A curious thing happened when the Geek Squad technical services began to swap out their older logoed VW Beetle fleet for the Prius. Where there had previously been only the black and orange Geek Squad logo, the familiar bright yellow Best Buy logo now made an appearance on the cars. Since inception there had been no reference to the parent brand, and the Geek Squad technical service division operated as an unlinked sub-brand. But it would seem the psychological distance that had been created between the corporate and sub-brand was not working to either’s benefit.
An increasingly competitive landscape combined with the steady proliferation of brands has made building strong brands more important than ever, and at the same more difficult. The key challenge hinges on the fact that new and unknown brands, as well as and private label brands, are typically faced with lower levels of perceived quality, lower levels of trust and higher perceived risk on the part of consumers. To counter these challenges, the key strategic imperative is to utilize the corporate brand whenever possible.
Brands that utilize the corporate brand typically fall into two buckets, endorsed brands and sub-brands, but in both cases the corporate brand is included in the name of the product (Aaker, 2004). Examples would include Microsoft Excel (sub-brand or co-driver brand) and Residence Inn by Marriot (a token endorsement). In either instance the purpose is to lend brand equity from the corporate brand to the linked brand. Theoretically, an endorsed brand provides greater psychological distance between the corporate entity and the linked brand. Regardless, since qualities such as higher perceived trust, higher quality, and lower perceived risk should already adhere to well-established corporate brands, one can improve customer perception of the linked brands by lending them corporate brand equity.
There are some very good reasons for utilization of the corporate brand, including lowering perceived risk on the part of consumers, enhanced leverage across sub-brands and product categories, marketing cost savings, and cutting through an increasingly cluttered brand landscape.
Step one means addressing head-on the prevailing issues of trust, perceived risk and perceptions of quality. Consider Esurance, an online insurance provider. After acquisition in 2011 they were quick to note in their ads that they were “now backed by Allstate” and ultimately self-identified as “an Allstate company.” The Esurance website emphasizes the connection: “In business for more than 80 years, this Fortune 100 company [Allstate] has total assets exceeding $130 billion. With Allstate’s proven know-how and financial strength behind us, you can count on us to be there for you when things go wrong.” The perceived risk on the part of consumers in using an unknown brand drops significantly, while trust and perceived quality go up.
Linked strategies also provide leverage for brand building investments. Marketing and advertising expenses can achieve results across multiple brands (e.g. Coca Cola’s new brand strategy bridging all its products), rather than having to undertake the expense of individually building all brands independently. The corporate linkage provides the brand equity needed to compete, while the endorsed or sub-brand provides the flexibility to enter into whatever product categories are required and the ability to position them as necessary. Gillette’s reputation for razors and shaving creams allowed it move into aftershave and ultimately into body washes and deodorant (under the Body, Fresh Endurance, and Sport lines). Without the Gillette endorsement, entering the men’s personal care segment would have been substantially more difficult and expensive.
Of perhaps even greater significance, the brand landscape has changed over the past 10 to 15 years, with more and more private label brands coming to market. As more brands enter, differentiation becomes extremely difficult in many product categories, resulting in the commoditization of entire categories. Without sufficient differentiation, a purchase decision will typically come down to price, and price wars reduce margins. A corporate linkage can provide the added boost in confidence needed to encourage trial, while at the same time maintaining adequate margins.
For precisely these reasons, recent research as well as anecdotal evidence indicates there is a trend underway toward corporate linkage in a wide variety of industries. A Weber Shandwick study on the subject, concluded (among other findings) that the “corporate brand is as important as the product brand” and that “corporate reputation provides product quality assurance.” Quotes from consumers and executives interviewed support the corporate brand/quality connection:
“Anyone can market a product. But you need to know who stands behind it to know if it’s a quality product.”
“The company’s reputation represents the product’s quality assurance.”
The firm summed up the results of the study this way: “In this always-on, multi-platform uncertain world, corporate brands are more important than ever because they provide an anchor of trust and credibility in a sea of dynamic, continual change. A strong corporate brand is essential to unlocking the full value of the enterprise and strengthening its brands, products and services as a result (emphasis added).”
Anecdotally one can point to any number of corporate brands that explicitly endorse their products, including Trader Joe’s, Amazon (with Amazon Basics), Safeway, etc. Tesco, the UKs largest retailer specifically puts their name on most of their private label products because “the reality is that it helps [customers] believe it is a reliable, good quality product.” As the Brand Development Director at Tesco put it, “[w]e consistently do research where we check whether products are better with the Tesco name on or off. Almost without fail it is better for Tesco to be on it because customers get it. They see it as more reliable, they know it is good value and where it is coming from.” (quoted from MarketingWeek, 2012)
Even the archetypical house of brands firms Proctor and Gamble and Unilever have come out from behind the curtains. P&G and Unilever are actively promoting their corporate brands, and connecting them to their product brands (recall the “Proud Sponsor of Moms” campaign from P&G). It’s not only a cost saving move by the largest advertiser in the world, it’s also an effort to provide distinction.
