No one understands the power of a product brand better than Procter
& Gamble. But as John Frank reports, the master marketer is having to
think about the bigger brand picture
Procter & Gamble has had its share of issues in the past few months,
with senior management changes and thousands of layoffs only compounding
disappointing first-quarter results.
Add to this a PR issue that demands immediate attention given P&G's poor
showing in Corporate Branding's 2000 study of corporate brand strength
(PRWeek, April 16): how much effort should a multi-product company put
behind corporate communications and reputation-building as opposed to
marketing and promotion for its individual brands?
Consumer goods companies have traditionally focused more on individual
brands. P&G is perhaps the most famous subscriber to this strategy. 'The
corporate brand is important to us, but we don't spend a lot of money
going out and advertising it,' explains William Dobson, VP of global
external relations at P&G. 'For years here at Procter & Gamble, we've
had a philosophy that says the reputation of our brands really drives
the reputation of our company.'
That view is changing today at many companies. Employees who once
thought only about their plant or the product they make are hearing more
about their parent company on the news and from friends and neighbors.
They're also much more aware that events halfway around the globe could
impact their jobs. 'The silos are getting shallower,' says Ron Culp, VP
of PR and government affairs with Sears Roebuck, in describing the
breakdown of old parochial interests within companies.
Wall Street has also become everyone's concern as retirement funds
heavily invested in stock give Americans reason to wonder about
corporate share performance.
Companies are becoming more aware that they need to form messages to
reach the investment world, employees and the business world, as well as
'There are lots of things a strong corporate brand can do - build
employee morale, make joint ventures and alliances easier. Product
brands don't always do that,' says Steven Makadok, Corporate Branding's
group director of brand intelligence. 'Companies absolutely should be
concerned about their corporate reputations.'
His firm has found that a strong corporate brand can add anywhere from
5% to 7% to a company's stock price in a bull market, and can mitigate
losses in a down market. And an Ernst & Young study found corporate
brand knowledge and reputation accounts for 30% of a company's stock
With its current corporate problems, P&G has seen its reputation take a
knock. 'They're a great marketing school, but that imagery has been
lost. They need a mission and they need to communicate how they'll
achieve that,' says one veteran PR firm CEO.
'Are they right to focus so much on brands or should they pay more
attention to corporate-level communications?' asks another agency CEO.
'The answer is, they have to do both.'
P&G's Dobson's says his company has considered whether it should do more
to create a corporate brand and 'sees the value of establishing a
corporate brand among key target audiences,' such as security analysts,
the news media and consumers.
But, already wrestling with staff cuts and stagnate markets, P&G has yet
to formulate a strategic long-term plan to enhance its corporate
reputation. It's far from alone.
Many companies trying to find ways to cut PR expenses in the current
economic downturn have looked first to corporate branding efforts. 'It's
one of those things that unfortunately falls by the wayside when things
get tough,' says Nick Kalm, EVP and general manager of reputation
management with Edelman Public Relations Worldwide. But while companies
cut corporate work, the area is 'least accepting of starts and stops,'
Kalm says. It takes time to build a corporate brand identity. 'The
companies that are really resonating with consumers are those with
strong corporate brands,' he says.
Ellen Ryan Mardiks, worldwide director of marketing and brand strategy
at Golin/Harris International, bristles at companies that think they
should either back brands or create a corporate image. 'It's really not
an either-or discussion,' she says. 'Consumer products companies in
particular wrestle with this issue and I don't know if there's much
wrestling to be done. The value of the corporate brand is increasing and
is showing an increased impact on a company overall.'
Baxter International has wrestled with the branding issue. A
pharmaceutical and healthcare company, Baxter once had to market its
products only to the medical world. Today, the changing nature of
healthcare increasingly means reaching out to consumers and health plan
Rather than simply continue to promote individual products, Baxter has
created a corporate message, says Matthew Gonring, VP of corporate
communications. The company's catch phrase has become 'critical therapy
for people with life-threatening conditions,' Gonring says. That
captures the essence of all Baxter offerings and sums up what the
company wants to be.
'There's a difference between product branding to the customer and
positioning by stakeholder,' continues Gonring, who came to Baxter last
year after guiding the former Arthur Anderson through a major
communications program to prepare it for a break with Andersen
Consulting (now Accenture).
Gonring wants Baxter's corporate message to reach anyone who may
interact with the public - from company salespeople to employees'
friends and neighbors. 'One has to think about what's most relevant to
customers' he says.
Ironically, new ways of reaching customers have been a major factor in
prompting P&G to think more about corporate communications. The company
was long known as a mass-marketer extraordinaire. But the mass market,
in which one TV ad during the former NBC hit show Bonanza could reach
most of the country, is gone. With advertising channels fragmented, P&G
has been trying more grassroots methods of reaching consumers.
'As brands look to alternative media to deliver their messages, there
may be an advantage to recognizing P&G as their parent,' Dobson
If individual brands work through the Web, for example, will they get a
halo effect from being part of the P&G family? Supermarket shoppers
might not care who makes their detergent, but they might take notice if
they see P&G hosting a brand Web site offering them laundry care
Mardiks believes the Internet has gotten many companies to think more
about the value of corporate communications and corporate image
Web companies in recent years were in a mad dash to establish their
corporate identities so consumers would trust them enough to buy from
them. Old-line companies took notice.
And P&G seems to be among them, having noticed the Web can help it reach
consumers. For example, its Web site helps establish a link between the
parent company and individual brands by inviting consumers to share
their ideas for improving existing brands and creating new ones.
P&G is starting to get the message that it matters what people think
about the company as a company. Whether it translates that understanding
into a corporate communications program anytime soon is an open
The answer could go a long way to determining if P&G can move beyond its
current problems and once again become known as a master communicator,
not just with consumers, but with all its audiences.