In my last blog post on brands, I had written about brands having the ability to affect and influence companies’ operations at the corporate level, not merely at the marketing level. That is, if brands are used to determine and guide a company’s direction. If used strategically and imaginatively well, brands might even help reinstate the marketing function, which I am sad to point out, has lost its way in recent years. It might even bring some sense and long-term thinking to the department.
I say this from years of having worked on brands – both Indian as well as multinational – in the advertising and brand communications industry in India. In my experience, I have observed that brandthink at the marketing level tends to be narrow and too micro. Some of it might be due to the way the marketing department itself is structured, especially in multi-brand companies. People are given charge of individual brands, and where these do well, they become individual P&L centres. Some companies have category heads at senior levels, and often categories become P&L centres. The responsibility for big picture, corporate level brandthink ultimately lies with the chief marketing officer or marketing director, but too often it is the power brands and the categories that still lead the thinking. There is no cohesive plan for how all these lead up to the corporate brand, and indeed, for how the corporate brand filters down to the individual brands. And finally, we have the problem of digital disruption that has upset the entire balance of brand building and hastened the short-termism associated with sales.
When brands are thought of as ways to serve customers and build enduring relationships with them, they can provide direction to a company’s strategy, to its growth prospects, to its future M&A activity, and more. I had shared a diagrammatic representation of how brands can help take a company’s strategy forward in my last post. Now I wish to illustrate just what I mean by brands having the power and potential to propel a company forward through examples of three companies/brands. But before I do so, a little explanation would be in order.
Because brand strategy derives from business strategy and then goes on to create brand communication, brand salience and loyalty, it gains traction and other influences in its journey. It is tested and tried in the real market environment, it gets to compete with several others and improves along the way, it builds relationships with new consumers and strengthens old relationships and it is all the while faced with changes in consumer’s lifestyles, preferences, changes in technology, in the environment, etc. There is plenty therefore that a brand gathers in its journey, through which it then adds value to the corporate brand/company.
To get a sense of some of what the brand gains in its journey especially in relation to the consumer, refer to the brand strategy to brand salience section in the diagram below.
The force that the brand can provide when it adds value to the corporate brand, if channeled and treated in the right way, can actually not merely close the loop, but propel the corporate brand forward in a new trajectory towards further growth. This dynamic can create several virtuous cycles, if you can imagine them as part of a coiled spring, as I will be explaining in the three examples that follow. In all three cases, though, the companies have experienced, or could have experienced, huge transformations resulting from different forces.
The first is GE, which I briefly wrote about in the same previous article on brands, regarding what David Aaker had to say about GE in his book, Building Strong Brands. General Electric is a company that was born out of a life-changing invention: the incandescent electric bulb. From Edison’s invention, the company grew into an electrical appliances company, manufacturing everything from washing machines to refrigerators and air conditioners. These were the years when GE grew internationally as well and became part of people’s homes everywhere, with the “We bring good things to life” positioning and communication that David Aaker refers to in his book. From electrical appliances, the company diversified further, building on its technological strengths in electricity and power. This led to GE becoming a prominent maker of power turbines and then also, nuclear energy reactors. The company has since then, also gone into powering transportation, especially in aviation with their jet engines, healthcare equipment, and most recently, digital technology-enabled additive manufacturing and a digital diagnostic system for industrial equipment.
Through this diversification, GE has become a global industrial conglomerate, and its business has transformed from a business-to-consumer appliances company to a business-to-business industrial conglomerate. And the company has progressed from “We bring good things to life” to “Imagination at work”. In the post-electrical age which is electronic, digital, internet-enabled and increasingly services, I think it’s time for GE to give “Imagination at work” a new interpretation.
As I had mentioned in my earlier piece, I had put down my thoughts on GE and worked on a campaign for it as well, but lost all of it to termites at my parents’ place in Goa. To share my thoughts here briefly, I think that GE, with its origins in Edison’s inventions, the company’s inventiveness and innovations as well as its patents, is well-poised to take this to the next level by positioning itself as the company best equipped to take people into the future.
The focus ought to be on new, digital technologies of the future, including services that are internet-enabled, with the common thread of GE’s core strength in electronics and power. And because the focus is on the future, the company ought to be able to also connect with end-users and customers across all lines of their business, even though they are now a business-to-business company. The creative expression of the new positioning could be several: from imagination@work, to imagination th@t works to get future-ready.
However, GE needs to reposition itself for the next stage of its strategy and communicate this soon, because there will be generation(s) of people even in their home market, America, who will have no experience or memory of GE’s consumer durables and “bringing good things to life” high-growth phase. And that would leave the company with a significantly large missing link in its brand building at a generational level. Instead, the latest news one heard about the company planning to split its business into three separate public companies, with no decision on the GE brand yet, made me realise that the GE brand was perhaps never at the centre of their business. I don’t think the GE brand guided them in their decisions to go into the media business, finance and oil and gas either, which were clearly mistakes. But now that GE is back again on a growth trajectory – albeit with frequent leadership changes – the company ought to focus on its brand once again.