Mark Ritson noted in MarketingWeek that “Coke isn’t the first big player to move south when it comes to brand architecture. Unilever famously shifted from a house of brands architecture down to an endorsed approach in 2004. P&G even more famously followed suit nearly a decade later, similarly moving down and away from its long established house of brands approach to allow its previously unknown corporate brand to create resonance among target households.” (emphasis added).
“But what P&G really wants to achieve is cross-selling – that a consumer increases the number of products purchased from the brand portfolio. People often have positive associations to one or two products in the brand portfolio, and when they see a link between these brands and other brands that are connected to the same corporate brand, they might consider these brands worth trying. (Ritson, 2015)”
Similarly, Unilever recently noted that making it easier to identify the company’s brands “is good for consumers and for our business”.
“Our research suggests consumers increasingly want to understand who is behind the brands they buy, how they are sourced and how they are made,” a [Unilever] spokesperson said. “We know that standing visibly behind our brands increases consumer trust and as a result people who buy one Unilever brand are more likely to buy others across the portfolio.” (emphasis added, quoted from Steve Jones, Mumbrella, 2014).
Another recent example comes from the big box home improvement arena. Despite a long history of not endorsing its brands, Home Depot has clearly made an endorsement move with its HDX label. While not explicitly endorsed by Home Depot (referred to as a shadow endorser), the big orange HDX on the label (and having the “X” in a different font than the “HD”) would seem to act as an endorser to all but the most inattentive Home Depot shoppers. MSI, the design company enlisted to create the look and feel, noted, “The Home Depot tapped MSI to design and introduce the HDX brand to the world. Keeping a close connection to the retailer’s rich brand name and iconic orange color, the HDX brand was designed and built on a foundation of ‘Trusted Value,’ delivering premium products at an affordable price (emphasis added).”
The recurring subtext in these discussions is also hard to avoid – it’s not just effective, it’s cheaper. Building brands is expensive, the more brands there are and the less differentiated they are, the harder it becomes to build and maintain them as stand-alone entities. Thus the corporate endorsement can “jump start” new or flagging brands and provide some differentiation while boosting trust.
Traditionally hiding the corporate brand has been appealing strategy since it can shield the corporate brand from transgressions of the product brands. However, more and more companies appear willing to forgo the benefit of shielding the corporate reputation in the quest for awareness, trust and revenue. However, there are some risks that may increase under an endorsed strategy, and any comprehensive strategy should include risk management.
There are a number of different ways a brand can engender risk. “Reputation risk” is the most serious, where brand transgressions (significant product recalls, health hazards, ethics violations, etc.) impact customer trust in the brand.
Arguably, linking a brand does incur some reputation risk. Attaching the corporate name where it had not been before may open up the brand to reputation risk if something goes horribly wrong with a product. However, a key question to address at the outset involves the risk a brand is already facing with its current portfolio, architecture and marketing strategy. That is, linking may add incremental risk, but that added risk should be assessed relative to the risk already in existence.
The forthcoming should not be taken as legal advice, but the basic idea is that companies can be held liable for issues arising from selling products, regardless of whether or not they own the brands or label them with the corporate brand, sub-brand or private label brand.
“In the United States, any seller of a product (not just the manufacturer) is liable for losses, injury or damage caused by a defective product under the doctrine of strict tort liability. The injured party may file a suit against the wholesaler-distributor and it is not necessary to also sue the product manufacturer. The fact that a wholesaler-distributor did not create the defect, or did not participate in the design or production of the product, or did not author the product instructions or warnings, is no defense. This is true if the wholesaler-distributor is selling a private label product, or if the product bears the manufacturer’s own brand name.” (National Association of Wholesaler-Distributors)
Thus Amazon stops selling hoverboards once they begin bursting into flames and Walmart is held to account for “fillers” in one of their Great Value brand cheese products, despite the fact that there is no Walmart endorsement or brand indication anywhere on the label. The point, of course, is that beyond legal liability, the source of a faulty product may be held responsible for any transgressions, regardless of whether or not the product or brand is endorsed in any way, and it may have an impact on the brand reputation either way.
When bits of debris were discovered in spinach that had been supplied to DiGiorno and California Pizza Kitchen frozen pizzas a recall was issued to ensure public safety. Did the press announcement come from DiGiorno or CPK? No, it came from the corporate owner, Nestle. Most consumers likely had no idea that Nestle owned the brands, and such a fact came out only when the recall occurred. Thus, at the very moment when separating the corporate brand from the sub-brand is most critical, it becomes essentially impossible to keep them separate. So brands such as this may end up with the worst of both worlds, the lack of linkage does not help the brand with trust, risk, or sales, and the reputation risk “fire break” proves to be non-existent at precisely the moment when shielding the corporate entity would actually be useful. Considering the reach and speed of social media in particular, transgressions can be punished with remarkable speed and attempts to hide behind a sub-brand may prove to be a questionable strategy even if it’s theoretically possible. Thus the incremental risk that is being undertaken with an endorsed strategy may turn out to be negligible.
