Brand vision is management’s view of the brand’s long-term potential. It is influenced by how well the firm is able to recognize the current and possible future brand equity. Many brands have latent brand equity that is never realized because the firm is unable or unwilling to consider all that the brand could and should become.

On the other hand, many brands have transcended their initial market boundaries to become much more. Waste Management is in the process of transforming itself from a “trash company” to a “one-stop, green, environmental services shop” that does a lot more than just collect and dispose of garbage. Its new tag line, “Think Green,” signals the direction it is taking to find ways to extract value from the waste stream through materials-recovery facilities (MRFs) that enable “single-stream recycling.”1 Google is clearly in the process of being much more than a search engine as it offers more and more services. Another brand that has already transcended its traditional boundaries is Crayola.

Without a clear understanding of its current equity, however, it is difficult to understand what the brand could be built on. A good brand vision has a foot in both the present and the future. Brand vision obviously needs to be aspirational, so the brand has room to grow and improve in the future, yet it cannot be unobtainable. The trick is to strike the right balance between what the brand is and what it could become, and to identify the right steps to get it there.

Fundamentally, brand vision relates to the “higher-order purpose” of the brand, based on keen understanding of consumer aspirations and brand truths. It transcends the brand’s physical product category descriptions and boundaries. P&G’s legendary former CMO Jim Stengel maintains that successful brands have clear “ideals”—such as “eliciting joy, enabling connection, inspiring exploration, evoking pride or impacting society”—and a strong purpose of building customer loyalty and driving revenue growth.3 The Science of Branding 11-2 describes one perspective on how firms can maximize a brand’s long-term value according to their vision of its potential.

Some of the world’s strongest brands, such as GE, Virgin, and Apple, have been stretched across multiple categories. Defining brand boundaries thus means—based on the brand vision and positioning—identifying the products or services the brand should offer, the benefits it should supply, and the needs it should satisfy.

Although many product categories may seem to be good candidates for a brand extension, as we will develop in greater detail in Chapter 12, marketers would be wise to heed the “Spandex Rule” espoused by Scott Bedbury, former VP-Advertising for Nike and VP-Marketing for Starbucks: “Just because you can . . . doesn’t mean you should!” Marketers must evaluate extending their brand carefully and launch new products selectively.

A “broad” brand is one with an abstract positioning that is able to support a higher-order promise relevant in multiple product settings. It often has a transferable point-of-difference, thanks to a widely relevant benefit supported by multiple reasons-to-believe or supporting attributes. For example, Delta Faucet Company has taken its core brand associations of “stylish” and “innovative” and successfully expanded the brand from faucets to a variety of kitchen and bathroom products and accessories.

Nevertheless, all brands have boundaries. It would be very difficult for Delta to introduce a car, tennis racquet, or lawnmower. Japanese carmakers Honda, Nissan, and Toyota chose to introduce their luxury brands in North America under new brand names, Acura, Infiniti, and Lexus, respectively. Even considering its own growth, Nike chose to purchase Cole Haan to sell into the dressier, more formal shoe market. Some brands have struggled to stretch into new markets, as did VW Phaeton.

VW Phaeton

Auto industry insiders were surprised when VW chose to introduce the $85,000 VW Phaeton luxury sedan in 2002. Named after the son of the Greek god Helios, the vehicle racked up more than $1.3 billion in development costs. Although VW also owned Audi, management wanted to make the VW brand more upscale to better compete with BMW and Mercedes. But after Phaeton failed to meet sales goals in the United States—selling only 2,253 cars from 2004 to 2006—the brand was pulled from the market in 2006. After continuing to experience annual losses in the highly competitive U.S. market, VW announced in 2011 that it would relaunch a newly redesigned Phaeton at a later date, with a higher-quality interior, renewed front and rear exterior, and new engine choices. VW sees a strong presence in the U.S. luxury car segment as vital to its goals of tripling its share in the United States and surpassing Toyota worldwide in sales and profitability.4

To improve market coverage, companies target different segments with multiple brands in a portfolio. They have to be careful to not over-brand, however, or attempt to support too many brands. The trend among many top marketing companies in recent years has been to focus on fewer, stronger brands. Each should be clearly differentiated and appeal to a sizable enough market segment to justify its marketing and production costs.

Brand positioning puts some specificity into a brand vision. Chapter 2 reviewed brand positioning considerations in detail; the four key ingredients are: (1) competitive frame of reference, (2) points-of-difference, (3) points-of-parity, and (4) brand mantra. The brand mantra in particular can be very useful in establishing product boundaries or brand “guardrails.” It should offer rational and emotional benefits and be sufficiently robust to permit growth, relevant enough to drive consumer and retailer interest, and differentiated enough to sustain longevity.

The highest level of the hierarchy technically always consists of one brand—the corporate or company brand. For simplicity, we refer to corporate and company brands interchangeably, recognizing that consumers may not necessarily draw a distinction between the two or know that corporations may subsume multiple companies.

For legal reasons, the company or corporate brand is almost always present somewhere on the product or package, although the name of a company subsidiary may appear instead of the corporate name. For example, Fortune Brands owns many different companies, such as Jim Beam whiskey, Courvoisier cognac, Master Lock locks, and Moen faucets, but it does not use its corporate name on any of its lines of business.

For some firms like General Electric and Hewlett-Packard, the corporate brand is virtually the only brand. Conglomerate Siemens’s varied electrical engineering and electronics business units are branded with descriptive modifiers, such as Siemens Transportation Systems. In other cases, the company name is virtually invisible and, although technically part of the hierarchy, receives virtually no attention in the marketing program. Black & Decker does not use its name on its high-end DeWalt professional power tools.

