MARKETING FOCUS: Who needs corporate brands? - There is new and widespread enthusiasm for corporate branding. Harriot Lane Fox investigates whether the strategy works

There are few more effective ways to send people scurrying for the

sick bag than to have big corporations come out of the shadows and boast

about what marvellous chaps they are.

But, like it or not, this tactic is being used more and more. Nestle and

Kellogg are among many companies now experimenting with corporate

branding. The motives behind corporate campaigns vary widely, but all

are symptomatic of a new-found enthusiasm for corporate

chest-beating.

The question is, why are companies doing it and why do they think it

works?

In the current marketing climate, when such a premium is placed on

accountability, it is surprising that corporate branding is receiving

such prominence.

Compared with product-related initiatives, it is hard to measure its

impact and justify its expense. It also seems to fly in the face of

well-documented findings that tell us the modern consumer is

ultra-cynical, especially toward companies with controversial pasts

trying to sell a new, improved image.

So, what are we to make of campaigns such as that from British Nuclear

Fuels, which included lavish TV ads to persuade us of the virtues of

nuclear power, and the ads by Monsanto, trying to explain its work in

genetically modified food? And how about Nestle, which has been steadily

increasing the prominence of the corporate brand across its portfolio?

These companies have very different reasons for leveraging the corporate

brand, but they all think it will strike a chord with consumers.

Image worries

Camelot is another company to have shown its faith in the strategy, by

appointing Sue Slipman as its first director of social

responsibility.

Having suffered its own ’fat-cats’ brouhaha last year, Camelot will be

looking hard to improve its reputation.

When you consider the external forces acting on companies in all

sectors, the fact that many fall back on the corporate brand is easier

to understand.

The increasing difficulty of carving out a competitive edge, the cost of

supporting single brands and the pressure for corporate responsibility

from government, action groups and the City all make corporate branding

seem a sensible - if a little woolly - marketing option.

For companies used to the more exact art of brand-led marketing,

corporate campaigns can be fraught with uncertainties.

Kellogg’s recent activities in this area show how hard it can be. It was

persuaded to launch a corporate campaign when, following a Henley Centre

study, it discovered it was the UK’s most trusted brand.

Its ’Serving the nation’s health’ campaign was launched to show Kellogg

as a champion in the fight against teenage anorexia and other

food-related social problems. But just four months later the campaign

was dropped (Marketing, July 16) and now Kellogg is back to

product-related pushes. The official line is that this is part of a

rejig of its European strategy, but this is the second high-profile

corporate campaign to be dropped after ’Mrs K’ was shelved last

November, suggesting to many that Kellogg can’t find a sure-fire way to

exploit the umbrella brand.

Impact of ethics

The increasing influence of corporate ethics in decision-making is one

of the main factors driving the rise of the corporate brand. Jackie

Kavanagh, head of corporate communications programmes at BT, explains:

’Price and technological prowess, product quality and service are

hygiene factors.

Things like corporate ethics are becoming the real differentiator.

’Customers almost expect you to be doing these (ethical) things and are

happy to know about them. You have to give them information and let them

make their own minds up. People are much more ad-literate than they are

given credit for.’

The time is certainly ripe to attach new values to the corporate

brand.

Many of New Labour’s policies will significantly raise expectations

about companies’ behaviour. For example, the government is funding an

ethical trading unit, and there is a new Fairness at Work

initiative.

Pressure for good behaviour and transparency has mounted through the

Cadbury, Greenbury and Hampel committees on corporate governance. Using

their recommendations, the Institute of Management audits board-level

skills.

Mark Hastings, its policy adviser, says: ’Integrity and ethics come

close to the top of the list. For companies to succeed they have to be

perceived to care; it improves the connection between the business and

its customers.’

Sophisticated consumer groups are appealing to an expanding and more

opinion-led news media. Monsanto is directly in the pressure-group

firing line. Last year, when ad agency Bartle Bogle Hegarty began

working for Monsanto, a group of naked protesters hit the headlines when

it took over the roof of the agency’s Soho office.

The reaction of Sheila McKechnie, head of the Consumers’ Association, to

Monsanto’s conciliatory ad campaign shows how corporate marketing can

easily be seen as superficial and meaningless. She says: ’Monsanto will

have to work hard to restore trust after the contempt with which it

treated consumers with its strategy for introducing genetically modified

organisms.

When a company does something like that it seems to me that all the

propaganda in the world won’t do anything to shift that image.’

Explaining themselves

Research by Corporate Edge, the new corporate strategy arm of CLK MPL,

suggests she may be right. It found that 65% of respondents supported

Iceland’s decision not to stock bio-engineered foods, and 26% said they

would choose to shop at Iceland rather than another frozen-food retailer

as a result.

Debate will rage for some time about true consumer awareness and

motivation when it comes to how much they favour ethically well-behaved

companies.

Paul Edwards, chief executive of The Henley Centre, is pragmatic, using

Tesco’s Computers for Schools programme as an example. ’People know

there is a deal going on. People know there’s a profit to be made.

People know it’s business. They’re prepared to go along with the game as

long as it seems like a fair contract,’ he says.

For Monsanto, BT, Shell and Camelot, corporate branding has more to do

with PR than anything else. It is all about projecting a human face for

a company that has suffered, or still suffers, from a bad public image.

