Once purely an investor and employee-facing corporate brand, for over a decade, Procter & Gamble has successfully leveraged the P&G brand to create global programs that build corporate equity while driving incremental product brand sales. General Mills places their Big G logo on every box of cereal it sells, and SC Johnson and Hasbro tag every TV commercial with their corporate brand. Companies have commonly promoted the corporate brand targeting current and potential investors, but the corporate brand can also play an impactful role when linked with the portfolio brand to maximize value for the enterprise.
And research supports the valuable role the corporate brand can play. 94% of US consumers state that the corporate brand plays a role in their purchases (Tenet), 70% of global consumers claim that they have avoided buying a product, over half of global consumers say that they hesitate buying products if they don’t know who made them (Balmer) and 91% of consumers are more willing to work for a company with a positive brand image (Weber Shandwick). Given this data and an understanding of the role that corporate brands play inside and outside of a company, executives have the opportunity to think even more strategically about corporate brand perceptions from internal and external stakeholders, how the corporate brand interacts with the product brand(s), and how to best utilize the corporate brand, if at all, to maximize value and drive growth. The following offers our thinking and frameworks to help senior leaders get the most value out of their corporate brands.
Contents:
- Introduction to Brands and the Perceived Value Equation
- The Perceived Value Equation
- Corporate Brand Architecture
- The Corporate Brand Perceived Value Equation
- Leveraging the Corporate Brand to Maximize Value: A Framework
- Measuring Corporate Brand Value Impact
- Corporate Brand Value Summary
- Corporate Brand Challenges
- Organizing Around the Corporate Brand
1. Introduction to Brands and the Perceived Value Equation
Before jumping into a discussion as to how corporate brands can help to maximize the perceived value of their product and services brands, let’s first align on what we mean by brands and brand equity. A brand is basically a marketing or business concept that acts as an identifier of a company, product, or service. Brands use words, logos, colors, fonts, etc. to create these unique identifiers that enable consumers and customers to easily identify, and hopefully select, their offer.
With these brands, according to David Aaker, Professor Emeritus at the University of California, Berkeley’s Haas School of Business and marketing and branding expert, come a “set of expectations, memories, stories, and relationships, that taken together account for a consumer’s decision to choose one product or service over another.” Consider what you would expect from a BMW, Patagonia clothing, or Apple products. These brand intangibles are what make up a brand’s equity. From a basic financial standpoint, brand equity represents the premium a consumer would pay vs. a generic equivalent. And it’s the previously mentioned brand perceptions and expectations that create the equity and ultimately the value differentiation when it comes to making a purchase decision. BMW, Patagonia, and Apple all command healthy price premiums in part due to the strong brand equity that they’ve established and cultivated over time. The perceived value equation below shows the relationship that brand equity has with price and the perceived value of the offer.
As the equation demonstrates, changes in brand equity can have a direct impact on the perceived value of a product, offer, or service, as well as the price premium a given product can command. Consumers or customers take into account both the benefit they believe that they will receive, plus the brand equity associated with those brands. Basically, all else equal, the stronger the brand equity, the higher the price can be without impacting the perceived value.
Given this equation, how should business leaders think about leveraging the corporate brand to maximize the value of their offers? Before we consider the impact that the corporate has on the perceived value equation, it’s helpful to first look at the various corporate brand architectures and how companies think about the corporate brand in relation to their portfolio brands.
2. Corporate Brand Architecture
Based on the company’s portfolio brand architecture, the corporate brand may be more or less integrated with the rest of the brand portfolio. The terms “branded house” (FedEx) and “house of brands” (Unilever) represent the two extremes across the corporate brand architecture continuum. two common corporate brand architectures.
However, there are numerous other approaches and examples that sit somewhere in between. We refer to these as branded house hybrids, where the corporate brand has varying levels of degrees of intuitive connection with the product brand portfolio. In the case of Amazon, the corporate brand is used for some, but not all, product brands, while for Pepsi, Macy’s and Coca-Cola, the corporate brand is used for the flagship product brand. Companies like MolsonCoors, KraftHeinz, and ConocoPhillips are examples of corporate brands that are the result of a merger of major product brands.