As we detail below, we can think of a corporate image as the consumer associations to the company or corporation making the product or providing the service. Corporate image is particularly relevant when the corporate or company brand plays a prominent role in the branding strategy.

At the next-lower level, a family brand, also called a range brand or umbrella brand, is used in more than one product category but is not necessarily the name of the company or corporation. For example, ConAgra’s Healthy Choice family brand appears on a wide spectrum of food products, including packaged meats, soups, pasta sauces, breads, popcorn, and ice cream. Some other notable family brands for companies that generate more than $1 billion in sales include Purina and Kit Kat (Nestlé); Mountain Dew, Doritos, and Quaker Foods (PepsiCo); and Oreo, Cadbury, and Maxwell House (Kraft).

Because a family brand may be distinct from the corporate or company brand, company-level associations may be less salient. Most firms typically support only a handful of family brands. If the corporate brand is applied to a range of products, then it functions as a family brand too, and the two levels collapse to one for those products.

Marketers may apply family brands instead of corporate brands for several reasons. As products become more dissimilar, it may be harder for the corporate brand to retain any product meaning or to effectively link the disparate products. Distinct family brands, on the other hand, can evoke a specific set of associations across a group of related products.15

Family brands thus can be an efficient means to link common associations to multiple but distinct products. The cost of introducing a related new product can be lower and the likelihood of acceptance higher when marketers apply an existing family brand to a new product.

On the other hand, if the products linked to the family brand and their supporting marketing programs are not carefully considered and designed, the associations to the family brand may become weaker and less favorable. Moreover, the failure of one product may hurt other products sold under the same brand.

Individual brands are restricted to essentially one product category, although multiple product types may differ on the basis of model, package size, flavor, and so forth. For example, in the “salty snack” product class, Frito-Lay offers Fritos corn chips, Doritos tortilla chips, Lays and Ruffles potato chips, and Rold Gold pretzels. Each brand has a dominant position in its respective product category within the broader salty snack product class.

The main advantage of creating individual brands is that we can customize the brand and all its supporting marketing activity to meet the needs of a specific customer group. Thus, the name, logo, and other brand elements, as well as product design, marketing communication programs, and pricing and distribution strategies, can all focus on a certain target market. Moreover, if the brand runs into difficulty or fails, the risk to other brands and the company itself is minimal. The disadvantages of creating individual brands, however, are the difficulty, complexity, and expense of developing separate marketing programs to build sufficient levels of brand equity.

Regardless of whether marketers choose corporate, family, or individual brands, they must often further distinguish brands according to the different types of items or models. A modifier is a means to designate a specific item or model type or a particular version or configuration of the product. Land O’Lakes offers “whipped,” “unsalted,” and “regular” versions of its butter. Yoplait yogurt comes as “light,” “custard style,” and “original” flavors.

Adding a modifier often can signal refinements or differences between brands related to factors such as quality levels (Johnnie Walker Red Label, Black Label, and Gold Label Scotch whiskey), attributes (Wrigley’s Spearmint, Doublemint, Juicy Fruit, and Winterfresh flavors of chewing gum), function (Dockers Relaxed Fit, Classic Fit, Straight Fit, Slim Fit, and Extra Slim Fit pants), and so forth.16 Thus, one function of modifiers is to show how one brand variation relates to others in the same brand family.

Modifiers help make products more understandable and relevant to consumers or even to the trade. They can even become strong trademarks if they are able to develop a unique association with the parent brand—only Uncle Ben has “Converted Rice,” and only Orville Redenbacher sells “Gourmet Popping Corn.”17

Although not considered a brand element per se, the product descriptor for the branded product may be an important ingredient of branding strategy. The product descriptor helps consumers understand what the product is and does and also helps define the relevant competition in consumers’ minds.

In some cases, it may be hard to describe succinctly what the product is, a new product with unusual functions or even an existing product that has dramatically changed. Public libraries are no longer about checking out books or taking a preschooler to story time. A full-service modern public library serves as an educational, cultural, social, and recreational community center.

In the case of a truly new product, introducing it with a familiar product name may facilitate basic familiarity and comprehension, but perhaps at the expense of a richer understanding of how the new product is different from closely related products that already exist.

Consistent with discussions in other chapters about what products a firm should introduce for any one brand, we can note three principles here.

The principle of growth maintains that investments in market penetration or expansion versus product development for a brand should be made according to ROI opportunities. In other words, firms must make cost–benefit calcuations for investing resources in selling more of a brand’s existing products to new customers versus launching new products for the brand.

In seeing its traditional networking business slow down, Cisco decided to bet big on new Internet video products. Although video has become more pervasive in almost all media (cell phones, Internet, etc.), the bulky size of files creates transmission challenges. Cisco launched Telepresence technology to permit high-definition videoconferencing for its corporate customers and is infusing its entire product line with greater video capabilities through its medianet architecture.18

The other two principles address the dynamics of brand extension success, as developed in great detail in Chapter 12. The principle of survival states that brand extensions must achieve brand equity in their categories. In other words, “me too” extensions must be avoided. The prin ciple of synergy states that brand extensions should also enhance the equity of the parent brand.