In the Weber Shandwick study, 45% of the executives surveyed indicated that because it’s easy for people to find out who the corporate brand is anyway, they “may as well be up front about it.” The takeaway is simply that the corporate brand is unlikely to be able to hide, and if one is already taking on the reputation risk, one may as well achieve the significant benefits of linking to the corporate entity.
There are, of course, also ways to minimize the risk that should be considered in combination with a stronger corporate endorsement. Aaker acknowledges the potential for risk when using the corporate brand, but suggests that a “strong citizenship brand” can help minimize the impact of transgressions. Along the same lines, research indicates that customers that strongly identify with the corporate brand form a bond of sorts, thus making them more likely to forgive company transgressions. The caveat is that the corporation must address the issue quickly and in a forthright manner. This would suggest that a risk management plan is put in place to ensure that should a transgression occur, the company is equipped to handle it quickly and in a transparent manner. Clearly, attempting to hide behind a sub-brand to avoid responsibility is not consistent with this perspective.
Similar to business continuity plans, a simple plan might include “listening posts” to ensure consistent feedback is being received and assessed. Soliciting sales team feedback via a Product Quality Hotline might serve as a listening post and identify issues quickly before they scale. Collecting customer satisfaction and quality assessments post-purchase would serve a similar function, while potentially providing positive customer testimonials for marketing use. In addition, scenario planning should be considered, where a few possible transgressions are hypothesized and detailed plans put in place to mitigate.
While a corporate linkage is a powerful branding tool, there are certainly instances when it is probably a bad idea. An early version of this article argued that Amazon’s line of private label clothing should probably not be labeled with the Amazon name. Surprisingly, they went with Amazon Fashion and Amazon Essentials to great success. But Amazon does have other “higher end” fashion lines that are not explicitly endorsed by Amazon. Similarly, while Mars is well known in the candy industry, what is less well-known is that they are also a significant player in the pet food industry. Mars typically uses a corporate endorsement in candy, but not in pet supplies, presumably because consumers would prefer to not conflate the two when snacking.
The key question in the decision making process is whether or not the corporate brand will lend positive brand equity to the sub-brand. This can be a function of the corporate reputation in general, but the frame of reference is also a key consideration. Amazon is willing to put its name on all its Amazon Basics products. Similarly, a brand typically affiliated with candy wisely opts to hide its association with dog food. Ultimately it is the customer that decides on “goodness of fit” in terms of how broadly a brand may be conceived. So while Bic can produce pens, lighters and disposable razors, when it launched Bic Perfume it performed poorly. Perfume was outside the customer frame of reference for Bic, and thus Bic would have been better served by either staying out of the category or creating a stand-alone brand.
Similarly, when Budweiser moved into flavored beer they wanted to leverage that product brand name (Bud Lime) because they want to maintain many of the same associations that adhere to the original brand. But when Coke moves into bottled water they didn’t go with “Coke Water” or “Dasani by Coca Cola” since these do not have the connotations they want to associate with water (e.g. clean, pure, healthful). Separate brands enable one to create separate sets of associations and benefits in customer’s minds, and may advocate against a linked strategy.
The decision to endorse sub-brands with the corporate brand can have dramatic impacts on customer perception and trust. Some of the long-standing objections to linkage are in serious need of review, and while it is certainly not a “no brainer,” there are valid reasons and genuine substance behind the move towards greater corporate brand linkage.
Aaker, David, Brand Portfolio Strategy, Simon and Schuster, New York, New York, 2004
Handley, Lucy, “Debranding: The great name-dropping gamble”, MarketingWeek, https://www.marketingweek.com/2012/04/04/debranding-the-great-name-dropping-gamble/, 2012
Jones, Steve, “P&G and Unilever defend strategy of marketing corporate name in addition to brands”, https://mumbrella.com.au/companies-defend-strategy-marketing-corporate-name-addition-brands-243037, Mumbrella, 2014
National Association of Wholesaler-Distributors, “Private Labeled Products – Opportunity is not without Risk, https://www.naw.org/govrelations/advisory.php?articleid=489, 2007
Ritson, Mark, “Coke’s ‘one brand’ strategy highlights one of the great marketing themes of our lifetime,” Marketing Week, https://www.marketingweek.com/2015/03/11/cokes-one-brand-strategy-highlights-one-of-the-great-marketing-themes-of-our-lifetime/
Weber Shandwick, “The company behind the brand: In reputation we trust”, http://www.webershandwick.com/uploads/news/files/InRepWeTrust_ExecutiveSummary.pdf 2012