Finally, some corporate architectures operate as a linked house of brands, where the corporate brand acts as an aggregator of the product brands, linking them in some way to each other, as well as to the corporate brand. P&G and General Mills are examples of this approach, all of which are outlined in the corporate brand architecture continuum below:
Where a corporate brand sits on this continuum helps inform the ways in which the corporate brand can add value. In a branded house, with the corporate brand as the master brand for all of the products, there is significant synergy and message/equity clarity across the entire portfolio. Throughout the various branded house hybrids, and well as with the linked house of brands, the corporate brand can act more as an endorser that provides credibility and assurance. In a true house of brands, as is the case with VF Corp. and DIAGEO, the corporate brand remains purposefully detached from the product brand portfolio. This approach creates a clear separation between the consumer-facing brands and the investor-facing corporate brand. It also facilitates the existence of potentially incongruent product brands within the same company (e.g. Dove and Axe within Unilever’s portfolio).
These architecture choices can provide different benefits to the corporation. While branded houses, and to some extent the branded house hybrids, by leveraging a single brand across multiple products can realize economies of scale in marketing, lower costs of new brand introductions, and have a higher likelihood of new product success, houses of brands allow for an improved ability to target new customer segments and increase prospects for brand extensions and distinctly customized brands. Defining this architecture provides clarity to the organization as to how the corporate brand should connect with, at all, the product brands.
3. Adding the Corporate Brand to the Perceived Value Equation
With a better understanding of corporate brands, and how a corporate brand can interact with the product brand portfolio based on corporate brand architecture, we can integrate the corporate brand into the perceived value equation and demonstrate, at least for now, how the corporate brand can build value. As shown below, the corporate brand can act as both a benefit and equity multiplier for the product brand to which it’s connected. However, this multiplier can be positive, negative, or neutral depending on the perceptions and equity of the corporate brand.
Where:
- PV = Perceived Value; P = Price; B = Product/Service Benefit; Eq = Product/Service Brand Equity
- CEnf = Corporate Brand Endorsement Factor – accounts for the product benefit as more or less believable when the company that makes it is known
- CApf = Corporate Brand Appeal Factor – accounts for the corporate brand’s impact on the product equity when combined
Playing the role of endorser (notated by CEnf, the corporate endorsement factor), the corporate brand lends credibility and trust to the claims and/or benefit that the product brand is making. For example, even though Apple had never made a watch, the features and benefits purported by the new Apple Watch had instant credibility given that it was made by Apple.
The perceptions and appeal of the corporate brand (notated by CApf, the corporate appeal factor) can enhance or detract from the perceptions, feelings, and desirability of the product brand. Consider Goose Island, a premier craft beer brewer in the Midwest, and its corporate owner, ABInBev (coincidentally, another merged corporate brand). Combining Goose Island with the corporate brand would likely detract from the small batch, craft beer equity Goose Island has built since its founding in 1988. It’s no surprise that Goose Island, along with other craft beer brands owned by ABInBev, including Breckenridge Brewery, Elysian, and Devil’s Backbone, operate independently from the corporate brand. On the other hand, consumers might think more positively of Windex when they realize that it’s manufactured by SC Johnson, who tags their communications with “An SC Johnson Company”.
While the corporate brand value equation demonstrates how the corporate brand can impact the product brands, the reverse can be true as well. Depending on the corporate brand equity, visibility, and reputation compared to the product brand equity, the product brand can enhance or detract from the corporate brand. Alphabet gained instant equity and credibility when stakeholders associated the newly created corporate brand with Google. Conversely, Altria’s reputation and perception might be negatively impacted when connected with Marlboro or Virginia Slims, two of their portfolio brands.
4. Leveraging the Corporate Brand to Maximize Value: A framework
Given the lack of corporate brand frameworks to help guide executives with regard to leveraging the corporate brand to maximize value, Denneen & Company developed the framework that is outlined and explained below.
Framework Part 1: The strategic vision and purpose influences both internal and external stakeholders
Starting with Vision and Purpose. The first step in leveraging the corporate brand to maximize value is to define the strategic vision and purpose for the corporate brand. Setting an aspirational vision of what the company can, or wants to become, and clearly defining why the corporation exist, it’s purpose, is foundational to value maximization.