Given product boundaries and an extension strategy in place for a brand, the first decision to make in defining a branding strategy is, broadly, which level or levels of the branding hierarchy to use. Most firms choose to use more than one level, for two main reasons. Each successive branding level allows the firm to communicate additional, specific information about its products. Thus, developing brands at lower levels of the hierarchy allows the firm flexibility in communicating the uniqueness of its products. At the same time, developing brands at higher levels of the hierarchy is obviously an economical means of communicating common or shared information and providing synergy across the company’s operations, both internally and externally.

As we noted above, the practice of combining an existing brand with a new brand is called sub-branding, because the subordinate brand is a means of modifying the superordinate brand. A sub-brand, or hybrid branding, strategy can also allow for the creation of specific brand beliefs. Pepsi is working hard to create a number of sub-brands for its Gatorade brand.

Gatorade

First created by researchers at the University of Florida in the mid-1960s—whose nickname for its sports teams the “Gators” gave the product its name—Gatorade was a carbohydrate-electrolyte beverage designed to replace what the school’s athletes would lose from sweating in the intense Gainsville heat. Pioneering the sports drink market, Gatorade became an on-court and off-court staple for athletes everywhere. PepsiCo bought Quaker Oats and the brand in 2000, but after a decade of ownership, sales began to slump. A slew of new water and energy drink competitors helped erode Gatorade’s sales. The “What is G?” ad campaign failed to reignite sales in 2009. That year, Pepsi marketers decided to launch the innovative new “G series” to reconnect with competitive athletes and to ensure that Gatorade was not seen as “the sports drink of my father.” The G series was designed to “fuel the body before, during, and after practice, training and competition.” It consisted of three product groupings:

• Prime 01, pregame fuel in the form of four-ounce beverage pouches packed with carbohydrates, sodium, and potassium to be consumed before athletic activity.

• Perform 02, the traditional Thirst Quencher and G2 beverage lines used to hydrate and refresh during periods of heavy exertion, exercise, or competition.

• Recover 03, a protein-packed beverage to aid hydration and muscle recovery after exercise.

Other versions of G Series were also launched. G Series Pro was initially available only for professional athletes but was later broadened to target the more serious amateur; G Series Natural contained natural ingredients like sea salt, fruit flavors, and natural sweetners. G Series Fit was a healthier and low-calorie version of the product line to be used before, during, and after personal workouts.19

Sub-branding thus creates a stronger connection to the company or family brand and all the associations that come along with that. At the same time, developing sub-brands also allows for the creation of brand-specific beliefs. This more detailed information can help customers better understand how products vary and which particular product may be the right one for them.

Sub-brands also help organize selling efforts so that salespeople and retailers have a clear picture of how the product line is organized and how best to sell it. For example, one of the main advantages to Nike of continually creating sub-brands in its basketball line with Air Max Lebron, Air Zoom Hyperdunk, and Hyperfuse, as well as the very popular Jordan line, is to generate retail interest and enthusiasm. Ninety-two of the top-100-selling basketball shoes in 2010 were sold by Nike.20

Marketers can employ a host of brand elements as part of a sub-brand, including name, product form, shape, graphics, color, and version. By skillfully combining new and existing brand elements, they can effectively signal the intended similarity or fit of a new extension with its parent brand.

The principle of simplicity is based on the need to provide the right amount of branding information to consumers—no more and no less. The desired number of levels of the brand hierarchy depends on the complexity of the product line or product mix, and thus on the combination of shared and separate brand associations the company would like to link to any one product.

With relatively simple low-involvement products—such as light bulbs, batteries, and chewing gum—the branding strategy often consists of an individual or perhaps a family brand combined with modifiers that describe differences in product features. For example, GE has three main brands of general-purpose light bulbs (Edison, Reveal, and Energy Smart) combined with designations for basic functionality (Standard, Reader, and three-way), aesthetics (soft white and daylight), and performance (40, 60, and 100 watts).

A complex set of products—such as cars, computers, or other durable goods—requires more levels of the hierarchy. Thus, Sony has family brand names such as Cyber-Shot for its cameras, Bravia for TVs, and Handycams for its camcorders.21 A company with a strong corporate brand selling a relatively narrow set of products, such as luxury automobiles, can more easily use nondescriptive alphanumeric product names because consumers strongly identify with the parent brand, as Acura found out.

It’s difficult to brand a product with more than three levels of brand names without overwhelming or confusing consumers. A better approach might be to introduce multiple brands at the same level (multiple family brands) and expand the depth of the branding strategy.

How much awareness and what types of associations should marketers create for brand elements at each level? Achieving the desired level of awareness and strength, favorability, and uniqueness of brand associations may take some time and call for a considerable change in consumer perceptions. Assuming marketers use some type of sub-branding strategy for two or more brand levels, two general principles—relevance and differentiation—should guide them at each level of the brand knowledge creation process.

The principle of relevance is based on the advantages of efficiency and economy. Marketers should create associations that are relevant to as many brands nested at the level below as possible, especially at the corporate or family brand level. The greater the value of an association in the firm’s marketing, the more efficient and economical it is to consolidate this meaning into one brand linked to all these products.23 For example, Nike’s slogan (“Just Do It”) reinforces a key point-of-difference for the brand—performance—that is relevant to virtually every product it sells.

The more abstract the association, the more likely it is to be relevant in different product settings. Thus, benefit associations are likely to be extremely advantageous because they can cut across many product categories. For brands with strong product category and attribute associations, however, it can be difficult to create a brand image robust enough to extend into new categories.