Yes, there are additional benefits from leveraging the corporate brand,

such as motivating staff and pleasing shareholders, but for many the

’we’re not so bad really’ factor is the most important.

For fmcg companies, the motivating factors are less clear, but that’s

not stopping them. As well as Kellogg and Nestle, Cadbury has made a

concerted effort to increase the prominence of its name on all

confectionery and spin-off products and spent pounds 870,000 on the

masterbrand ’Tastes like heaven’ campaign in the year to May (ACNielsen,

Meal).

Richard Frost, a Cadbury spokesman, says: ’It is certainly important for

us to have people understand what sort of business we are, and research

suggests buying opinions are influenced by what people think of a

company. It is nevertheless very important to remind people that we make

the best chocolate. We are sure that this is the most important thing to

consumers.’

In financial services, Sarah Weller, retail marketing director of Abbey

National, says stronger corporate branding is a logical development in a

market where customers may be confused by the rash of new entries into

the market. ’All the banks and all the building societies sell

everything. And so does Tesco and so does Virgin. What are customers to

make of that?’

Promotional profile

Despite this, Weller is sceptical about the effectiveness of marketing

on the Abbey National corporate platform. ’It is something that is

unlikely to be part of our public profile in a promotional sense. It is

kept separate from our commercial activities. We do get PR coverage (of

corporate activities) but not to leverage against the commercial

activities of the bank. In retail, certainly we have said it is key that

this is kept separate, and we won’t use it as a selling tool in the

foreseeable future,’ she says.

One of the main reasons marketers may be cautious is because it is still

so hard to demonstrate its effectiveness. As Jonathan Hall, head of

marketing at Corporate Edge, says: ’Financial directors and chief

executives want to know how they can measure the effect of the corporate

branding exercise. But actually relating something like responsiveness

to public opinion to the bottom line is a very difficult thing to

do.’

Maggie Mullen, a senior partner in the valuations section of

Pricewaterhouse-Coopers, says rough estimates can be made: ’You can set

up measures in the same sector looking at those that protect their

image, espouse the brand image and carry it through the organisation to

market and see that they tend to generate higher returns. But it is an

intuitive measure.’

The real bottom line here is that corporate branding is no panacea.

Consumers respond well to companies they respect. This can be in the way

they treat their staff, the environment or simply in being consistent to

long-held brand values. But in many cases this respect is based on the

company’s track record, rather than any communications campaign.

Perhaps the most powerful and effective corporate brand - and one that

stands strong with the minimum of marketing support and expense - is

Marks & Spencer. Its green plastic bag is as powerful a corporate

advertisement as all those glitzy efforts produced by BNFL and BT.

Companies that use corporate branding as an extension of their

crisis-management strategy could find it falls on deaf ears. Using

corporate branding to win back lost consumer trust will quickly fail; it

has to have the equity and goodwill there in the first place before it

can start drawing on it.

And for all those fmcg companies thinking of investing in corporate

branding, think carefully about what there is to be gained and whether

it is not worth letting the brands that built the corporation do the

talking for you.

HOW IMPORTANT IS CORPORATE BRANDING TO YOU?

A Corporate Edge survey of leading UK companies found that corporate

branding is clearly much more important to them (72% said ’very’) than

it is to consumers (45% ’very’).

The majority of companies (80%) said its power will increase in the next

few years. For most, the corporate brand guardian is the ceo (58%) or

marketing director (42%). The car industry appears to admit to a certain

neglect of corporate branding; respondents rated the importance of it to

their own companies as low and a corresponding lack of interest from

consumers.

FMCG is the least convinced, not believing it boosts sales: 50% of them

said it wouldn’t rise above product branding.

Increasing competition (22%) and the need for a sustainable strategic

tool (21%) are far and away the most popular reasons for increasing

importance to their sector. For their own companies this shifted to

organisational identity and focus (24%) and internal recognition of

corporate brand value (19%). Creating trust scored low on both counts.

The top three corporate brands admired by respondents were Virgin (54%),

Coca-Cola (49%) and Marks & Spencer (30%).

The response rate was 23% from a sample totalling 300.

HOW PIRC MADE SHELL REVIEW ITS CORPORATE BRAND

The City is a keen supporter of companies using integrity as a marketing

tool. Bodies such as the Pensions and Investment Research Consultants

(PIRC) wield enormous power. Set up in 1986 to research ethical,

environmental and social issues, it now represents 60 pension funds and

the UK’s ten biggest fund managers. Together these control pounds 150bn.

PIRC both recommends how they should vote on issues and offers a voting

service. Shell discovered PIRC’s power to its cost through a resolution

tabled at its AGM last year, challenging its policy on Nigeria and the

environment.

Anne Simpson, joint managing director of PIRC, says: ’Shell is

financially buoyant and internationally known. But the company’s ability

to retain customer confidence, keep government confidence and ride the

next wave of ethical concerns required a whole new corporate

stance.’

PIRC has since been involved in a project to re-engineer the culture of

Shell - a programme that began over three years ago and the results of

which are about to be revealed.

Wider vision

Intensive research into perceptions of how Shell does business will have

far-reaching implications on how it positions its corporate brand in the

future. Simpson says her sights are set on companies in all areas:

’There is a mood of complacency engendered by people thinking this is

only a problem for certain sectors. The environment is an issue for

every business. Since PIRC was set up, it has crossed from an ethical,

’saving the planet’, issue into a financial one.’

This article was first published on Marketing