Simon Sinek, in his well-known Golden Circle TED talk, highlights the importance of purpose by reiterating “people don’t buy what you do, they buy why you do it”. Simon Mulcahy, the CMO of Salesforce.com, says “purpose is not just about donation or corporate giving – it’s got to be part of everything you do in the organization. Purpose has to be part of your brand”. Finally, Mukul Deoras, Global CMO of Colgate offers that “the world has changed a lot since 1806…[To stay relevant] we clearly define what our core stands for. We’re a great toothpaste company, but our brand believes that `everyone deserves a future they can smile about’ – and that goes far beyond product”.
Engaging Internal and External Stakeholders. Moving into the framework (see figure 6.1), an aspirational vision and purpose influences both internal and external stakeholders. A strong strategic vision and purpose generates positive external perceptions, and helps to assure external stakeholders about where the company is heading. It also is the foundation from which the internal values and culture are built, resulting in a purpose-driven and aligned organization focused on delivering the vision.
Framework Part 2: External support flows from perceptions while scale and efficiencies are realized internally
Gaining External Support and Leveraging Scale. Based on the perceptions created by the vision and purpose, internal and external stakeholders take actions that are influenced by these perceptions. External stakeholders may choose to support the corporate brand, and subsequently the product brands, more, or less. This can include shareholder investment, distribution and broader availability, customer support and merchandising, and social advocacy. Internally, an aligned organization acts more efficiently and effectively. Efficiency is driven by the ability to create multi-brand (depending on the corporate architecture) executions that support the entire portfolio, while effectiveness is improved by more strategically aligned and congruent activations. An organization that buys into the vision and purpose can often have higher levels of satisfaction and retention as well.
Framework Part 3: Driving business results
Driving Business Results. By influencing internal and external stakeholders with a strategic vision and purpose, gaining external support, and realizing internal efficiencies, the corporate brand can be shown to be a driver of overall business results, which in the end is the ultimate goal.
5. Measuring Corporate Brand Value Impact
When using this framework, there are numerous ways in which the various elements of the framework can be measured and quantified. External measures include favorability ratings, share price, analyst recommendations, customer support levels, and purchase intent, while employee satisfaction, recruiting costs and yield, organizational efficiency measures, and cost savings from scale activations serve as internal measures. Typical business metrics provide a view of overall enterprise performance.
5. Corporate Brand Value Summary
Stepping back and looking at this framework holistically, we can summarize the three main ways the corporate brand can add value. They are 1) The Value of Appeal, 2) The Value of Endorsement, and 3) The Value of Scale, as outlined above.
The Value of Appeal. By creating greater corporate appeal and generating positive sentiment and goodwill (e.g. corporate brand equity), external stakeholders “feel” good about engaging with or investing in a given company. Internally, greater corporate appeal can result in greater organizational engagement and interest from prospective employees.
The Value of Endorsement. When the corporate brand was integrated into the simplified value equation in figure 5.6, the corporate endorsement factor showed how the corporate brand lends credibility and believability to the product brands and their benefits. In the context of this framework, which goes beyond consumers, the corporate brand offers an endorsement to all external stakeholders such that they are more confident in their purchase decisions, brand support, and investment levels.
The Value of Scale. Finally, by enabling broader, multi-brand activations that cost less than if each brand activated individually, the corporate brand adds the value of scale and improves margins and profitability. And because these activations are strategically aligned with the vision and purpose, they will likely be more effective in market.
Depending on the strategic role of the corporate brand, the corporate brand architecture, and identified opportunities, corporate brand owners can look to generate value in one or more of these areas.
Corporate Brand Challenges
While there are opportunities to build value by leveraging the corporate brand, there are also numerous challenges and obstacles that corporate brand owners need to navigate. The following outlines some common challenges when attempting to leverage the corporate brand.
Brand linkage challenge. In any corporate brand architecture where the corporate brand shares its names with some or all of the product brands, any singular product issue can impact the entire portfolio under that brand name. In simple terms, one bad apple spoils the bunch.