For example, Blockbuster struggled to expand its meaning from “a place to rent videos” to “your neighborhood entertainment center” in hopes of creating a broader brand umbrella with greater relevance to more products. It eventually declared bankruptcy before being acquired via auction by satellite television provider Dish Network in April 2011.24

The principle of differentiation is based on the disadvantages of redundancy. Marketers should distinguish brands at the same level as much as possible. If they cannot easily distinguish two brands, it may be difficult for retailers or other channel members to justify supporting both, and for consumers to choose between them.

Although new products and brand extensions are critical to keeping a brand innovative and relevant, marketers must introduce them thoughtfully and selectively. Without restraint, brand variations can easily get out of control.25

A grocery store can stock as many as 40,000 items, which raises the question: Do consumers really need nine kinds of Kleenex tissues, Eggo waffles in 16 flavors, and 72 varieties of Pantene shampoo, all of which have been available at one point in time? To better control its inventory and avoid brand proliferation, Colgate-Palmolive began to discontinue one item for each product it introduces.

Although the principle of differentiation is especially important at the individual brand or modifier levels, it’s also valid at the family brand level. For example, one of the criticisms of marketing at General Motors was that the company had failed to adequately distinguish its family brands of automobiles, perhaps ultimately leading to the demise of the Oldsmobile, Pontiac, and Saturn brands.

The principle of differentiation also implies that not all products should receive the same emphasis at any level of the hierarchy. A key issue in designing a brand hierarchy is thus choosing the relative emphasis to place on the different products in it. If a corporate or family brand is associated with multiple products, which product should be the core or flagship product? What product should represent “the brand” to consumers?

A flagship product is one that best represents or embodies the brand to consumers. It is often the first product by which the brand gained fame, a widely accepted best seller, or a highly admired or award-winning product. For example, although other products are associated with their brands, flagship products might be soap for Ivory, credit cards for American Express, and cake mix for Betty Crocker.26

Flagship products play a key role in the brand portfolio in that marketing them can have short-term benefits (increased sales), as well as long-term benefits (improved brand equity). Chrysler put a lot of marketing effort behind its 300 models when they were hot sellers even though they made up only 22 percent of the brand’s total sales, because the 300 also appeared to provide a halo over the rest of the Chrysler line. At a time when General Motors sales were declining by 4 percent, Chrysler’s sales shot up 10 percent.27

If we combine multiple brand elements from different levels of the brand hierarchy, we must decide how much emphasis to give each. For example, if we adopt a sub-brand strategy, how much prominence should we give individual brands at the expense of the corporate or family brand?

Principle of Prominence

The prominence of a brand element is its relative visibility compared with other brand elements. Prominence depends on several factors, such as order, size, and appearance, as well as semantic associations. A name is generally more prominent when it appears first, is larger, and looks more distinctive. Assume PepsiCo has adopted a sub-branding strategy to introduce a new vitamin-fortified cola, combining its corporate family brand name with a new individual brand name, say, “Vitacola.” We could make the Pepsi name more prominent by placing it first and making it bigger: PEPSI Vitacola. Or we could make the individual brand more prominent by placing it first and making it bigger: Vitacola by pepsi.

The principle of prominence states that the relative prominence of the brand elements determines which become the primary one(s) and which the secondary one(s). Primary brand elements should convey the main product positioning and points-of-difference. Secondary brand elements convey a more restricted set of supporting associations such as points-of-parity or perhaps an additional point-of-difference. A secondary brand element may also facilitate awareness.

For example, with the Droid by Motorola series of smartphones, the primary brand element is the Droid name, which connotes its use of Google’s Android operating system. The Motorola name, on the other hand, is a secondary brand element that ideally conveys credibility, quality, and professionalism. According to the principle of prominence, the more prominent a brand element, the more emphasis consumers will give it in forming their brand opinions. The relative prominence of the individual and the corporate brands will therefore affect perceptions of product distance and the type of image created for a new product.

Consumers are very literal. If the corporate or family brand is made more prominent, then its associations are more likely to dominate. If the individual brand is made more prominent, on the other hand, then it should be easier to create a more distinctive brand image. “Marriott’s Courtyard” would be seen as much more of a Marriott hotel than “Courtyard by Marriott” by virtue of having the corporate name first. In “Courtyard by Marriott,” the position of the corporate or family brand is signaling to consumers that the new product is not as closely related to its other products that share that name. As a result, consumers should be less likely to transfer corporate or family brand associations. At the same time, because of the greater perceived distance, the success or failure of the new product should be less likely to affect the image of the corporate

or family brand. With a more prominent corporate or family brand, however, feedback effects are probably more likely to be evident.

In some cases, the brand elements may not be explicitly linked at all. In a brand endorse ment strategy, a brand element—often the corporate brand name or logo—appears on the package, signage, or product appearance in some way but is not directly included as part of the brand name. The brand endorsement strategy presumably establishes the maximum distance between the corporate or family brand and the individual brands, suggesting that it would yield the smallest transfer of brand associations to the new product but, at the same time, minimize the likelihood of any negative feedback effects.

For example, General Mills places its “Big G” logo on its cereal packages but retains distinct brand names such as Cheerios, Wheaties, and Lucky Charms. Kellogg, on the other hand, adopts a sub-brand strategy that combines the corporate name with individual cereal brands, for instance Kellogg’s Corn Flakes and Kellogg’s Special K. Through its sub-branding strategy and marketing activities, Kellogg should be more effective than General Mills in connecting its corporate name to its products and, as a result, in creating favorable associations to its corporate name.

