach does not work. Legally protecting several thousand
trademarks alone is punitively expensive, giving each one the investment it
needs to reach its full potential is impossible. It may work where people are
buying products, but not where people are buying relationships. Thus Proctor &
Gamble recently announced it would focus on 80 brands.
So, inevitably brands will have to be stretched. The more emotionally-based the
central organising thought, the easier it will stretch into new markets; Virgin is a
good example of this. The more specific the brand to a particular feature or
hard benefit, the more risky it is to stretch it because the legacy connotations
may not fit the new market. It is hard to imagine Snickers motor oil.
6. Issues
Some issues you may wish to address are:
•How much money do you have? - brands cost a great deal of money to build, especially
on a global basis. Using a trusted house trademark, or trademark-root, will get
recognition & gain respect faster, but may dilute the clarity of the brand.
•How many separate thoughts are you trying to get across? - one thought should equal
one trademark, at a cost.
•How quickly do you need to build respect and trustworthiness into your brand? - brands
gain trust over time. If you want immediate trust, you will need to link the new trademark
with a trademark which is already a trusted brand (which need not be your own).
•Do you want to grow and sell your brands? - trademarks cannot easily be sold in
sections. Buyers normally want the whole trademark or not at all. If your trademark
architecture is based on a house trademark, a trademark shared across a product family
or several product families, or a trademark-root, this makes it difficult to sell except as a
job lot. As with licensing or franchising, you would need to build into all agreements the
ability to confiscate the brand if the other parties do not uphold the core values of the
brand, and then you would have to police their performance.
•Are any parts of your business risky in PR terms? - the larger the span of a trademark,
the cheaper it is to run, but also the more at risk it is from damage to its reputation from
one area of the business. It is more costly, but safer, to have different trademarks to
cover different areas of the business as well as different thoughts.
7. Coca-Cola started life in 1886 as a
soda fountain beverage. A typical
local or store brand, it spread to
other outlets rapidly. Bottling was
not an initial priority. In fact, two
attorney bought the bottling rights
for most of the US for a handsome
$ 1.
8. Nokia was originally a brand of
paper and cardboard. It pre-dates
Coke, tracing its origins back to
1865. Today it is the world's eighth
most valuable brand worth $24
billion (Coke No.1 at $67 billion).
The company was in paper; it is still
in the communications business.
9. All brands have small beginnings. Even in
these days of simultaneous global
launches, there is an enormous amount of
test marketing earlier. In India, cities like
Hyderabad, Bhubaneswar, and areas like
Lokhandwala in Mumbai are happy hunting
grounds for the test marketing fraternity.
Sometimes new brands spend as much as a
year out there before they are taken
regional or national.
10. So is there a hierarchy in brands? At the bottom
is the store brand or the private label (a very
localized brand). Then comes the regional
brand, followed by the national brand and the
global brand.
The store brand needs the least investment and
the global brand the highest. Given the same
core product, the global brand cost the most.
An obvious corollary: the margins on store
brands are the least.
11. Is there also a natural
progression from a store
(local) brand to
regional, national and finally
global? What does it take to
move from one orbit to the
other?
12. It is an increase in energy level
and really need three inputs.
First is the communication
input, which means
advertising, promotions, etc.
Then is the availability
input, which is essentially
distribution. Finally, it is the
13. Unpredictability is what will make a
new brand successful against the
already entrenched. The P&G s of
the world are prepared for the
ordinary and the common place.
They take a hard knock when they
don't know what hit them. The
surprise could be in price.
14. It could be in distribution.
Would you think of getting salt
with your morning newspaper?
The Dainik Bhaskar
group, which has launched the
highly successful Bhaskar
salt, can do that because it
owns the No.1 Hindi daily in
15. It could be in advertising.
French Connection United
Kingdom was a tired old fashion
house. Then it started
advertising under its acronym
FCUK, and turned a loss of 5
million pound in 1992 into a
profit of almost 39 million
16. Progress never comes overnight.
Everyone has to climb the ladder step
by step. There are several Indian
brands that are doing it. Anchor is
going global. Bajaj Auto, Tata motors
and Raymond are already there, albeit
in a small way. The challenge for India
today is to turn from an outsourcing
center to a producer of India-owned
branded goods.