Targeting and segmentation challenge. When a corporate brand and product brand target and appeal to different audiences, the message can be confusing. With the vast majority of P&G brands targeting women, the “Thank You Mom” idea worked to aggregate all of the brands under a message that resonated with that female target. However, this also created communication and campaign integration issues for Gillette and Old Spice, two prominent P&G brands that target men. Corporate brand leaders should take care regarding their communications to minimize potential confusion across different targets or segments.
Corporate brand flexibility challenge. Unless the architecture is a true house of brands, corporate brand owners should be conscious of the product limitations based on the corporate brand equity. And if the product brand is completely incongruent with the corporate brand equity, ensure that the corporate and product brands remain separated. It would surely be a detriment to the consumer value equation if Clorox connected their corporate brand with Hidden Valley Ranch, or any of their other food brands.
Corporate brand over-extension challenge. The branded houses of GE and Virgin extend into many different categories, some of which are arguably beyond the natural extension of the corporate brand equity (e.g. GE Capital and Virgin Wines). While the brands may be able to flex and grow to make sense in the more disparate categories, corporate brand owners should understand the potential risk of extending the branded house too far, or into categories that could dilute the current corporate brand equity.
Brand incongruity challenge. When looking across the entire portfolio of brands, corporate brand owners need to be attuned to identifying equity conflicts between the product and/or corporate brands. Opposing consumer messages from different brands can lose credibility when stakeholders realize the messages are from the same company. For example, Unilever has been criticized for promoting Dove’s campaign for real beauty, while at the same time running sexually charged Axe messaging, putting those brand messages in direct conflict and confusing stakeholders as to Unilever’s values.
Organizing Around the Corporate Brand
So, who should manage and be responsible for the corporate brand? Basically, it starts with the CEO, who is ultimately accountable for the corporate brand. However, as the value maximization framework outlines, the corporate brand should be viewed as a strategic, business-building asset. Therefore, it follows that the corporate brand should be managed and overseen by a strategic leader. In many cases, the individual with the responsibility for managing the corporate brand is the Chief Marketing Officer (CMO), who also handles corporate brand messaging and communications. That said, the ultimate accountability for the corporate brand, given how closely it’s tied in with the company’s vision and purpose, and overall strategy, should almost always reside with the CEO. The corporate brand management pyramid below shows a corporate brand responsibility pyramid, and how corporate brand assets and communications can effectively be owned and developed by the corporate brand owner (a strategic business leader, often the CMO) and deployed through functional managers.
As the pyramid demonstrates, while the CEO is ultimately accountable for the corporate brand, a strategic business leader, such as the CMO, most often has responsibility for the corporate brand equity and assets, as well as for identifying and realizing opportunities for the corporate brand to build enterprise value. Various managers then interface with the corporate brand owner to gain access to corporate brand assets, communications, and guidance in order to tailor their communications to their various corporate brand stakeholders in a manner consistent with corporate brand equity. The entire organization then has responsibility of acting in ways consistent with, and reflective of, the corporate brand.
Conclusion
In conclusion, the corporate brand is a key strategic asset that can help build and maximize total enterprise value, while also mitigating risk. Depending on the corporate brand architecture and strategic intent of the corporate brand, it can help to build value by creating more appeal across both internal and external stakeholders, acting as an endorser of the product brands, and enabling scale and efficiencies. Starting with the CEO, business leaders should continue to identify and realize opportunities to strategically leverage the corporate brand to build value across both their organizations and their brand portfolios.
P. Ryan
July 2022
Denneen & Company is a growth strategy consulting firm that has been helping companies find and follow their unique paths to growth for over 28 years. With experience across 20+ industries, 40+ consumer categories, and 40+ countries, Denneen & Company consultants leverage their former backgrounds as industry practitioners and past engagements to develop practical and achievable strategies based on rigorous analysis, breakthrough insights, and a collaborative approach. To learn more, please visit denneen.com.
Phil Ryan is a Vice President at Denneen & Company where he has led numerous client engagements over the past seven years. Prior to consulting, Phil was a brand and business leader at Proctor & Gamble. He lives with his wife and three children in Arlington, MA.