So far, we’ve highlighted how to apply different brand elements to a particular product—the “vertical” aspects of the brand hierarchy. Next, we consider how to link any one brand element to multiple products—the “horizontal” aspects. The principle of commonality states that the more common brand elements products share, the stronger the linkages between them.

The simplest way to link products is to use the brand element “as is” across them. Adapting the brand, or some part of it, offers additional possibilities for making the connection.

• Hewlett-Packard capitalized on its highly successful LaserJet computer printers to introduce a number of new products using the “Jet” suffix, for example, the DeskJet, PaintJet, ThinkJet, and OfficeJet printers.

• McDonald’s has used its “Mc” prefix to introduce a number of products, such as Chicken McNuggets, Egg McMuffin, and the McRib sandwich.

• Donna Karan’s DKNY brand, Calvin Klein’s CK brand, and Ralph Lauren’s Double RL brand rely on initials.

We can also create a relationship between a brand and multiple products with common symbols. For example, corporate brands like Nabisco often place their corporate logo more prominently on their products than their name, creating a strong brand endorsement strategy.

Finally, it’s often a good idea to logically order brands in a product line, to communicate how they are related and to simplify consumer decision making. We can communicate the order though colors (American Express offers Red, Blue, Green, Gold, Platinum, and “Black” or Centurion cards), numbers (BMW offers its 3-, 5-, and 7-series cars), or other means. This strategy is especially important in developing brand migration pathways for customers to switch among the brands offered by the company. The relative position of a brand within a brand line may also affect consumer perceptions and preferences.29

Like individual brands, a corporate or company brand may evoke in consumers a strong association to a product attribute (Hershey with “chocolate”), type of user (BMW with “yuppies”), usage situation (Club Med with “fun times”), or overall judgment (Sony with “quality”).

If a corporate brand is linked to products across diverse categories, then some of its strongest associations are likely to be those intangible attributes, abstract benefits, or attitudes that span each of the different product categories. For example, companies may be associated with products or services that solve particular problems (Black & Decker), bring excitement and fun to certain activities (Nintendo), are built with the highest quality standards (Motorola), contain advanced or innovative features (Rubbermaid), or represent market leadership (Hertz).

Two specific product-related corporate image associations—high quality and innovation—deserve special attention.

A high-quality corporate image association creates consumer perceptions that a company makes products of the highest quality. A number of different organizations like J.D. Power, Consumer Reports, and various trade publications for automobiles rate products. The Malcolm Baldrige award is one of many that distinguishes companies on the basis of quality. Quality is one of the most important, if not the most important, decision factors for consumers.

An innovative corporate image association creates consumer perceptions of a company as developing new and unique marketing programs, especially with respect to product introductions or improvements. Keller and Aaker experimentally showed how different corporate image strategies—being innovative, environmentally concerned, or involved in the community—could affect corporate credibility and strategically benefit the firm by increasing the acceptance of brand extensions.33 Interestingly, consumers saw a company with an innovative corporate image as not only expert but also trustworthy and likable. Being innovative is seen in part as being modern and up-to-date, investing in research and development, employing the most advanced manufacturing capabilities, and introducing the newest product features.

An image priority for many Japanese companies—from consumer product companies such as Kao to more technically oriented companies such as Canon—is to be perceived as innovative.34 Perceived innovativeness is also a key competitive weapon and priority for firms in other countries. Michelin (“A Better Way Forward”) describes how its commitment to the environment, security, value, and driving pleasure has been spurring innovation. Branding Brief 11-4 describes how 3M has developed an innovative culture and image.

Corporate image associations may reflect characteristics of the employees of the company. Although focusing on employees is a natural positioning strategy for service firms like Southwest Airlines, Avis car rental, and Ritz-Carlton hotels as well as retailers like Walmart, manufacturing firms like DuPont and others have also used it in the past. Their rationale is that the traits that employees exhibit will directly or indirectly influence consumers about the products the firm makes or the services it provides.

Consumers may themselves form more abstract impressions of a firm’s employees, especially in a services setting. One major public utility company was described by customers as “male, 35–40 years old, middle class, married with children, wearing a flannel shirt and khaki pants, who would be reliable, competent, professional, intelligent, honest, ethical, and business-oriented.” On the downside, these same customers also described the utility as “distant, impersonal, and self-focused,” suggesting an important area for improvement in its corporate brand image.

Retail stores also derive brand equity from their employees. For example, from its origins as a small shoe store, Seattle-based Nordstrom has become one of the nation’s leading fashion specialty retailers through a commitment to quality, value, selection, and, especially, service. Legendary for its “personalized touch” and willingness to go to extraordinary lengths to satisfy its customers, Nordstrom creates brand equity largely through the efforts of its salespeople and the relationships they develop with customers.

Thus, a customer-focused corporate image association creates consumer perceptions of a company as responsive to and caring about its customers. Consumers believe their voice will be

heard and that the company has their best interests in mind. Often this philosophy is reflected throughout the marketing program and communicated through advertising.

Corporate image associations may reflect company values and programs that do not always directly relate to the products. Firms can run corporate-image ad campaigns to describe to consumers, employees, and others their philosophy and actions with respect to organizational, social, political, or economic issues.

For example, many recent corporate advertising campaigns have focused on environmental issues and social responsibility. A socially responsible corporate image association portrays the company as contributing to community programs, supporting artistic and social activities, and generally attempting to improve the welfare of society as a whole. An environmentally concerned corporate image association projects a company whose products protect or improve the environment and make more effective use of scarce natural resources. We consider corporate responsibility in more detail below, and Brand Focus 11.0 looks at the broader issue of cause marketing, in which British Airways has been a pioneer.