The next brand I’d like to use to illustrate my brand propelling strategy forward thinking is Sony, one of the world’s leading brands of consumer electronics. The Japanese company is best known for its Sony Trinitron television sets, Sony Handycam video cameras, music systems – especially the highly individual Sony Walkman and Sony Discman – and the popular gaming console, Sony Playstation. It soon became a world beater and leader in consumer electronics.
If you look at their product range, Sony’s expertise or competitive advantage lay in imaging technology and sound. In the 1980s, when Japanese companies were raiding corporate America, Sony acquired CBS, a news and entertainment giant in the US. And presto! Sony was now a media and entertainment company. Except that the company never thought of itself in those terms and didn’t realise that their strengths in imaging and sound technology was also what links it to the CBS part of the business, making them even more of a media and entertainment company now. This could well be another example of what Theodore Levitt was referring to when he wrote about how narrowly companies define the business they are in, in his famous 1960 article, Marketing Myopia in HBR.
If Sony had anticipated the progress of technology along the digital lines, the internet, the convergence of technology and screens, streaming, etc, they ought to have repositioned themselves as a media and entertainment company in the 1990s itself. Instead, they were so focused on their gadgets, that they forgot they were sitting on a treasure trove of priceless content in the form of news, sports, cinema and music.
I always thought that Sony’s biggest competitor in the media and entertainment space was Apple, if you consider how Apple manages to unify its devices and content into a cohesive whole. Of course, Apple is also an important technology company with its core still in computing, but it is also a media and entertainment company because of the way its devices combine with content. And it is increasingly shifting towards services.
Like GE, I had put down my thoughts and ideas on Sony as well, which have also been lost to termites. Sony should have gone from “Sony, the one and only” to “All the infotainment you need” in the ‘90s, well before infotainment became an automobile feature. And in the 2010s or thereabouts, Sony should have been about living, working and playing in the SonyStream (just an attempt to brand the Sony experience). I can’t emphasise enough what a huge missed opportunity it is for the company, and how it has fallen behind by a couple of decades, much like the Japanese economy itself.
The third example is closer to me and my work experience, especially at Ogilvy Delhi, because it acquired the company, Seagram, that was then our client. It is Pernod Ricard, maker of the highly popular anis-based pastis drink, Pernod, in France. The company is France’s no. 1 pastis maker and enjoys a long history in the south of France, especially Marseille. In an audacious move in 2001, the French company acquired most of Seagram, a global wines and spirits company with origins in Canada. Talk about David and Goliath. This catapulted Pernod Ricard into the world’s No 2 wines and spirits company, albeit still much smaller than Diageo the world’s No 1.
Pernod Ricard is now no longer merely a pastis maker, it is the purveyor of fine wines and champagnes such as Perrier Jouet and Mumm as well as cognacs such as Martell, all great products of France. It is also the maker of great Scotch whiskies like Chivas Regal and The Glenlivet Single Malt Scotch Whisky. In addition, the company boasts of best-selling vodkas and gins as well as liqueurs in its repertoire. Suddenly, Pernod Ricard has become a company that is about the socializing and meeting of people over drinks; about reflecting a certain lifestyle, however clichéd that might sound. As a company, it appears that it has decided to position itself around the spirit of conviviality and I don’t have any serious argument with that.
I have put down my thoughts on how Pernod Ricard ought to position itself and communicate with its audiences as a corporate brand and have shared it on my blog earlier. Now that Pernod Ricard has become a global company, I share a strategy for how it can shed whatever French provincialness the Pernod Ricard brand might be associated with, and how it can communicate its international brand strengths.
As a strategy to differentiate itself from Diageo and yet be able to compete with it, I recommend that Pernod Ricard focus on building stronger relationships with its consumers and in ways that go beyond sales of its products. I suggest that Pernod Ricard make better and more knowledgeable consumers of its wines and spirits, and become a sort of fine guide to wines and spirits appreciation. Diageo’s strategy appears to be to own the largest selling brand in each of its markets and dominate through it. Pernod Ricard cannot possibly compete head-to-head directly, but what it can do is make better consumers of its products than Diageo can ever hope to.
As Diageo owns the biggest local brands and spends big, Pernod Ricard connects better with its consumers and attempts to turn them into connoisseurs of global brands of wines and spirits, through the spirit of conviviality. Whiskies will tend to dominate marketing activity and budgets and this is a good opportunity for me to bring up the subject of categories becoming P&L centres once again. To counter the category-think, Pernod Ricard can use its more complete portfolio of wines and spirits brands to its advantage than can Diageo, which dominates in whiskies and is not present in wines and champagnes.
These are ways that brands – especially corporate brands – can build their businesses and take their strategies forward, when they put the brand at the centre of their business and focus on their core strengths and values. From a business-to-business industrial company such as GE, to a consumer-focused media and entertainment brand like Sony, and a multi-brand, consumer products or FMCG company such as Pernod Ricard, each can anticipate long-term future trends, customer tastes and preferences as well as their own core strengths to shape their growth strategies.
If in the case of GE the force for change was the changing industrial and technology landscape and the commodification of appliances, Sony missed anticipating the future of media consumption to take their strategy forward even when they had acquired the right content and intellectual property assets. Pernod Ricard was in the right place at the right time and will hopefully leverage their brand strategy to take them to the next level.