Download Corporate branding as an internal marketing tool

European Applied Business Research Conference
Venice, Italy 2003
The Role Of Brands
In Managerial Decisions
Ilias Kapareliotis, Athens University of Economics and Business, Greece.
Abstract
One of the most important assets for contemporary companies is a brand. Not only, because it is
the face of the company to the consumer markets but also because, it is the evaluating tool of the
company’s marketing strategies. Companies and academics have to take into consideration that
brands are valuable assets for the external customers, but also to the internal ones. Companies
interested in long-term existence in the market have to seriously consider the role and importance
of brands to the formation of their corporate strategies, but also to the marketing ones.
Introduction
Contemporary organizations use brand strategy as a tool in today’s business environment with increasing
regularity. Although brands and branding aren’t new managerial concepts firms are applying them to more different
settings due to the increasing importance of brands. The traditional role for brands gets much interest nowadays.
Strategist’s and analyst’s believe that this trend will continue as part of a business success in the future (Aaker 1996,
Kapferer 1997, De Chernatony 1998).
Organizations develop brands as a way to attract and keep customers by promoting value, image, prestige
or lifestyle. Brands reduce also the risk consumers face when they do their purchases. Over and above branding is a
technique to build a sustainable, competitive advantage in markets. By the time, consumers become accustomed to a
certain brand, they don’t accept substitutes. Organizations seek ways to take advantage of this human trait, that’s
why brands are popular (Guillen1994, Omalley1991).
Taking into consideration the humanistic aspect of branding companies have to addresses the matching of
external opportunities of brand management with the internal ones. Under that base companies have to consider the
integration of internal activities to ensure cohesion and therefore consistency in deliver of brand values inside the
company and outside of it(Harris, De Chernatony2001). The changing role of employees can guarantee that under
the name firm we can subsume no employees, they have to be recognized as brands and over and above as the
interface between brand’s internal and external environment having thus a powerful impact on the market of both
the brand and the organization (Schneider and Bowen 1985, Balmer and Wilkinson 1991, Kotter J, Heskett J 1992).
A brand emotional value is communicated not just by promotional activities or their presence to the market but
mostly with employee’s interactions with different publics. Employees are the customer’s informative source; they
become the center of the brand building process. Its of extreme importance to build inside the company values and
behaviors aligned with a brands desired values.
Thus, a brand takes a dynamic perspective to the market, brands aren’t static and have to change with their
environment, that why the trust for companies in the contemporary markets wont be towards new markets, but
toward the strengthening and expansion of the existing ones. During the last decade, companies were only
concerned about their brands and how the consumers perceive them. Today, companies are concerned with sales and
profits and with the financial aspects of branding such as their monetary value, and their performance to the stock
market. That value leads the brands, to a strategic asset valuable for the company and a strategic tool for corporate
strategic issues such as mergers and acquisitions.
Under the axes mentioned before the present study proposes:
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European Applied Business Research Conference
Venice, Italy 2003
P1: Brands are valuable assets of the company, which have to be handled correctly. Brands are sources of
profitability, competitive advantage and market power.
P2: Brands have to be one of the first priorities of a firm for both types of customer the external one, but also the
internal one.
P3: Brands can be valuable tools for corporate strategies guidance.
Brands as profitable entities
Brands have particular characteristics, which guarantee their successful presence in the market. Some of them are
the corporate characteristics, by which the company combines the presence of the brand with its presence, and some
of them are the individual brand characteristics which the consumer evaluates when he purchase a product. The
corporate characteristics give to the brand the values to compete and the way to create a welcome point of
difference. The individual ones give the brands their specific character, which are absolutely different from one
brand to another (De Chernatony 2001, Fombrun 1996). Both type of brand characteristics, lead the brand-to-brand
equity, what is it important is that companies have to understand that the right combination of both brand
characteristics can lead the brand to the success.
The success of a brand is not a very easy task for organization; the main brand characteristics by which a company
has to endow the brands are the following:
Research and development: Innovative brands not only do they hide a strong corporate image, but also they give to
the consumers a strong belief of customer care. Research and development needs branding strategies, but also
branding strategies need research and development. Branding research and development projects helps the company
to better communicate those projects, but also to create a stronger image than that of the competitors. Thus, the
combination of brands and research and development performance within the brands leads to barriers of entry.
Profits and sales are guaranteed, due to the market power the company gets(Bain 1956).