A particularly important set of abstract brand associations is corporate credibility. As defined in Chapter 2, corporate credibility measures the extent to which consumers believe a firm can design and deliver products and services that satisfy their needs and wants. It is the reputation the firm has achieved in the marketplace. Corporate credibility—as well as success and leadership—depend on three factors:

1. Corporate expertise: The extent to which consumers see the company as able to competently make and sell its products or conduct its services

2. Corporate trustworthiness: The extent to which consumers believe the company is motivated to be honest, dependable, and sensitive to customer needs

3. Corporate likability: The extent to which consumers see the company as likable, attractive, prestigious, dynamic, and so forth

While consumers who perceive the brand as credible are more likely to consider and choose it, a strong and credible reputation can offer additional benefits.36 L.L. Bean is a company with much corporate credibility.

L.L. Bean

A brand seen as highly credible, outdoors-product retailer L.L. Bean attempts to earn its customers’ trust every step of the way—by providing prepurchase advice, secure transactions, best-in-class delivery, and easy returns and exchanges. Founded in 1912, L.L. Bean backs its efforts with a 100-percent satisfaction guarantee as well as its Golden Rule: “Sell good merchandise at a reasonable profit, treat your customers like human beings and they will always come back for more.” Now a billion-dollar brand celebrating its 100th anniversary in 2012, the company retains its original image of being passionate about the outdoors and believing profoundly in honesty, product quality, and customer service.37

A highly credible company may be treated more favorably by other external constituencies, such as government or legal officials. It also may be able to attract better-qualified employees and motivate existing employees to be more productive and loyal. As one Shell Oil employee remarked as part of some internal corporate identity research, “If you’re really proud of where you work, I think you put a little more thought into what you did to help get them there.”

A strong corporate reputation can help a firm survive a brand crisis and avert public outrage that could otherwise depress sales or block expansion plans. As Harvard’s Stephen Greyser notes, “Corporate reputation . . . can serve as a capital account of favorable attitudes to help buffer corporate trouble.”

Many intangible brand associations can transcend the physical characteristics of products, providing valuable sources of brand equity and serving as critical points-of-parity or points-of-difference.38 Companies have a number of means—indirect or direct—of creating these associations. But they must “talk the talk” and “walk the walk” by communicating to consumers and backing up claims with concrete programs consumers can easily understand or even experience.

Some marketing experts believe consumers are increasingly using their perceptions of a firm’s role in society in their purchase decisions. For example, consumers want to know how a firm treats its employees, shareholders, local neighbors, and other stakeholder or constituents.39 As the head of a large ad agency put it: “The only sustainable competitive advantage any business has is its reputation.”40

Consistent with this reasoning, 91 percent of respondents in a large global survey of financial analysts and others in the investment community agreed that a company that fails to look after its reputation will endure financial difficulties. Moreover, 96 percent said the CEO’s reputation was fairly, very, or extremely important in influencing their ratings.41

The realization that consumers and others may be interested in issues beyond product characteristics and associations has prompted much marketing activity to establish the proper corporate image.42 Some firms are putting corporate social responsibility at the very core of their existence.43 Ben & Jerry’s has created a strong association as a “do-gooder” by using Fair Trade ingredients and donating 7.5 percent of its pretax profits to various causes. Its annual Social and Environmental Assessment Report details the company’s main social mission goals and spells out how it is attempting to achieve them.

TOMS Shoes used cause marketing to launch its brand.

Toms Shoes

When entrepreneur and former reality-show contestant Blake Mycoskie visited Argentina in 2006, he saw masses of children who suffered health risks and interrupted schooling due to a simple lack of shoes. Once home, Mycoskie started TOMS Shoes, whose name conveys “Shoes for a Better Tomorrow” and whose One for One program delivers a free pair of shoes to a needy child for each pair sold. The shoes themselves are based on the classic alpargata style found in Argentina. They’re sold online and through top retailers such as Whole Foods, Nordstrom, and Neiman Marcus. TOMS’s donated shoes—black, unisex canvas slip-ons with a sturdy sole—can now be found on the feet of more than 2 million kids in developing countries such as Argentina and Ethiopia. TOMS has a strong social media presence with almost a million Facebook friends. In 2011, Mycoskie launched TOMS Eyewear, using a similar One for One model in which for every pair of glasses sold, a child in need will receive either medical care, prescription glasses, or sight-saving surgery.44

Brand Focus 11.0 outlines the advantages of cause marketing, the obstacles they face, and how to successfully design a successful campaign, with particular emphasis on green marketing.

Corporate image campaigns are designed to create associations to the corporate brand as a whole; consequently, they tend to ignore or downplay individual products or sub-brands.45 As we would expect, some of the biggest spenders on these kinds of campaigns are well-known firms that use their company or corporate name prominently in their branding strategies, such as GE, Toyota, British Telecom, IBM, Novartis, and Deutsche Bank.

Corporate image campaigns have been criticized as an ego-stroking waste of time, and they can be easy for consumers to ignore. However, a strong campaign can provide invaluable marketing and financial benefits by allowing the firm to express itself and embellish the meaning of its corporate brand and associations for its individual products, as Philips did.

To maximize the probability of success, however, marketers must clearly define the objectives of a corporate image campaign and carefully measure results against them.47 A number of different objectives are possible in a corporate brand campaign:48

• Build awareness of the company and the nature of its business.

• Create favorable attitudes and perceptions of company credibility.

