Corporate vs Product Branding

8/9/2019 Corporate vs Product Branding

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CORPORATE BRANDING VERSUS

PRODUCT BRANDING IN EMERGING

MARKETS


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Purpose of the studyPurpose of the study

which branding strategy, corporate branding or product

branding, do firms prefer to use in their initial entry in the

emerging markets?

What factors influence the choice of branding strategy in

emerging markets?


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Corporate BrandCorporate Brand

In which brand and corporate name is sameIn which brand and corporate name is same

IBM, Nike, Sony, MitsubishiIBM, Nike, Sony, Mitsubishi

Product BrandProduct Brand

Separate brand identities for different productsSeparate brand identities for different products

Sprite, Mr Pibb under cocaSprite, Mr Pibb under coca--cola, Lux and Dovecola, Lux and Dove

from Unileverfrom Unilever


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Emerging marketEmerging market

The countries or origin that have begin to industrialized and areThe countries or origin that have begin to industrialized and are

showing great promise as a good place to invest.showing great promise as a good place to invest.

A country that has experienced a relatively rapid pace of economicA country that has experienced a relatively rapid pace of economic

development, and has initiated economic liberalization and a marketdevelopment, and has initiated economic liberalization and a market

economy (Arnold and Quelch, 1998)economy (Arnold and Quelch, 1998)

Market size and market growth offer enormous potential for marketingMarket size and market growth offer enormous potential for marketing

success (Nakata and Sivakumar, 1997).success (Nakata and Sivakumar, 1997).

Eastern Europe and many Asian countries China, India,Eastern Europe and many Asian countries China, India, BBrazil, Russiarazil, Russia

etc are consider emerging marketetc are consider emerging market


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challenges to enter emerging marketchallenges to enter emerging market

Political risks, nonPolitical risks, non--transparent government policies, fiscal restrictions,transparent government policies, fiscal restrictions,

and the like. Emerging countries have traditionally protected theirand the like. Emerging countries have traditionally protected their

economies and their dominant stateeconomies and their dominant state--owned enterprises.owned enterprises.

Saturation of developed markets leads to the exploitation of newSaturation of developed markets leads to the exploitation of new

markets in emerging economies, to shield firms from economicmarkets in emerging economies, to shield firms from economic

recessions and changing demographics.recessions and changing demographics.

Development of brand strategy in an emerging market should be basedDevelopment of brand strategy in an emerging market should be based

on an understanding of its economic, technological, socioon an understanding of its economic, technological, socio--cultural, andcultural, andcompetitive conditions, all of which may exert a considerable impact oncompetitive conditions, all of which may exert a considerable impact on

an incoming firms operations and performancean incoming firms operations and performance


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Brand architectures

There are four basic brand architectures available to

firms:

(1) corporate(2) product

(3) corporate-and-product

(4) product-and-corporate


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Corporate BrandIn which brand and corporate name is sameIn which brand and corporate name is same

example, IBM, Nike, Sony, MitsubishiIBM, Nike, Sony, Mitsubishi

Product Brand

Separate brand identities for different products

example, Sprite, Mr Pibb under coca-cola, Lux and Dove

from Unilever etc

Corporate-and-product

with dominant use of the corporate brand. example, Nestle

Product-and-corporate

with dominant use of product brands. example, P&G


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Literature reviewCorporate branding

The role of the corporate brand is to give credibility in cases such as

communications with government, the financial sector, the labour

market, and society in general (Urde, 2003).

Corporate branding is very appropriate to those companies engaged in

service industries, as their products are more intangible in nature. When

consumers cannot see the product, the company brand name helps givethem an assurance of quality, heritage, and authenticity

Markets are becoming more complex and products and services are

quickly imitated and homogenized, maintaining credible product

differentiation is increasingly difficult, requiring the positioning of the

whole corporation rather than simply its products (Hatch and Schultz,2001).

Alan (1996) attributes the surge of corporate branding to the rising costs

of advertising, retailer power, product fragmentation, new product

development cost efficiencies, and consumers expectations of

corporate credentials.


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contProduct branding

McDonald et al. (2001) argue that, a firm using a product-brand

strategy rather than corporate branding will experience less damage

to its corporate image if one of its individual brands fails

A product brand is also flexible, allowing firms to position and appeal

to different segments in different markets

The company name is either totally or virtually absent. It gives each

brand the opportunity to have unique values, personality, identity and

positioning

Product branding is costly though, as advertising and promotion costscannot be shared, and its success depends on the product itself


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Choice of BrandingStrategyCorporate BrandProduct Brand

Firm CharacteristicsAgeSize

Experience

Corporate ImageAnd reputation

Stakeholder Interests

Market Complexity

Marketing Costs

ProductCharacteristics


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Stakeholder interestStakeholder interest

Product brands usually need to appeal only to a limited group ofProduct brands usually need to appeal only to a limited group of

stakeholders, mostly customers who purchase and use the product.stakeholders, mostly customers who purchase and use the product.

On the other hand, corporate brands may need to take account of theOn the other hand, corporate brands may need to take account of the

larger group of internal and external stakeholderslarger group of internal and external stakeholders

P1. The broader the stakeholders interests, the moreP1. The broader the stakeholders interests, the more

likely firms operating in emerging markets are to choose corporatelikely firms operating in emerging markets are to choose corporate

brandingbranding..