Marketing competencies: The implementation of a brand strategy by the company tries to create strong brand
image and the enhancement of the brand purchase. The degree in which the company invests in brand’s management
has absolutely to do with the level of which the company accumulates brand values itself, and to the competencies
on marketing that the company has. Companies spend money for brand building either according to the competitors
spending, either according to marketing department’s budget. The general principle for marketing activities aimed to
the brand is important for companies but also for brand managers. Companies have to understand that marketing
activities aiming to the brand have to be continuous and separate from any other disclosure than that of brand
building (Capron & Hulland 1999). Brand building by marketing activities isn’t an easy task it asks for activities,
which enhance brands but also, brand equity. The degree of brand success depends on:
1.
2.
The marketing activities the company decides and can undertake
The perspective those are activities were decided.
Different marketing activities for brands mean different branding strategies and communications and thus different
impact of brand existence to the consumers. The reason of the marketing activities decided seems to be very
important. Brand extensions of highly valued brands some times seem to be a vulnerable marketing activity for the
mother brand. It is very important that activities aiming to brand strategies have to de designed according to the
purpose of brand aim and scope in the market(Lane & Jacobson 1995). Differentiated brand strategies can contribute
to the brands success, but also to the company’s increased profitability (Keller 2003, Kapferer 1997) . The concept
of a unique brand communicated with those strategies permits to the company to price those brands more than the
competitors.
The individual brand characteristics that a consumer evaluates when he buys a product are:
1.
2.
The company, which gives the brand to the market
The time the brands exists to the market.
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European Applied Business Research Conference
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With regards to corporate name brands are primarily associated with the company’s competencies and
capabilities as a hole. Research results show that consumers evaluate positively brands by companies with a pioneer
image in terms of perceived corporate credibility and expected quality. Company’s reputation is one of those issues
that the consumer evaluates when he buys a brand. Companies have to maintain their reputation in high standards in
order to get consumers trust(Gray & Balmer 1998, Perkins 1995) . Undoubtedly, consumers today buy, brand image
but over and above corporate images and competencies. Brand’s life cycle is shorter, corporate names lifecycle are
enlarged.
The age of the brand is another important characteristic, evaluated by the consumers. The long brand existence in
the market gives to the consumers security of their choices, trust for the product’s standards. The company gets
profits by the loyalty it gets, trust by the target market, good reputation and strong corporate image. In addition, the
long existence of the brand permits to the company to enlarge its brand portfolio with four types of brands: prestige
brand, bastion brand, fighter brand and flanker brand (Riezebos 2003). Brand extensions are one of the major
advantages that both companies and consumers can get by a strong brand in the market. Experimental research
showed that old brands have a strong power but this is reduced as time passes but as those brands are used to new or
differentiated products those brands are rejuvenated (Arnold 1992, Alpert, Kamins 1995, . Thus, the company has
more profits, more power based on consumer brand loyalty, and a more dynamic perspective for long term existence
in the market (Barwise, & Robertson 1992).
Research and
Development
Marketing
Competencies
Company
Corporate Name Age of the Company
Age of the Brand
Figure1. Brand Characteristics
Corporate branding as an internal marketing tool
Brands are multidimensional entities, whose success requires matching a firm’s functional and emotional values
with consumer’s performance and psychological needs (De Chernatony and Dall´ Olmo Riley 1998). Corporate
branding relies heavily on an organization’s members and the perceptions they have about the nature of the
corporate brand. Corporate brand in this paper is defined as the corporate name as the internal customers-employees
show it. This could include both internal staff (finance, marketing, e.t.c.) and those in external agencies working on
the brand. Brand managers have to emphasize on the brand vision and culture at the working place, but also to
shareholders (Freeman, Lietdtka 1997, Mc Donald, Gandz 1991 ) . Favorable brand reputation results from internal
brand resource. In contrast to a brand’s image, reflecting current changing perceptions, a brand reputation is a stable
concept representing the total of different images over time.
Managers need to communicate their brand purpose, role and values to employees in order to inspire them, but
over and above to help them understand, how their presence in the company is related to those three elements
mentioned before (De Chernatony 2001). The consistency of brand values employees are asked to guarantee, aren’t
only those which are strongly related to the creation and maintenance of brands, but also those who work in the
company, and their relation with the brand building process is indirect(Hambrick 1982). Corporate branding culture
can help the company to gain a unique managerial advantage by the following ways:
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Employees are aware of what the branding process is and the perspectives that it can give to their
organization.
Employees understand better the benefits by the brand.
It encourages staff commitment to the branding culture and branding process.
It leads to human equity, which is the unique value that each employee gets in a company, by the corporate
branding process.