• Link beliefs that can be leveraged by product-specific marketing.

• Make a favorable impression on the financial community.

• Motivate present employees and attract better recruits.

• Influence public opinion on issues.

In terms of building customer-based brand equity, the first three objectives are particularly critical. A corporate image campaign can enhance awareness and create a more positive image of the corporate brand that will influence consumer evaluations and increase the equity associated with individual products and any related sub-brands. In certain cases, however, the latter three objectives can take on greater importance.49

A corporate image campaign may be useful when mergers or acquisitions transform the company. Consolidation in the financial services industry has caused firms like Zurich and UBS to develop and implement strong corporate branding strategies.

Like product advertising, corporate image campaigns are becoming more creative and often include digital strategies as an integral component. For its new “Solutionism. The New Optimism.” campaign, Dow Chemical put up a giant 46-foot chalkboard in Soho, Manhattan. Over a series of days, an elaborate set of equations described as a mathematical poem emerged, with numbers representing significant human achievements through history, such as “the year the Great Pyramid of Giza was completed,” “Golden Gate Bridge length in feet,” and “GIANT leaps for mankind.” The public was invited to participate and guess the meanings of different elements of the poem through Twitter (@giantchalkboard) and a giantchalkboard.com Web site. When the full equation appeared on the fifth day, its solution totaled 7 billion, the total world population.51

Unlike a corporate image campaign that presents the brand in abstract terms with few, if any, references to specific products, brand line campaigns promote a range of products associated with a brand line. By showing consumers the different uses or benefits of the multiple products offered by a brand, brand line ads or promotions can be particularly useful in building brand awareness, clarifying brand meaning, and suggesting additional usage applications. Sometimes a brand line campaign will emphasize a common thread running through all the products for a brand, as was the case with General Mills.

General Mills

In 2004, General Mills elected to make all its cereals with 100 percent whole grains so that each provided at least half a serving (8 grams) in every bowl. Despite the many benefits of whole grains, including lowered risks of chronic diseases such as heart disease, certain cancers, and diabetes, only 5 percent of U.S. consumers at that time got the minimum three daily servings recommended by the U.S. Dietary Guidelines for Americans. Much consumer confusion existed about what whole grains were and why it mattered. Based on research showing that consumers read their cereal boxes an average of 2.7 times, General Mills decided to promote the health benefits of 100 percent whole-grain cereal on all its product packaging, using the U.S. Department of Agriculture food guide pyramid. An advertising campaign also touted the switch to whole grains. The program met with much success, essentially adding 1.5 billion servings of whole grains to the U.S. diet each year. In 2011, General Mills partnered with Dr. Travis Stork, host of a popular daytime talk show, to donate 1 million servings of whole grain to families in need.52

Corporate names may have to change for many reasons, but they should be the right reasons pursued in the right way.

Rationale

A merger or acquisition is often the impetus to reevaluate naming strategies and weigh the existing and potential equity of each brand in its new context.53

• A new corporate name arising from a merger or acquisition may be based on some combination of two existing names, if they are strong. For example, when Glaxo Wellcome merged with SmithKline Beecham, the new company became GlaxoSmithKline. J.P. Morgan & Co. and Chase Manhattan Corporation became JP Morgan Chase after their merger. United’s name was combined with Continental’s globe logo when those two air carriers merged.

• If there is an imbalance in brand equity, the firm typically chooses the name with more inherent brand equity and relegates the other to a sub-brand role or eliminates it altogether. When Citicorp merged with Travelers, the latter’s name was dropped, although its familiar red umbrella symbol was retained as part of the new Citigroup brand look.

• Finally, if neither name has the desired brand equity, a completely new name can signal new capabilities. When Bell Atlantic purchased GTE in 2000, the newly merged company adopted the Verizon brand name, which combined veritas, the Latin word for reliability, and horizon, which was intended to signify a forward-looking attitude.

Corporate names also change because of divestitures, leveraged buyouts, or the sale of assets. When Andersen Consulting was allowed to separate from Arthur Andersen following an arbitrator’s ruling in 2000, it was required to stop using its old name by the end of the year. After an extensive naming search and rebranding project, the firm was renamed “Accenture”—an employee suggestion meant to connote an “accent on the future.” Having a new name proved especially fortuitous when Arthur Andersen was convicted of obstruction of justice in 2002 in the wake of the Enron scandal and ceased to operate as a business. Some residual negative perceptions from Arthur Andersen would likely have transferred to the Andersen Consulting brand.

Corporate names can also change to correct public misperceptions about the nature of the company’s business.54 For example, Europe’s third-largest food company, BSN, renamed itself for its Danone brand—a hugely successful fresh dairy products subsidiary, second only to Coca-Cola in terms of branded sales in Europe—because many consumers didn’t know what the old name stood for. Moreover, BSN was already used by other companies in other countries, including a bank in Spain, a textile firm in the United States, and a television station in Japan.55

Significant shifts in corporate strategy may necessitate name changes. US Steel changed its name to USX to downplay the importance of steel and metal in its product mix. Allegheny Airlines changed its name to USAir when it moved from being a regional to a national carrier, and then later to USAirways when it wanted to be seen as an international carrier. Its later acquisition of America West did not require a change in strategy or implementation but brought significant logistical hurdles.

Sometimes a name change just reflects the fact that the original name wasn’t all that good and probably shouldn’t have been chosen to begin with.