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Corporate imageCorporate image

Corporate image is the sum of impressions and expectations of anCorporate image is the sum of impressions and expectations of an

organization built up in the minds of its stakeholders and the publicorganization built up in the minds of its stakeholders and the public

(Topalian, 2003).(Topalian, 2003).

Aaker (1996) argues that a brand serves to differentiate the productAaker (1996) argues that a brand serves to differentiate the product

from its competition by means of a set of consumer perceptions.from its competition by means of a set of consumer perceptions.

According to both Kelly (1998) and Sharp (1995), many firms haveAccording to both Kelly (1998) and Sharp (1995), many firms have

realized that a strong corporate brand can lead to competitiverealized that a strong corporate brand can lead to competitive

advantage in the presence of increased competition.advantage in the presence of increased competition.

P2. The more corporate image is emphasized by stakeholders inP2. The more corporate image is emphasized by stakeholders inemerging markets, the more likely entrants from developed countriesemerging markets, the more likely entrants from developed countries

are to choose corporate branding.are to choose corporate branding.


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Market complexity

Many emerging economies lack effective internal and external

governance mechanism

Fragmented distribution channels

lack of property protection

P3. The more complex a target market in an emerging economy is, theP3. The more complex a target market in an emerging economy is, the

more likely entrants from developed countries are to choosemore likely entrants from developed countries are to choose

corporate brandingcorporate branding


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Marketing costsMarketing costs

It is very costly to establish a new brand today, and expensive toIt is very costly to establish a new brand today, and expensive to

maintain an existing one (Berry, 1993).maintain an existing one (Berry, 1993).

The increased exposure of worldwide consumers to global media hasThe increased exposure of worldwide consumers to global media has

increased their desire for quality branded goods and services (Batra,increased their desire for quality branded goods and services (Batra,

1997).1997).

McDonald et al (2001) argue that targeting different brands at separateMcDonald et al (2001) argue that targeting different brands at separate

small segments can incur high marketing costs and consequently resultsmall segments can incur high marketing costs and consequently result

in lower brand profitability.in lower brand profitability.

P4. The higher the costs of marketing in emerging markets, the moreP4. The higher the costs of marketing in emerging markets, the more

likely entrants from developed countries are to choose corporatelikely entrants from developed countries are to choose corporate

branding.branding.


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Product characteristicsProduct characteristics

Consumer products tend to be more culturally sensitive than industrialConsumer products tend to be more culturally sensitive than industrial

products, in international markets, especially in the heterogeneousproducts, in international markets, especially in the heterogeneous

emerging economies.emerging economies.

Industrial products target concentrated markets, whereas consumerIndustrial products target concentrated markets, whereas consumer

products are mass marketed;products are mass marketed;

Industrial products enjoy longIndustrial products enjoy long--term, stable buying relationships,term, stable buying relationships,

whereas consumer products suffer shortwhereas consumer products suffer short--term perspectives;term perspectives;

There are relatively fewer buyers for industrial products than forThere are relatively fewer buyers for industrial products than for

consumer products;consumer products;


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Conti.Conti.

Industrial products typically reach buyers through short channels,Industrial products typically reach buyers through short channels,

whereas long channels are normal for consumer products;whereas long channels are normal for consumer products;

There is a greater emphasis on personal selling in the case ofThere is a greater emphasis on personal selling in the case of

industrial products than in the case of consumer products.industrial products than in the case of consumer products.

P5. Market entrants selling industrial products in emerging markets areP5. Market entrants selling industrial products in emerging markets are

more likely to use corporate branding than those marketing consumermore likely to use corporate branding than those marketing consumer

products.products.


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Moderating factors

Firm Characteristics

Age

Size

Experience

P6. The size of a firm entering the emerging market is positivelyassociated with the probability of choosing product or corporate

branding.

P7. The length of a firms relevant experience is positively associated

with the probability of choosing product or corporate branding.

P8. The extent of a firms international experience is positively

associated with the probability of choosing product branding over

corporate branding.


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Conclusion:Conclusion:

Branding strategy in the international context is a crucial issue for firmsBranding strategy in the international context is a crucial issue for firms

from developed countries aspiring to succeed in emerging markets.from developed countries aspiring to succeed in emerging markets.

However, the choice and adoption of a certain branding strategy is notHowever, the choice and adoption of a certain branding strategy is not

a static process.a static process.

There is no single branding strategy that works for all firms orThere is no single branding strategy that works for all firms or

organizations (Gulati and Garino,2000).organizations (Gulati and Garino,2000).

As firms gradually establish their presence in the emerging markets,As firms gradually establish their presence in the emerging markets,

accumulate marketing experiences and expand capacity, their targetaccumulate marketing experiences and expand capacity, their target

consumers or segments may evolve as well as their market position.consumers or segments may evolve as well as their market position.


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Future researchFuture research

Developing additional propositions and hypotheses, and designing theirDeveloping additional propositions and hypotheses, and designing their

empirical testing methodology.empirical testing methodology.

This research topic can be expanded to firm branding strategyThis research topic can be expanded to firm branding strategy

throughout all the stages of marketing operations in emerging markets,throughout all the stages of marketing operations in emerging markets,

as firms from developed countries enter higher internationalizationas firms from developed countries enter higher internationalizationstagesstages..

Further, firms indigenous to the emerging markets may take differentFurther, firms indigenous to the emerging markets may take different

approaches to branding from the entrants when they themselves enterapproaches to branding from the entrants when they themselves enter

other emerging markets, or developed countriesother emerging markets, or developed countries

Documents

Corporate vs Product Branding