Human equity seems to be a new dimension in corporate branding. A very simple definition of it could be
“The peculiar value of each employee, in an branded organizational environment.” Corporate branding seems to
be the ideal process for the human equity perspective. A company can gain a superior advantage if it decides, to
be oriented towards that orientation. Human equity isn’t part of one or two company’s departments, its part of
the whole organization. When an organization has its different departments aligned with a desired culture, there
is a more unified identity presented also to different stakeholders and a strong commitment from the staff that it
will act in a more consistent manner to their tasks (Epstein, Seymour 1983). The main rationale is that in strong
corporate cultures are consistent values, thus facilitating agreement about key objectives. In a strong culture the
shared values engender greater motivation as staff fell proud with the organization’s brands
A further appeal of the strong culture-performance firm’s culture provides the basis for a sustainable
competitive advantage because employees learn how things are delivered and not what is being delivered
(Newsrtom & Davis 1998) . Through working to develop a strategically appropriate culture, human equity
could be considered as an intangible asset, which competitors find hard to emulate.
What the company, can get by the human equity perspective;
-
-
Companies oriented to human equity perspectives, have more satisfied internal customers, and thus more
loyal ones. Its difficult to fire and hire staff that has to be adapted to a general corporate culture, but also its
difficult to make, the staff understand brand vision and purposes.
Satisfied employees mean more capable employees, more effective ones. Employees satisfaction can lead
the company to cost reduction, due to the employees increased effectiveness.
Identifying human equity, for a company enables an organization to be very clear, about the core
differences among other companies.
Enable staff to understand the rationale for customer orientation
Employees understand better how they can better influence the branding process
Staff has a strong commitment to the company’s mission and vision.
Human equity, gives shareholders the opportunity to feel their unique contribution to the company’s
existence and thus better serve its mission and vision. Its important for the shareholders to be aware not
only of how they contribute to the branding strategy, but over and above to the corporate one. Anyone of
them according to human equity theory is a unique part of the company’s wheel. Its part of the manager’s
mission to create and communicate to each shareholder a unique human equity perspective.
Thus, human equity could be added to the following intangibles assets
Intellectual property: The Company’s patents, licenses, and other knowledge assets.
Human capital: The knowledge skills, experience and engagement of the workforce
Organization capital: The operating environment derived from the complex interplay between a company’s
management and business process, technology, structure and culture.
Customer capital: The Company’s brands and trademarks, customer and supplier relationship and other
sources of brand, customer and value equity in the business.
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Intellectual
Property
Customer
Capital
Human Equity
Organizational
Capital
Human
Capital
Figure2. Human Equity Concept
Brands as corporate decision tools
The creation and maintenance of brands are becoming more important in today’s competitive environment
where consumers have to choose among a plethora of brands. The creation of a strong corporate brand isn’t
only beneficial for the internal customers; it is also for the external ones(Diefenbach 1987). Consumers
recognize a brand and have some knowledge of it then they do process information in reduced levels than that
in other cases.(Gill 1995, Vishwanath 1997) Thus brands allow consumers to lower search costs for products,
both internally and externally. The meaning imbedded in brands can be quiet profound. The relationship created
between the brand and the consumer can be seen as a type of bond or pact(Day 1994). Consumers offer their
trust and loyalty with the implicit understanding that the brand will behave in certain ways and provide them
with utility through consistent product performance and appropriate pricing, promotion and distribution
programs and actions.
Brands can also play a significant role in signaling certain product characteristics to consumers. Brands can
also reduce the risks in product decisions. Consumers may perceive many different of different types of risks in
buying and consuming a product(Keller 2003). The main types of those risks are the following:
-
Functional: The performance of the product isn’t the expected one.
Financial: The product isn’t worth the price paid.
Psychological: The product affects the mental well being of the user.
Time: The failure of finding the best product at less time.
Branding is all about creating difference. The basic principles of branding, which give that perspective to the
brand and creates brand equity are the following(Macrae 1996):
Market
Dynamics
Past of the
Brand
Brand
Orientation
Figure3. Brand as a Strategic Tool
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Company's
Brand Equity
Elements
Corporate
Strategies Brand
Tools
European Applied Business Research Conference
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1. Added value to a product followed by marketing or particular branding strategies.
2. Branding strategies must be endowed by the market dynamics, but also they must have the perspective of
doing the brand a pioneer marketing and also corporate tool. That type of strategy is brand extensions.
3. Brands have also a past which shouldn’t be ignored the performance of brands in the past can guarantee a
better performance to the future.
4. Brand equity concept must be the bridge between the company and the market. Organizations have simply
to incorporate brand equity concept also to their culture.