Boloco

A small New England restaurant chain selling burritos, bowls, and smoothies was called The Wrap, derived from its original name, Under Wraps. In 2005, the founders felt a name change was in order because the word “wrap” had come to mean something that was typically cold, full of lettuce, and wrapped in pita bread and then cellophane, with a packet of mayonnaise and mustard on the side. The Wrap, on the other hand, had always been about hot, grilled, fresh ingredients wrapped in steamed tortillas, more like a burrito than a wrap. The new name, Boloco, and the tag line “Inspired Burritos” were much more evocative of what the chain sold. As cofounder and CEO John S. Pepper explained, “The name has a bit of a Latin flair with ‘loco,’ reflecting what our menu focuses on—inspired burritos. Furthermore, Boloco—Boston Local Company—is a tribute to the city of Boston and our customers who gave us a chance to be successful.” Another reason for the name change was that The Wrap was too generic to be protected legally. Boloco was not a name shared by any other entity at the time.56

Finally, the desire to create distance from scandal can also motivate a name change. A new name cannot repair a company’s damaged reputation, though, and experts advise against making a switch in the midst of bad publicity; otherwise the stigma and suspicion will follow the new name. Philip Morris Co. decided to change its name to get away from its association with tobacco and emphasize its range of companies, including Kraft Foods, so in 2003, it adopted the new name Altria Group Inc. After its name was tarnished by human rights violations, military support firm Blackwater changed its name to Xe in 2007 and then again to Academi in 2011.57

Guidelines

Although renaming can yield growth opportunities, experts recommend a cautious approach. Name changes are typically complicated, time-consuming, and expensive and firms should undertake them only when compelling marketing or financial considerations prevail and a proper supporting marketing program can be put into place. A new corporate name cannot hide product or other deficiencies, and it requires extensive legal and URL vetting to make sure it is available and appropriate. Rebranding campaigns also usually forfeit the brand recognition and loyalty attached to the old name.

Many of the branding issues we discussed in Chapter 4 are relevant in choosing or changing a corporate name. Given the corporate branding strategy and marketing objectives, firms should evaluate candidate names in terms of memorability, meaningfulness, likability, protectability, adaptability, and transferability. If the consumer market is the primary objective, the name may reflect or be suggestive of certain product characteristics, benefits, or values. Consolidated Foods Corporation switched to Sara Lee Corporation, Castle & Cooke, Inc. to Dole Food Company, and United Brands Company to Chiquita Brands International.

Once the firm has chosen the new name, the substantial task of introducing it to employees, customers, suppliers, investors, and the public begins—often with the launch of a new marketing campaign and the opportunity to work with a blank canvas. Corporate rebranding is a time- and resource-intensive process that demands a company’s total commitment to succeed. A company with little consumer exposure may spend as much as $5 million on research, advertising, and other marketing costs (new signs, stationery, business cards, Web site, and so on) to change its identity, but a company with a high public profile may have to spend up to $100 million or more.58

It is important not to move too fast in rebranding. In updating brand architecture in any way, the goal is to at least preserve if not actually enhance brand equity as much as possible. Here are two companies that got ahead of themselves in their brand makeovers.

• As part of its strategy to become more of a national retailer, Macy’s acquired May Department Stores and Chicago retailing icon Marshall Field’s in August 2005. The Marshall Field’s flagship building on State Street, built in 1892 and covering a full city block, was designated a National Historic Landmark in 1978. The department store occupied 8 of its 12 floors, and generations of Chicagoans had shopped there. When Macy’s almost immediately rebranded the store as Macy’s, replacing Marshall Field’s famous awnings, signage, and green shopping bags, a consumer uproar ensued. It took years for protests to die down.59

• When online retailer Overstock.com rebranded itself as O.co in June 2011, the company revamped its Web site and changed its advertising and sponsorship to reflect the new name. Unfortunately, many consumers began mistakenly going to the O.com Web site, which was not owned by the company. After six months, the company decided to return to Overstock.com on its Web site, in online ads, and in new TV ads “for now,” though not abandoning O.co outright. The O.co name was to still be used internationally, on mobile efforts, and on the Oakland NFL stadium sign. “We were going too fast, and people were confused, which told us we didn’t do a good job,” President Jonathan Johnson admitted.60

Initial reaction to rebranding is almost always negative, simply because people resist change. Sometimes, however, an especially harsh reception will cause a firm to abandon a new name. As Royal Mail began to distance itself a bit from the UK government, which owned a majority share, it tried to adopt a new name, Consignia. A public outcry ensued, and within a matter of months, the name was changed back to the original.61 PriceWaterhouseCoopers tried to spin off its consulting unit to a new firm called Monday. The name was widely mocked, and within nine months the group was sold off and absorbed into IBM. The name change and branding were largely blamed for Monday’s lack of success.62

When UAL, the parent company of United Airlines, decided a new name was necessary to reflect the one-stop travel options that resulted from its acquisitions of Hertz car rental and Westin and Hilton International hotels, it chose the name “Allegis,” a compound of “allegiance” and “aegis.” Public reaction was decidedly negative. Critics maintained that the name was difficult to pronounce, sounded pretentious, and had little connection with travel services. Donald Trump, formerly a major UAL shareholder, said the new name was “better suited to the next world-class disease.” After six weeks and $7 million in research and promotion expenditures, the company decided to shed its car rental and hotel businesses and rename the surviving company United Airlines, Inc.63

Over time, though, if properly chosen and handled, new names gain familiarity and acceptance. Guidelines that encourage uniformity and consistency in the brand’s appearance and usage help make the implementation effective; these rules should be part of a revised brand charter (see Chapter 8).