5. Companies have to choose by their own the brand elements to build brand equity.
As a means of measuring the outcomes of brand value or brand equity there are different approaches by
which that can be done. Competitive brands can be useful benchmarks in brand based comparative
approaches (Capron & Dussauge 1998). Although, consumers may interpret marketing activity for a
fictional named or unnamed version of the product or service in terms of the general product category
knowledge, they may also have a particular brand, or exemplar in mind. This might be the category leader
or some other brand that consumers feel as representative of the category. The leadership that a brand
gains results in high added value and also to strong brand equity(Marion 1989) . High equity brands can be
a managerial tool under the following conditions:
1.
2.
The assets of a firm are classified as either tangible or intangible. Tangible assets include plant,
property and equipment; current assets and investments in stocks and bonds. The tangible assets
value can be estimated by accounting book values. Intangible assets on the other hand, are factors
of production or specialized resources permitting to the company to earn cash flows in excess of
the return on tangible assets. Accountants, consider as intangible asserts goodwill, patents,
trademarks and licensing agreements and brands(Murphy 1990) . The more the value of a brand is
the most is its power. As brand power increases, possibilities for managerial usage of them
increases also.
Marketing and corporate strategy are valuable firm resources, when they are trying to build strong
brands, which then become a valuable firm resource. Thus brands, lead to sustainable competitive
advantage seen as rare resources (Person 1996). Firms often turn to the market to acquire or sell
brands. It is at the firm’s corporate strategies to decide which way it wants to take.
There a lot of cases in which brands is part of a corporate strategy, quiet important for a company such as mergers
and acquisitions (Mitchell 1994). The main variables, which could influence a firm’s propensity to redeploy the
brands at a merger and acquisition case, are the following:
-
The degree of similarity between the markets served by the merging firm, brand names are kept constant.
The degree of brand asymmetry between the two firms.
The marketing capacities and capabilities to follow up the branding strategy, undertaken before.
The brand portfolio both companies have
The industry in which the brand belongs to.
Brands can be powerful entities by which corporate decision s can be taken. Managers have to clearly understand
that issue and go through the branding process with a different attitude (Saporito 1986). A strong brand can be a
merger’s or acquisitions reason, but it can also be a reason for strategic alliance i.e. co-branding strategies. The main
concept is that brands can be managerial tools, only when companies are treating them as intangible assets,
investments on intangible assets can help the company to grow easier and quicker. Long-term profitability is the
next step of investments on brands.
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Conclusions
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Particular characteristics of brands can lead them to a pioneering place in the market. Companies have
simply to emphasize on them, and communicate those characteristics to all types of audiences. The main
brand characteristics a company has to take into consideration are research and development, marketing,
corporate image-existence in the company to the market, age of the brand. The first two characteristics are
the evaluating criteria for the company’s performance in the market and its capacities to give valuable
brands. The other two clusters of brand characteristics are the guarantee of a powerful brand. Till now
researches gave only emphasis on some special brands characteristics, according top the product category,
brand image e.t.c. The present study gives emphasis on more general characteristics, which are evaluated
both by consumers and the total of the market.
Managers must seriously consider they way the are treating brands powerful brands need high investments
in research and development and marketing, if that condition is satisfied then profitability and constant
sales are guaranteed.
In a competitive environment where organizations imitate its others functional advantages, continuous
competitive advantage can be gained by the way the company threats, one of its most valuable assets, its
employees. An organizational culture enables staff to infer firm’s values and provide them with guidelines
about how they should behave. Human equity, the peculiar value of each employee can be a working
guideline. Companies have to understand that human capital, intellectual property e.t.c. are useless if the
employees aren’t ready to support the dilution and enhancement, of them. Employees feel unique and they
know that the company has to do also with their own good.
Branding the workplace gives the opportunity to companies to emphasize on the human equity concept.
Thus, companies reduce costs of hiring new employees, due to the high degree of loyalty to the workplace.
The value of brands both for consumers and companies becomes very important in today’s competitive
environment. Brands are the image of the company to the market, but also to the consumers. That image,
and the brand’s capacities can de used by a company. If the company follows the market dynamics, and
combines a brand equity orientation with the existence of the brand in the market then the brand is unique.
The brand has simple to be dowed with the company’s brand equity elements.
Corporate strategies can be lead by powerful brands, or can be driven by them. The top management has
simply to face them as intangible assets, which has to be treated accordingly. Treating brands as intangible
assets among other intangibles, means that the company invests on them, in order to create a strong asset
with high value, also in the stock market.
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